Recently a member of our Compliance Masters Group inquired, “It looks like the CFPB has dropped their case with Zillow according to a statement by Zillow. We had a lot of our lenders wanting to co-market with realtors on Zillow. Now what?”
What we do know – Zillow Group received a letter from the CFPB on June 22 stating that the CFPB “had completed its investigation, that it did not intend to take enforcement action, and that the Company was relieved from the document-retention obligations required by the Bureau’s investigation.”
What is not clear – What were the CFPB’s concerns with Zillow Group’s co-marketing program? What adjustments did Zillow make to eliminate the CFPB’s concerns? If Zillow did not make adjustments, why was the investigation terminated?
What we need – Guidance from the CFPB explaining how to set up a co-marketing arrangement that fully complies with Section 8 of the Real Estate Settlement Procedures Act would be a good start.
CFPB’s investigation placed a stain on Zillow. Some lenders have avoided entering arrangements with Zillow because of fears of getting caught up in the investigation. Now the investigation has ended. It is unlikely that the CFPB will issue an “all-clear” announcement that it is safe to do business with Zillow or to issue clarifying guidance any time soon.
Now What? – Anyone in an arrangement with Zillow should be more comfortable with that relationship this month, than they were last month. Anyone contemplating an arrangement with Zillow would be well advised to obtain a legal opinion from counsel. It is likely that Zillow will create a “comfort package” that explains why it is now safe to do business with them.
Every day that goes by without the CFPB, or one of the prudential regulators, taking action against Zillow, or those who do business with Zillow, should increases the comfort level for everyone. Slow and cautious makes sense now.