T
hink you’re safe from regulatory scrutiny? Recent litigation shows otherwise. A class‑action against Zillow and three brokerages/teams alleges racketeering tied to Zillow’s mortgage arm and agent referrals. The case underscores a larger trend: professionals chasing profit at the expense of buyers, exposing themselves to RESPA violations. The fix is simple—offer buyers more than one lender when you recommend financing. A single lender recommendation is a liability trap for agents and brokers.
The lawsuit’s update with racketeering charges should alarm anyone who believed the CFPB’s virtual dissolution meant no one was watching. Works Industries LLC, GK Properties, and The Frano Team, all named in the suit, now face the same scrutiny. Many brokers fear they’ll be next, but the risk can be mitigated by presenting at least two, preferably three, mortgage options. A single lender name is an outrageous liability.
Housing affordability has become a political flashpoint, and industry players who prioritize their own commissions over buyers’ best interests are creating both regulatory and reputational danger. Real‑estate portals pressure agents to embed the portal’s mortgage products in every transaction, while mortgage firms turn into brokers to control search portals and marketing channels. Affiliated‑business disclosure forms offer little protection if buyers overpay for those loans. Some lenders run joint ventures that generate most of their business from a single team, amplifying the risk.
RESPA is clear: brokers and agents must avoid “affirmative influence” in settlement services, meaning they cannot single‑handedly recommend a mortgage. The solution is straightforward—offer a range of independent mortgage products alongside any in‑house option. At Tomo Mortgage, we advise clients to obtain two or three quotes. This protects portals, brokers, and agents from RESPA exposure and, more importantly, serves buyers. An agent rarely knows a customer’s full financial picture, so recommending a specific lender is risky. If an agent lacks a trusted lender list, they can simply encourage buyers to shop both offline and online.
This moment demands action. We must reduce risk, build trust, and help buyers secure homes at competitive prices and rates. Empathy is key. Ultimately, we want to be proud that our actions help customers purchase a great house with the best mortgage terms.
Greg Schwartz, CEO and co‑founder of Tomo Mortgage, leads with a customer‑first philosophy to simplify and democratize the mortgage process. Before founding Tomo, he was a senior executive at Zillow, overseeing strategy, sales, and product development.
