More than a month has gone by since Zillow last gave an update on the Consumer Financial Protection Bureau’s investigation into its practices, causing at least one analyst to question the likelihood the two parties will be able to reach a settlement.

And if no settlement is reached, the industry should ready itself for one of the biggest RESPA battles to date, as Zillow has continuously defended its practices.   

While a lot is still unknown in the case, the issue centers on Section 8 of the Real Estate Settlement Procedures Act and Section 1036 of the Consumer Financial Protection Act.

During Zillow’s earnings call, they revealed that the CFPB concluded its investigation and wants to discuss a settlement.

According to the earnings release, “Based on correspondence from the CFPB in August 2017, we understand that it has concluded its investigation. The CFPB has invited us to discuss a possible settlement and indicated that it intends to pursue further action if those discussions do not result in a settlement.”

Kathleen Philips, Zillow chief financial officer, said at the time that they expect things to move quickly and was headed to Washington after the call to talk about a settlement.

However, as it stands today, the company doesn’t have any new updates to give on the case.

An article from The Fly cited that shares of Zillow stock are sliding after Susquehanna Financial Group analyst Thomas Claps “told investors that he believes a lawsuit may be forthcoming from the Consumer Financial Protection Bureau over its co-marketing program. The analyst pointed out that CFPB had ‘invited’ the company to discuss a settlement, but no progress update on the discussions has been announced.” 

From the article:

Currently, Zillow’s co-marketing program allows certain groups of lenders to subsidize up to 90% of an agent’s marketing costs, while other lenders are capped at 50%, Claps said. The analyst argued that this subsidy issue is the primary focus of the CFPB investigation, and that the CFPB is likely demanding a 50% contribution cap across the board, regardless of how many lenders are contributing. Therefore, at a bare minimum, the CFPB will demand that Zillow eliminates its ability to collect more than a 50% co-pay from lenders, he added. The analyst reiterated a Neutral rating on Zillow. 

Here’s a picture from Yahoo on the company’s stock over the last year, along with another one from the last three months.

In April 2017, Zillow received a Civil Investigative Demand from the Consumer Financial Protection Bureau that requested information related to its March 2017 response to the CFPB’s February 2017 Notice and Opportunity to Respond and Advise (NORA) letter.

The letter stated that the bureau’s Office of Enforcement was considering whether to recommend that the CFPB take legal action against Zillow, alleging that it violated Section 8 of the RESPA and Section 1036 of CFPA.

Zillow added that the notice stemmed from an inquiry that commenced in 2015 when it received and responded to an initial Civil Investigative Demand from the CFPB.

The CFPB has already cautioned that the bureau may seek restitution, disgorgement, civil monetary penalties, injunctive relief or other corrective action.

“We cannot provide assurance that the CFPB will not commence a legal action against us in this matter, nor are we able to predict the likely outcome of any such action,” stated Zillow.