The Connecticut Banking Department issued a cease and desist order earlier this month to a California-based mortgage lender for allowing individuals without a mortgage license to negotiate and take residential mortgage loans over the phone.
The cease and desist against LoanSnap alleges that it employed a business model from at least August 29, 2022, to December 2, 2022 in which most of its origination work in Connecticut was performed by unlicensed mortgage loan originators.
The charges brought against LoanSnap, Inc. include alleged violations of the Truth in Lending Act and the Fair Credit Reporting Act. However, the central focus of Commissioner Jorge Perez's findings revolves around unlicensed mortgage origination activities.
LoanSnap did not immediately respond to requests for comment on the allegations.
Perez directed LoanSnap to halt specific activities and notified the company of the impending revocation of its state mortgage lender license. Additionally, LoanSnap faces up to a $100,000 civil money penalty per violations as a result of the order.
The company had 14 days to request a hearing or their license would be revoked. The Banking Department said LoanSnap did request a hearing.
According to the cease and desist, LoanSnap employed individuals who were not licensed as mortgage loan originators in Connecticut. Despite their lack of proper licensing, these individuals acted as mortgage loan originators by taking residential mortgage loan applications, soliciting Connecticut borrowers for residential mortgage loans, and even negotiating terms for these loans.
Most of the unlicensed mortgage originators worked in out-of-state call centers and the company relied on this unlicensed workforce for its origination work in Connecticut.
The order states, "that once an unlicensed MLO deemed a potential borrower qualified for one of the respondent’s loan products based on the information gathered (via text, electronic mail, telephone call and additional verification documentation he or she required the potential borrower to submit), the unlicensed MLO would then send the file to a licensed mortgage loan originator." Additionally, it says, if the borrower didn't qualify for one of the products then the unlicensed MLO "would end the call without allowing the potential borrower the opportunity to speak with a licensed mortgage loan originator."
The order says that one non-licensed employee maintained a LinkedIn profile that identified her as a "mortgage loan officer." Furthermore, other non-licensed employees' LinkedIn profiles included statements indicating their involvement in activities directly related to mortgage loan origination. These representations played a significant role in the examination and subsequent order against LoanSnap because Connecticut law states that an individual is considered to be engaged in the business of a mortgage loan originator if they represent themselves as such to the public through advertising or other forms of communication. Additionally, the commissioner alleged that LoanSnap's conduct triggered provisions of the Connecticut SAFE Act related to character, general fitness, and operating with honesty, fairness, and efficiency.
