LoanSnap, Inc., an AI-powered mortgage startup, has had its license to operate revoked in Connecticut, according to a new Consent Order executed by the State's Banking Commissioner, Jorge Perez, on Oct. 2. The news follows LoanSnap's violation of a previous order, enacted in May 2024.
According to the filing, an investigation conducted by the Commissioner through the Consumer Credit Division of the Department of
Banking revealed that LoanSnap committed multiple violations of state regulations, including advertising to consumers on its website that it was licensed in states in which it was not and using an address other than the address specified on NMLS.
The revoking of LoanSnap's license follows a cease and desist order issued in January this year. The cease and desist against LoanSnap alleged 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 against LoanSnap from January also included alleged violations of the Truth in Lending Act and the Fair Credit Reporting Act. However, Commissioner Perez's findings primarily focused on unlicensed mortgage origination activities.
The California-based lender has faced legal trouble before, including a lawsuit from Wells Fargo, which sought $431,000 after alleging a loan bought from LoanSnap broke the bank's rules about the ratio of income to debt.
Since its 2017 founding, LoanSnap secured millions in funding from major investors like Richard Branson’s Virgin Group, the Chainsmokers’ Mantis Ventures, Baseline Ventures, and Reid Hoffman. The company pledged to leverage AI to streamline the home lending process, and by 2021, it had originated nearly 1,300 loans totaling close to $500 million.
Its latest numbers are a stark difference. Per Modex data, the company has originated 22 loans year to date, totaling just over $1.8 million.
NMP reached out to LoanSnap for comment; the company did not share commentary before the time of publication.
