A national mortgage lender is ceasing operations after the state Department of Banking announced it planned to revoke its license to operate in Connecticut, and its CEO is complaining the DOB targeted the firm.

The firm, 1st Alliance Mortgage Lending, was placed under investigation in May 2018 following a whistleblower complaint that the firm was engaging in unlicensed mortgage origination, according to the DOB’s notice of intent to revoke the lender’s license, published Aug. 1. At the time, Connecticut represented around 7 percent of its originations,

The DOB investigation found that 1st Alliance relied on a call center staffed by around 50 unlicensed mortgage loan originators and only 11 licensed mortgage loan originators. The former would make outbound calls on leads the company had purchased from Lending Tree, Realtor.com and Zillow, sometimes making up to 200 to 250 such calls per day, and take inbound calls from interested applicants. They would then gather information necessary for the application, review the borrower’s eligibility for various products and home purchase prices based on federal guidelines and estimate monthly payments and closing costs for the borrower.

Once the unlicensed originator decided the potential borrower was qualified for a 1st Alliance loan product, they would send the application to one of the company’s licensed mortgage loan originator for the issuance of a prequalification letter. According to the DOB, 1st Alliance’s Connecticut residential loan closings were performed by only eight of 1st Alliance’s licensed originators. Of its licensed originators, a subset of five averaged between 80 and 102 closed mortgage loans nationwide for the quarter preceding the start of the investigation, or roughly one loan per day, well above industry norms.

After settlement negotiations with the DOB broke down, 1st Alliance announced in September of last year that it was beginning layoffs as a result of the dispute. According to the CT Mirror, 1st Alliance CEO John DiIorio held a press conference late last week to state the firm was down to 17 employees, from 170 prior to the investigation, and was ceasing operations due to the Connecticut investigation – it had lost its surety bond on July 31. DiIorio accused the DOB of regulatory overreach.

Attempts to contact 1st Alliance for comment were unsuccessful.