A former East Hartford-based mortgage lender that had filed a lawsuit over the state banking department’s decision to revoke its license has lost the case in court.
A Connecticut Superior Court judge rejected an appeal by 1st Alliance Lending and upheld the decision by Banking Commissioner Jorge Perez to revoke the lender’s mortgage license.
The court action, first reported by National Mortgage News, stemmed from one of two enforcement proceedings the Department of Banking had with 1st Alliance.
1st Alliance had been placed under investigation in May 2018 following a whistleblower complaint that the firm was engaging in unlicensed mortgage origination. The lender lost its $200,000 surety bond from The Hartford in July. Maintaining a surety bond is a requirement for all Connecticut mortgage licensees.
The lender had stopped doing business in Connecticut and decided in July 2019 to voluntarily surrender its license, according to court documents. The license was then suspended by the Department of Banking. Following a hearing with Perez in September 2019, the license was revoked.
1st Alliance appealed what it said was an adverse final decision.
“Revocation of the plaintiff’s license has impaired the plaintiff’s reputation and caused regulators in other states to take actions adverse to the plaintiff,” according to court documents.
A judge last week dismissed the appeal, saying in a memorandum that “the record contains substantial evidence in support of the Commissioner’s decision.”
The decision did not affect the other enforcement proceeding against 1st Alliance involving allegations that the lender relied on a call center staff of about 50 unlicensed mortgage loan originators to decide whether potential borrowers were qualified for a 1st Alliance loan product before sending the application to one of the company’s licensed mortgage loan originators to issue a prequalification letter.
At a press conference in August 2019, 1st Alliance CEO John DiIorio accused the Department of Banking of regulatory overreach.
