An East Hartford mortgage lender that has been fighting a prolonged battle with the Department of Banking over its mortgage lending license, plans to officially close its doors on Friday.
1st Alliance Lending, housed at Founders Plaza, had announced back in August that it would shutter its operations.
The company said Thursday that it now has five remaining employees, down from 178 when the banking department began investigating it last year. 1st Alliance CEO John DiIorio said he is considering a relocation of his company to another state — perhaps Massachusetts, Rhode Island or New Hampshire.
While the banking department has been investigating alleged mortgage lending violations, including the use of unlicensed call center workers to initiate sales leads, a lack of surety bond was technically the reason it revoked 1st Alliance’s mortgage license in early October.
1st Alliance previously had a bond from The Hartford, but lost it over the summer — which DiIorio has blamed on the department’s decision to investigate him. That loss led to an automatic suspension of 1st Alliance’s license with the banking department, and ultimately, the revocation in October.
The department’s administrative hearings weighing 1st Alliance’s alleged violations, which began in September, continued Thursday and are expected to take longer still.
The department is seeking a $1.5 million civil penalty. DiIorio has hired lawyers and vowed to stick with the process into next year.
“…we will see it through and, if necessary, litigate our case in court,” he said Thursday.
Asked for comment on DiIorio’s potential plans to move, banking department spokesman Matthew Smith referred to a previous statement he issued in August, when 1st Alliance revealed that it planned to close its business.
“The department will continue to work toward a fair resolution of the allegations against 1st Alliance but must ensure that companies doing business in Connecticut play by the same rules,” it said.
Meanwhile, DiIorio continues to press two cases before the Freedom of Information Commission, alleging that the department has failed to produce requested documents in compliance with the state’s open records law.
1st Alliance was once licensed to do business in 46 states. However, the company has been asking regulators in many of those states to surrender or cancel its licenses, according to the Nationwide Multistate Licensing System.
Many of those requests were filed in the past few months. A number have been approved, while others are still pending. In some cases, 1st Alliance’s license expired over the past year or so.
1st Alliance said it decided to surrender the licenses due in part to limited remaining financial resources. In addition, certain states require a lender to be licensed in its home state.
The company said to its knowledge, it’s not under investigation by any other federal or state regulators. Several states — including Iowa, Pennsylvania and New Hampshire — have audited 1st Alliance, with none adopting Connecticut’s interpretation of mortgage licensing requirements, according to the company.
This story has been updated with additional information about 1st Alliance’s licenses in other states.
