A financial services company based in California has lost its license to operate in Connecticut, after failing to disclose a default judgment, among other violations of state law.
The company, LoanSnap, uses artificial intelligence and machine learning to help homebuyers obtain loans.
LoanSnap faces multiple lawsuits claiming unpaid debts, breach of contract and default on payments. The company was evicted from its office building with a sheriff lock-out on May 16, according to banking documents.
The Connecticut Department of Banking issued a temporary cease-and-desist order against LoanSnap in January, which alleged the company employed unlicensed individuals to perform mortgage loan origination activities.
LoanSnap also violated state law when it falsely stated on a form submitted to the Nationwide Multistate Licensing System and Registry that it “did not have any unsatisfied judgments or liens against it,” according to the state baking department.
Specifically, Wells Fargo won a $431,511 default judgment against LoanSnap in November 2023, after alleging in a lawsuit that the company sold it a mortgage loan with an excessive or unsupported debt-to-income ratio, and later refused to honor its contractual obligation to repurchase the nonconforming loan.
LoanSnap failed to appear in court and lost the case.
Based on an investigation, Connecticut Banking Commissioner Jorge L. Perez concluded that LoanSnap “failed to demonstrate that its financial responsibility, character and general fitness are such as to command the confidence of the community and to warrant a determination that LoanSnap will operate honestly, fairly and efficiently.”
As part of a consent order, the state banking department revoked LoanSnap’s license to engage in the business of a mortgage lender effective Oct. 2.
