Struggling fintech LoanSnap had its mortgage lender license in Connecticut revoked in early October by state authorities, adding to the company’s legal and financial problems.
The firm was first licensed to do mortgage business in Connecticut in January 2021 and applied for a renewal in December 2023. The request was pending, but in July, the company had its mortgage lender license in the state automatically suspended. TechCrunch previously reported the news.
LoanSnap did not immediately reply to HousingWire‘s request for comment.
According to the consent order signed by Connecticut banking commissioner Jorge L. Perez on Oct. 2, LoanSnap failed to file in timely fashion with the Nationwide Multistate Licensing System (NMLS) a change of its main address in Southern California, where the company was evicted in May. The landlord now seeks judgment for unpaid rent in the amount of $537,304.
The Connecticut consent order added that the firm failed to provide a bond and falsely stated that it did not have any unsatisfied judgments or liens against it. In fact, the company has been the target of several lawsuits since last year.
In November 2023, Wells Fargo sued LoanSnap for $431,511 in a district court in Minnesota, alleging breach of contract in selling a mortgage that did not meet contractual requirements, such as excessive and unsupported debt-to-income ratios.
The company also omitted civil actions from Mortgage Capital Trading, South Street Securities, Anderson Tax and Optimal Blue. The total judgment in these cases is more than $1.1 million.
“LoanSnap fails 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,” the consent order stated.
LoanSnap had previously received a temporary cease-and-desist order from the Connecticut Department of Banking for widespread unlicensed mortgage origination activity. The regulator also charged the company with violations of the Truth in Lending Act and Fair Credit Reporting Act.
Founded by Karl Jacob and Allan Carroll in 2017, LoanSnap raised $100 million in seed funding from investors such as Richard Branson’s Virgin Group; former NFL star Joe Montana’s Liquid 2 Ventures; and LinkedIn co-founder Reid Hoffman.
The firm, which offers “smart loans” through artificial intelligence technology, developed a cloud-based portal, LoanFlow, that allows mortgage brokers and loan officers to originate loans anytime, anywhere.
LoanSnap still had a license in Arizona and six sponsored LOs as of Thursday, per the NMLS.