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Additional evidence from 1st Alliance’s mortgage origination system has not changed the results of the Connecticut banking commissioner’s investigation into the former East Hartford-based mortgage lender.
The Connecticut Department of Banking said in a supplemental decision on April 5 that its findings from last year had not changed after reviewing data logs from 1st Alliance’s mortgage origination system.
1st Alliance is appealing in Connecticut Superior Court the decision by Banking Commissioner Jorge Perez in April 2021 to revoke 1st Alliance’s license to act as a mortgage lender after concluding that the lender had violated state laws.
The court in January had instructed the Department of Banking to review the data logs from Byte Software, a company based in Washington state, after 1st Alliance had filed a motion in the case last September. 1st Alliance said the data logs would show that its employees did not violate state laws.
The case had stemmed from 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.
In a report on the findings last year, the Department of Banking had said that 1st Alliance failed “to establish, enforce and maintain policies and procedures reasonably designed to achieve compliance with regulatory requirements.” The investigation also said that the lender violated state law by not telling prospective borrowers that call center employees were not licensed mortgage loan originators. The findings also said 1st Alliance aided and abetted the unlicensed activities of call center personnel.
1st Alliance in its September motion had argued that the investigation had ignored the information from Byte logs, which tracked employees’ interactions with loan files.
After reviewing the Byte logs, Perez said in the supplemental decision that the information did not refute the Department of Banking’s original findings and would not change the decision issued last year.
Also this month, a Connecticut federal court said a separate investigation into 1st Alliance by the Consumer Financial Protection Bureau could continue. The CFPB alleges that the company violated several regulations governing mortgage originations, including the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Mortgage Acts and Practices-Advertising Rule (MAP Rule) and the Consumer Financial Protection Act of 2010.
1st Alliance had asked the court to dismiss that case. The court denied most of the motions that 1st Alliance asked to be dismissed, allowing the case to move forward.
