Mortgage fintech Loansnap can no longer originate loans in Connecticut, a filing released by a state regulator in early October shows.
The revocation of its license in that state comes after allegations of shortcomings in reporting and staffing compliance. Loansnap also seems to have fallen into financial trouble,
According to a filing by a Connecticut state regulator, its license is not being renewed due to a number of factors, including the company dropping the ball in timely reporting a change of address in the Nationwide Multistate Licensing System and Registry.
But also because Loansnap has failed "to demonstrate that its financial responsibility, character and general fitness are such as to command the confidence of the community," Jorge Perez, banking commissioner in Connecticut, wrote in a consent order Oct. 2.
The state watchdog lists out numerous infractions by the fintech lender, including making false statements in its NMLS form where Loansnap did not outline outstanding judgments or liens against it, instead opting to state that it had none, the regulator wrote.
In reality, Loansnap is being sued by a number of stakeholders, including Wells Fargo Bank, Optimal Blue, Mortgage Capital Trading, and MGR Real Estate, the fintech lender's previous landlord.
Litigation by Wells Fargo accuses the fintech lender of selling it a loan that did not meet contractual requirements. It is asking for over $400,000 in damages.
Optimal Blue is seeking a little over $200,000 for unpaid services, meanwhile, MGR Real Estate, which evicted Loansnap in May, is suing the company for $537,3043 for past due rent.
All of these findings from the regulator's investigation casts doubt on Loansnap operating "honestly, fairly and efficiently," wrote Perez.
Loansnap, which has one remaining licensed office in Arizona and sponsors six loan officers, could not be reached for comment at the time of this writing.
Events leading to the company's loss of its license occurred earlier this year when it applied for a renewal and instead
In a filing dated Jan. 4, the state claimed Loansnap used unlicensed mortgage originators between August and December 2022, when they accepted applications, solicited potential borrowers and offered or negotiated residential loan terms in violation of both the federal Secure and Fair Enforcement for Mortgage Licensing Act and state laws. The lender "denied in large part" the allegations asserted, Connecticut filings at the time show. The filings did not provide details of the company's response to the state.
Loansnap has raised $57.7 million in four funding rounds from 14 investors, S&P shows. TechCrunch, sharing information from venture capital database Pitchbook, says the company has raised about $100 million since 2017. This included $19 million Forte Ventures invested last July. Pitchbook also reported the lender has $12 million in debt.
