EAST HARTFORD: A growing and expanding mortgage company has halted its expansion and new headquarters after a dispute with the Connecticut Banking Department.
1st Alliance Lending LLC announced it’s terminating a planned expansion of its Connecticut headquarters and ended negotiations with the Department. The company said that the department’s regulatory efforts aimed at the company were an “effort to raise revenue through fines and penalties on consumer lenders and their employees and impose new regulatory hurdles to doing business in Connecticut.”
The company says as result of the State’s action it will lay off up to 35 Connecticut employees.
"The regulatory environment in Connecticut has reached a breaking point. Our company was founded and has grown in Connecticut. We are extremely disappointed to have to look at other options. This isn't what we wanted," said John DiIorio, the CEO of 1st Alliance. "But Connecticut's overregulation and desperate revenue grabbing have severe consequences for those trying to live and do business here."
1st Alliance says it is “a national mortgage lender serving consumers in 46 states.”
The company said in a release that, “staff of the Connecticut Banking Department disclosed an effort to require all Connecticut employees of mortgage lenders to obtain costly licenses if they have any interaction whatsoever with a consumer.”
The company added that Connecticut’s new approach is different than Federal law, saying “Federal and state law requires such licenses only when a lender's employee "takes a mortgage application" or "negotiates loan rates" with a consumer.
The company said, “expansion of the licensing requirement will cost employees of Connecticut lenders thousands of dollars. In addition, the Banking Department staff has sought to impose hundreds of thousands of dollars in retroactive licensing costs and penalties on the lenders themselves.”
The company says it has been engaged in negotiations with the Banking Department, “1st Alliance had been engaged in good-faith negotiations with Banking Department staff in which 1st Alliance agreed (despite the lack of legal support for the Banking Department's position), but out of deference and respect for the Connecticut Banking Department, to have only licensed employees interact with Connecticut consumers. Notwithstanding 1st Alliance's efforts, the Banking Department has nevertheless insisted on a settlement that would include both substantial financial consequences and a gag order.”
The Department has not commented on the company’s statements or actions of halting their expansion and layoffs.
In a 2008 “settlement agreement” on a different matter the department claimed “as a result of an examination, the Commissioner alleges that during the period of September 2005 through August 2007, 1st Alliance Lending employed or retained at least six originators without registering them, in violation of Sections 36a-486(b) and 36a-511(b) of the Connecticut General Statutes and the 2008 Supplement to the General Statutes.” In that agreement 1st Alliance made a $6000 contribution to the Conference of State Bank Supervisors (“CSBS”).