EAST HARTFORD, Conn., Sept. 17, 2018 /PRNewswire/ -- Today 1st Alliance Lending LLC announced it is terminating a planned expansion of its Connecticut headquarters. It has also ended negotiations with the Connecticut Banking Department relating to the Department's effort to raise revenue through fines and penalties on consumer lenders and their employees and impose new regulatory hurdles to doing business in Connecticut. As a result of these actions, 1st Alliance plans to 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 is a national mortgage lender serving consumers in 46 states. During and after the financial crisis, 1st Alliance worked to help thousands of homeowners facing financial struggles keep their homes.
Recently, staff of the Connecticut Banking Department disclosed to 1st Alliance an effort to require all Connecticut employees of mortgage lenders to obtain costly licenses if they have any interaction whatsoever with a consumer. Federal and state law requires such licenses only when a lender's employee "takes a mortgage application" or "negotiates loan rates" with a consumer. 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.
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.
1st Alliance will be seeking review of the Banking staff's interpretation to Banking Commissioner Jorge Perez and will take other steps as necessary.
SOURCE 1st Alliance Lending LLC