The founder and CEO of a national mortgage lender has announced that the company has suspended its operations, blaming regulatory overreach in the state of Connecticut.
John Dilorio, founder and CEO of 1st Alliance Lending, blamed the state banking department for putting the company out of business, according to a report by CTMirror.com.
The state began an audit of 1st Alliance last year over allegations of fraud. Specifically, the state challenged 1st Alliance’s use of unlicensed “home loan consultants” – rather than licensed loan officers – to make initial contact with potential borrowers, CTMirror.com reported. Connecticut saw the practice as a potential violation of state and federal banking regulations, and suspended 1st Alliance’s license on July 31 after an insuer revoked the company’s surety bond – an action Dilorio said was a direct result of the state’s investigation.
Dilorio, for his part, has fought a very public battle with state regulators. Last year, he canceled a planned expansion in Connecticut because of the company’s ongoing regulatory troubles. He announced that the company would suspend operations at a press conference Thursday, surrounded by his 17 remaining employees – down from a high of 170. Dilorio said that the majority of the layoffs that have gutted the lender’s staff were due to 1st Alliance’s yearlong fight with the state banking department – and the agency’s interference with its ability to do business in other states, CTMirror.com reported.
“My industry needs regulation. This company was built fixing the problems that are directly tied to lack of regulation,” Dilorio said. “There’s a big difference between sound regulation and rogue bureaucrats that are uncontrolled by their superiors.”
An administrative hearing to determine the company’s fate is scheduled for next month. Dilorio said that 1st Alliance would be able to continue operations later this year if that hearing has a favorable outcome, according to a report by CT News Junkie.