The state's regulatory environment "has reached a breaking point," CEO says
National mortgage lender 1st Alliance Lending will no longer push through with the planned expansion of its Connecticut headquarters amid an impasse with state regulators.
The company also announced that it plans to terminate up to 35 employees based in the state.
The moves follow the end of negotiations between the lender and the Connecticut Banking Department related to a mortgage employee licensing regulation, including fines and penalties.
"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," 1st Alliance CEO John DiIorio said. "But Connecticut's overregulation and desperate revenue grabbing have severe consequences for those trying to live and do business here."
According to 1st Alliance, it learned from banking department staff of an effort to require all Connecticut mortgage lender employees who interact with consumers to obtain licenses.
Engaging in talks with the department, the company agreed to have only licensed employees interact with Connecticut consumers, “out of deference and respect for the Connecticut Banking Department” and “despite the lack of legal support for the banking department's position.”
1st Alliance said that the department nevertheless insisted on a settlement that would include both financial consequences and a gag order.
“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,” the company said in a statement.
1st Alliance plans to seek a review of the department staff's interpretation to Banking Commissioner Jorge Perez and to take other steps as necessary.
