September 18, 2018

Spurned E. Hfd. lender plans layoffs

An East Hartford financier that assists distressed mortgage borrowers says it plans to lay off as many as 35 Connecticut workers and scrap its headquarters expansion amid a staff-licensing flap with state bank regulators.

John DiIorio, CEO of 1st Alliance Lending LLC, blamed the state Banking Department's requirement that staff of mortgage lenders be licensed if their jobs require them to interact with consumers.

In a statement, DiIorio said state and federal law only require such "costly licenses" in instances where mortgage employees "takes a mortgage application'' or "negotiates loan rates."

He said negotiations broke down with state bank regulators over the staff-licensing requirement, and cast it as "overregulation and desperate revenue grabbing.''

"The regulatory environment in Connecticut has reached a breaking point," DiIorio said in a statement. "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."

"But Connecticut's overregulation and desperate revenue grabbing have severe consequences for those trying to live and do business here," he said.

DiIorio said his company, among other remedies, is pursuing state Banking Commissioner Jorge L. Perez's review of his staff's decision requiring many of 1st Alliance's staff be licensed.

Reached Tuesday, 1st Alliance declined further comment. The firm claims to serve consumers in 46 states.

The state Banking Department, in a statement later Tuesday, declined comment, noting it has yet to issue any recent formal administrative action against 1st Alliance.

In 2014, the federal Consumer Financial Protection Bureau (CFPB) ordered 1st Alliance to pay an $83,000 fine for splitting mortgage origination fees with a third party. According to CFPB, formed in the wake of the 2008 financial crisis tied largely to securitized mortgage loans to less-than-creditworthy borrowers, 1st Alliance self-reported the lapse and admitted liability.

In 2016, demolition work began on Vernon's former Amerbelle factory complex and a neighboring former mill site to convert them into 1st Alliance's new corporate headquarters.

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