Unlicensed Originators Land Mortgage Lender in Hot Water
California Mortgage Lender, LoanSnap Grapples with Cease and Desist Order in Connecticut
In a recent turn of events, LoanSnap, a California-based mortgage lender, has found itself in hot water. The state of Connecticut has issued a cease and desist order, accusing LoanSnap of allowing unlicensed individuals to negotiate and take residential mortgage loans over the phone within Connecticut. It has been alleged that LoanSnap employed unlicensed mortgage loan originators who performed activities typically reserved for licensed originators, such as taking loan applications, soliciting borrowers, and negotiating loan terms.
The order, handed down by the Connecticut Banking Department, claims that LoanSnap’s unlicensed employees openly indicated their involvement in mortgage loan origination on their LinkedIn profiles. These allegations include violations of important regulations like the Truth in Lending Act and the Fair Credit Reporting Act. LoanSnap may face severe consequences, including license revocation and civil penalties of up to $100,000 per violation.
These compliance breaches are serious business and can keep any organization’s compliance teams up at night. It’s crucial to ensure that similar infractions are not taking place within your own organization. It never hurts to have a quick refresher on compliance matters, even for the savviest mortgage professionals.
To deepen your understanding, Mortgage Advisor Tools recommends checking out Knowledge Coop, a vendor listed under our Education Category. Their three-part series titled “Mortgage Loan Origination Activities: Are You Licensed for That?” offers valuable insights and practical guidance that can instantly boost your knowledge.
If you prefer a more in-depth exploration of the regulations, we suggest delving into Reg Z: § 1026.36, which covers prohibited acts or practices and specific requirements for credit secured by a dwelling.
In addition to staying informed, it is crucial to have comprehensive policies and procedures in place, supported by thorough training for your employees. Implementing measures like capturing acknowledgment signatures and utilizing a compliance monitoring platform can help ensure that everyone understands what they can and cannot do. After all, knowledge is power, and well-trained employees can greatly reduce the risk of compliance breaches.
Don’t underestimate the importance of investing time and attention in your organization’s compliance practices. The potential repercussions, such as hefty fines and damaged reputation, far outweigh the effort required to establish solid policies and procedures. By strengthening your compliance efforts, you not only protect your organization from legal consequences but also gain peace of mind for your compliance team.
Let’s face it, mortgage matters can be complex, but by following these guidelines, mortgage lenders can bolster their compliance practices and mitigate the risk of facing similar allegations.
