The Consumer Financial Protection Bureau on Friday sued 1st Alliance Lending and its clients on allegations of improper licensing of loan officers, similar to the unsolved allegations Connecticut first made against the company in 2018.
"Since at least 2015, 1st Alliance has used unlicensed employees as part of its mortgage lending business to conduct mortgage creation and consumer interactions that required a license under state law, which is in violation of TILA and Regulation Z." its implementing regulation, ”the CFPB said in a press release.
The case is likely to be closely watched by the broader industry as its outcome can help determine the role licensed loan officers must play in direct consumer deals to be compliant.
The prosecution cited is Don Gordon, CFPB's Senior Litigation Counsel, who is known to have worked with Connecticut and other jurisdictions on multistate regulatory efforts such as the PHH case. So far, however, no other states have joined the 1st Alliance.
In addition to the company, the CFPB lawsuit filed in Connecticut US District Court named three company officers as defendants: former CEO John DiIorio, Kevin St. Lawrence and Socrates Aramburu. The company closed in 2019.
“These allegations are not based on fact. This is nothing more than an extension of the Connecticut Consumer Credit Division's well-documented misconduct, ”DiIorio said in an email, citing widespread legal disputes between the company and the state.
"The attack on clients is particularly egregious. It is not true that Soc, Kevin and / or I have ever acted in any way to harm consumers," he added. "1st Alliance Lending served the underserved in partnership with HUD. Our systems of origin were developed for these programs. Atypical, yes. Illegal? Not according to the Multistate Mortgage Committee or the dozen individual states that have reviewed and found compliant our practices across the country to have. "
"This is a very sad day for solid, honest regulation," continued DiIorio. "We're going to put up a rigorous defense and prevail. And then bring some bad actors to account."
In the lawsuit, the CFPB tries to order disgorgation, prohibit the accused from committing future violations, and grant injunctive relief, consumer protection, damages or other financial relief. Civil fines; and costs.