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California has become the second state in less than a month to revoke the license of LoanSnap, a mortgage lender that specialized in providing cash-out refinancing and home equity lines of credit (HELOCs) for debt consolidation.
The Costa Mesa, California-based lender saw most of its business dry up last year, was evicted from its headquarters in May and faces lawsuits by creditors, according to Connecticut regulators, who revoked the company’s license in an Oct. 2 consent order.
The California Department of Financial Protection and Innovation notified LoanSnap on Aug. 19 of its intention to revoke the company’s mortgage lending license, citing the Aug. 4 expiration of its surety bond.
California regulators followed through in an Oct. 18 final order revoking LoanSnap’s license, saying the company had not replaced or reinstated its surety bond nor requested a hearing on the matter.
LoanSnap launched in 2018 by acquiring an existing mortgage lender, DLJ Financial, and attracting funding from high-profile investors including Richard Branson, Joe Montana and LinkedIn co-founder Reid Hoffman.
In announcing $10 million in venture funding in May 2020, LoanSnap claimed to have invented “the world’s first smart loan technology that uses artificial intelligence to analyze a person’s finances and shows simple ways to benefit from a smarter loan.”
Business boomed during the pandemic when mortgage rates dropped to historic lows, with LoanSnap originating 2,164 loans totaling $822 million in 2020 and 2021.
LoanSnap landed an additional $30 million in Series B funding in May 2021, but the company’s business began to dry up the following year as mortgage rates climbed. Last year, LoanSnap originated 42 loans totaling $3.59 million, according to a Consumer Financial Protection Bureau database.
“Most people don’t realize they can move their credit cards or loans to their mortgage and save thousands in interest payments,” LoanSnap continues to pitch consumers on its website.
According to Connecticut regulators, LoanSnap was licensed in approximately 40 states in August 2023. Records maintained by the Nationwide Multistate Licensing System show LoanSnap currently holds licenses in 12 states and sponsors six mortgage loan originators.
LoanSnap did not respond to requests for comment Tuesday.
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