Fintech
Fintech mortgage lender Loansnap has been evicted and faces multiple lawsuits
Fintech on mortgages Loans is in big trouble with an eviction, non-payment lawsuits, a consent order and grim background data.
The company’s troubles first reported by TechCrunch, include an eviction in May at its Costa Mesa, California, location, the building’s owner confirmed Tuesday. MGR Real Estate sued Loansnap in an Orange County court for $404,667, claiming it failed to make monthly payments of $55,056.
Michael Rademaker, founder and CEO of MGR, told National Mortgage News that the lender is locked out of its previous space and has not yet paid rent owed. LoanSnap lists the former Costa Mesa suite as its only lending location and its de facto location in the National Multistate Consumer Licensing System records.
The lender, which says its AI tools can close loans in just 24 hours, appears to be contracting rapidly. According to data from S&P Global, there are only five sponsored mortgage originators on NMLS books and only $2.3 million in origination volume last year. In 2022 and 2023, it reported Home Mortgage Disclosure Act filing volume of $499 million and $209 million, respectively.
A number listed for Loansnap in the NMLS was disconnected, while an answering machine on a line listed on its website did not provide the ability to speak to a representative. The company’s press contact also did not respond to a request for comment Tuesday.
TechCrunch reported comments from anonymous company sources saying Loansnap missed payroll this winter and its number of active employees fell below 50. On LinkedIn, the company has 30 employees. It still has active origin licenses in 37 states, according to NMLS records.
Loansnap still retains an origination license in Connecticut following a recent consent order and a $75,000 fine to state officials last month. The company was first hit with a cease-and-desist order in January for using unlicensed MLOs in customer transactions. The May agreement was signed by company president Allan Carroll.
Loansnap also faces legal action from counterparties for non-payment.
A federal court in Minnesota in November issued a $431,511.75 default judgment for Wells Fargo, which sued the lender for failure to repurchase a loan that did not meet the custodian’s debt-to-income requirements. Anderson, a global tax firm, sued Loansnap last month in a New York state court over a $1 million debt arising from a $5 million warehouse line of credit for single-family loans.
An attorney for Andersen declined to comment on the ongoing litigation, while an attorney for Wells Fargo did not respond to a request for comment. According to public records, Loansnap did not retain legal representation in both cases.
Despite the list of problems, Loansnap continued to announce business activities, including joining a startup program Nvidia, the giant of artificial intelligence and computer chips. When the Costa Mesa eviction went to court in February, Loansnap also touted its entry a fintech program from Visa.
According to S&P, the fintech has raised $57.7 million in four funding rounds from 14 investors. TechCrunch, sharing data from venture capital database Pitchbook, says the company has raised about $100 million since 2017, including $19 million last July from Forte Ventures. Pitchbook data also says the lender is $12 million in debt.