The mortgage lender that wants to redevelop a large portion of downtown Rockville has been ordered by federal authorities to pay an $83,000 civil penalty for illegally splitting real estate settlement fees.
East Hartford-based 1st Alliance Lending reported the violations to the Consumer Financial Protection Bureau, admitted liability and provided information on others involved in similar practices, according to a release from the CFPB.
“These types of illegal payments can harm consumers by driving up the the costs of mortgage settlements,” CFPB Director Richard Cordray said. “The Bureau will use its enforcement authority to ensure these types of practives are halted. We will, however, also continue to take into account the self-reporting and cooperation of companies in determining how to resolve such matters.”
John C. DiIorio, chief executive of 1st Alliance, did not have an immediate comment today.
DiIorio is pursuing a $120 million redevelopment of downtown Rockville, part of the town of Vernon. DiIorio’s company would become the anchor commercial tenant and bring hundreds of jobs to an area that has struggled with the loss of manufacturing jobs.
DiIorio’s company focuses on refinancing of troubled home loans using federal mortgage programs.
According to the CFPB, 1st Alliance started using a hedge fund in 2010 to finance loans. Under the arrangement, 1st Alliance split revenues and fees with the hedge fund. In 2011, 1st Alliance found a lower cost funding alternative, ending its relationship with the hedge fund. However, 1st Alliance continued to split fees with them.
The hedge fund received payments from 83 1st Alliance loans made from August, 2011 to April 2012. In April, 2013, 1st Alliance reported to violations to federal authorities.