LoanSnap raised about $100M, then faced creditor suits, regulator fines and an eviction

TechCrunch reported in June 2024 that LoanSnap, an AI mortgage startup that had raised about $100M since 2017 (about $90M in 2021–2023), was facing a wave of lawsuits and had been evicted from its Southern California headquarters. At least seven creditors, including Wells Fargo, had sued since December 2022 claiming more than $2M in total. The company missed payroll between December 2023 and at least January 2024, and headcount fell from more than 100 at its peak to under 50, according to a source.

Its lending shrank fast: LoanSnap originated nearly 1,300 loans worth almost $500M in 2021, but reported only 122 loans for 2023. In May 2021, the month it announced a $30M Series B, it settled with HUD for $25,000 over failing to report an operating loss to the FHA, without admitting wrongdoing. Connecticut accused it of employing unlicensed loan officers and other violations and threatened its licence; LoanSnap paid $75,000 without admitting fault. Wells Fargo won a $431,000 default judgement, and the Costa Mesa landlord, owed nearly $405,000, won the right to evict it in mid-May 2024.

A former employee blamed 'terrible leadership' and overspending, while TechCrunch listed rent of about $55,000 a month for Costa Mesa and at least $30,000 for San Francisco, and a multimillion-dollar town house. LoanSnap raised another $19M in July 2023. Its CEO and CTO did not respond to requests for comment.

At least seven creditor suits claiming over $2M, a $75,000 Connecticut fine, a $25,000 FHA settlement, and headcount cut from 100-plus to under 50.

Loan volume fell from nearly 1,300 loans in 2021 to 122 in 2023 while costs stayed high, per regulatory data.

It ran two expensive offices, with rent of about $55,000 and $30,000 a month, and other spending, according to a former employee and court documents.

Regulators alleged compliance failures, including unlicensed loan officers in Connecticut and a late FHA loss notice.

Vendors, a landlord and a lender sued after LoanSnap stopped paying, and it did not respond to several suits.

Cash raised in a boom hides weak lending quality and costs; the bills arrive once loan volume collapses.

LoanSnap had not shut down when TechCrunch published, and two employees were waiting for clarity. It was still announcing partnerships with Visa and Nvidia's Inception programme, which one former employee called odd. Its investors either declined or did not respond to comment requests.