Legal and financial problems are piling up for the fintech mortgage lender LoanSnapwith the company recently being evicted from its headquarters in the South California. The news was already reported this week by TechCrunch.

TechCrunch reported Monday that while “LoanSnap has not yet closed its doors, according to two employees, the atmosphere inside the company is heartbreaking as workers wait for clarity on the company’s future.” The company reportedly failed to pay employees at least a month late. last year, while layoffs and attrition reduced the number of its employees from more than 100 to fewer than 50.

Founded by Karl Jacob and Allan Carroll in 2017, the company quickly took off after raising around $100 million in seed funding. Its investors were included Virgo Groupled by British tycoon Richard Branson; Liquid 2 businesses, led by former NFL star Joe Montana; AND LinkedIn co-founder Reid Hoffman.

His “smart loans“, which were built using artificial intelligence technology, are designed to help home buyers find the best mortgage for their unique financial situation. In May 2022 it launched a cloud-based portal, Loan flowwhich gives mortgage brokers and loan officers the ability to make loans anytime, anywhere.

But LoanSnap began having financial problems in late 2022, TechCrunch reported. It has since been subject to legal action by at least seven creditors, including Wells Fargo“who collectively said the startup owes them more than $2 million.”

The report goes on to note that numerous complaints have been filed against the company Better Business Bureauwhich gave LoanSnap a Rated “F”.

Some of the complaints center on allegations that the company charged nonrefundable fees but failed to close loans “in a timely manner” and failed to pay fees from escrow. Others accuse LoanSnap of selling loans that had already been paid off, instead of closing accounts, and of “deceiving consumers about mortgage approvals and shorting escrow accounts.”

In January 2024, HousingWire reported that LoanSnap had received a provision of temporary cessation and desistence from the Connecticut Banking Department for the widespread activity of granting mortgage loans without a license. The regulator also accused the company of violations of the Truth in Lending Act and the Fair Credit Reporting Act.

The complaint alleges that for approximately three months in 2022, LoanSnap used individuals who were not licensed loan officers in Connecticut to solicit prospective borrowers, collect mortgage applications and negotiate terms. Unlicensed LOs would purchase leads from sites like LendingTree to establish first contact with consumers.

As for the eviction, TechCrunch reported that it stemmed from a lawsuit filed by its landlord in February 2024. The lawsuit claimed that LoanSnap owed more than $400,000 in unpaid rent. After failing to respond to the lawsuit, a judge issued a default judgment and the owner was allowed to move forward in May eviction proceedings about office space the company was leasing in Costa Mesa, California.

The report also noted this another cause was filed last month with the New York State Supreme Courtclaiming that LoanSnap owes $900,000 to a creditor.

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Artificial intelligence startup xAI has announced that it has successfully raised a total of $6 billion in funding. Esteemed investors such as Valor, a16z and Sequoia were instrumental in the colossal capital infusion.

xAI, despite skepticism about its ambitious plans, has presented an advanced concept of artificial intelligence, attracting significant financial support with the promise of surpassing human cognitive performance. While some critics are concerned about the potential consequences, the benefits, according to xAI proponents, substantially eclipse the speculative risks.

The substantial investment is the latest demonstration of the continuing trend of investing in promising technology startups. This trend suggests a massive increase in opportunities and profitability, attracting more investors into this sector.

xAI’s massive funding amid fintech uncertainty

The financing confirms investor confidence and points to promising growth in the technology startup ecosystem.

Similar rumors in the fintech world include the abrupt fall of Synapse, the unexpected bankruptcy of SmartWallet, and StellarFeed’s controversial acquisition of RipplePay. Echoing these changes, the sudden discontinuation of Apollo InsuranceTech’s services and Helena Grant’s unexpected resignation from PayTechNow continue to roil the fintech world.

In HR news, Lucid Motors announced a 6% staff reduction as part of its restructuring plan. In contrast, Relay has managed to secure substantial funding strategically geared towards reviving small businesses typically overlooked in corporate strategies.

In a remarkable and resilient move, Firefly, despite the recent passing of its co-founder, has secured significant investment for its revolutionary approach to cloud resource management. Additionally, Google has invested heavily in Indian e-commerce giant, Flipkart, indicating a potential surge in the Indian digital market.

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First came CoDi, or “Cobro Digital” (Digital Collection). But it didn’t take off. The system, launched by the Bank of Mexico to speed up instant payments in the country, was pioneering even before Pix came online in Brazil a year later. But it was not successful, and today most Mexicans are unaware of what it entails. Now, with a second try, DiMo turns one in Mexico, yet another initiative to promote online payments in Latin America’s second-largest economy.

DiMo, short for Mobile Money, aims to gain traction among Mexicans by using only mobile numbers for money transfers. However, like CoDi, it has some limitations: both are focused on the banking population, as indicated by specialists.

However, this time it is expected to be more open towards fintech. Currently 19 financial institutions can provide the service. Fifteen more are in the process of being set up, central bank officials said. Recently, the regulator said there were already over 7 million accounts registered for DiMo, which facilitates money transfers using only the recipient’s mobile number.

“As DiMo becomes more widely available through financial applications, the adoption of electronic payments will be facilitated, simplifying the process of sending transfers,” said Victoria Rodríguez Ceja, governor of the Central Bank.

The CoDi case in Mexico

Instant payments that aim to reduce the use of cash while promoting greater financial inclusion are advancing across Latin America. But not at the same rate in all countries.

The numbers tell the story of CoDi, introduced in 2019. Unlike Pix, which was immediately available to hundreds of financial institutions, from banks to fintechs to payments providers in Brazil, CoDi in Mexico was supported by only a handful of traditional banks.

Over the course of four years, the system recorded less than $1 billion in total transactions. It has 1.9 million accounts that have made at least one payment. This contrasts sharply with Pix’s notable success in Brazil. Over 140 million users and a monthly transaction volume of more than $400 billion.

“In the case of Mexico and CoDi, the system is highly concentrated. It was not successful for various reasons,” says Ignacio Carballo, head of alternative finance at Americas Market Intelligence. “Among others, cash usage in Mexico is immensely higher than in other regional economies.”

Fintech now on board

Taking inspiration from past efforts, this time DiMo has been expanded to include financial technology institutions. Leading Brazilian fintech Nubank, for example, announced plans to integrate DiMo into its Mexican app earlier this year.

“We see in DiMo a great opportunity to simplify money transfers, reduce the use of cash and promote the digitalization of the country’s economy,” commented Ivan Canales, who leads Nubank’s operations in the country. “This opens up the possibility of sending and receiving money using the recipient’s ten-digit mobile number as a reference, without commissions or costs for users,” he pointed out.

In a recent study on the growth of mobile banking in Mexico, BBVA Mexico predicts an increase in mobile transactions in the coming years. By 2025 they will represent 18% of the total and by 2030 23%. The bank was the first to enable DiMo in June 2023.

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  David is a Latin American journalist. He regularly reports on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times and Americas Quarterly.

  He worked for S&P Global Market Intelligence as a Latin America financial reporter and gained experience on fintech and market trends in the region.

  He lives in Buenos Aires.

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About the speakers

Representing his company during this in-depth webinar will be Eoghan Casey, vice president of cybersecurity and product development, whose research and teaching focuses on digital forensics and cyber investigations.

Eoghan can offer extensive experience in managing complex investigations, specializing in smartphone forensic investigations and data breaches. This sees it apply digital forensics in response to security breaches to determine the source, nature and extent of cyber intrusions.

His main interests include smartphone and IoT forensics, knowledge reuse and reasoning systems, detecting links and repetitions in cyber investigations, and teaching STEM subjects through digital forensics.

Contributing on behalf of PayU will be Keren Ben Zvi, the company’s Chief Data Officer.

Keren, a business analytics, ML, and data architecture specialist, has over 17 years of experience transforming data into tangible business value.

Over the past two decades, he has held multiple VP of Data roles and led multiple teams across multiple industries, including data analytics, social media, financials, and product shipping.

Keren shares her extensive knowledge and experience in data analytics as a lecturer at several universities and academic institutions, as well as volunteering as part of the Women in Industry program.

To register for the webinar, Click here.

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