Sprout Mortgage Is The Latest Lender To Implode Due To Current Economic Conditions
The company informed the more than 300 workers of the shut down in a conference call on Wednesday. Sprout had already instituted several rounds of job cuts in the months leading up to the shutdown.
The Long Island-based Sprout is headed by industry veteran Michael Strauss. Its closure also represents the second non-QM mortgage lender to close in recent weeks.
Sprout President Shea Pallante gave a rosy prediction to HousingWire several months ago:
(We want to) focus our efforts on maximizing production during any changing rate environment. We’re confident that the non-QM sector and Sprout in particular will not only ride out the turbulence but outperform expected growth rates.
Unfortunately, the status of loans in Sprout’s pipeline was not immediately clear. A spokesperson for the company did not immediately respond to a request for comment.
Former employees said Pallante held the conference call at 4:30 p.m. and said the lender would be shutting down immediately. Sprout is not offering severance. Employees were immediately locked out of their systems. HousingWire reports that Sprout’s shut down occurred one day before pay day. Employees claim they did not receive their pay checks.
In summer of 2021, Sprout announced plans to set up a distributed retail operation. They planned to grow its retail channel through increased direct sales to consumers and residential investors. To do this, they used dedicated brick-and-mortar, and joint ventures. In addition, Sprout does most of its business through mortgage brokers. It also has a low-margin correspondent business.
Check back for updates on this breaking news story.
This article originally appeared on MFI-Miami.
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