Sprout Mortgage to shutter – HousingWire
Non-QM lender Sprout Mortgage is in the process of closing its operations, several workers said on Wednesday.
The company informed workers of the closure during a conference call on Wednesday, a former staff member said. Sprout had already implemented several rounds of job cuts in the months leading up to the shutdown, the ex-employee said.
The closure of Long Island-based Sprout, led by industry veteran Michael Strauss, marks the second non-QM mortgage lender to close in recent weeks amid historic volatility. First Mortgage Guarantee Companycontrolled by the asset management giant PIMCOabruptly ceased operations less than two weeks ago after encountering turbulence caused by a sharp rise in rates and difficulties in selling loans to investors.
In April, HousingWire chronicled the struggles of lenders in the non-QM space as rates rose.
Shea Pallante, president of Sprout, told HousingWire that the company prefers to “focus our efforts on maximizing production in any changing rate environment. We are confident that the non-QM sector – and Sprout in particular – will not only weather the turbulence, but surpass expected growth rates.
The status of the loans in Sprout’s pipeline was not immediately clear. A company spokesperson did not immediately respond to a request for comment.
In the summer of 2021, Sprout announced plans to establish a distributed retail operation, with plans to grow its retail channel through increased direct sales to consumers and residential investors, bricks and dedicated mortar and joint ventures. Sprout does most of its business through mortgage brokers. He also has a low-margin correspondent business.
Check back for updates on this late-breaking story.