Sprout Mortgage a major non-QM lender, told more than 300 workers last week that it would be shutting down in a conference call. Prior to this there already had been job cuts in April and June.
Prior to the closure, the president of Sprout, Shea Pallante, told HousingWire the company plans 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 no severance package was offered nor were employees given final pay checks and employees have filed a lawsuit against the company for 3 weeks of back unpaid wages.
One executive noted that the company had recently been doing $380 million in loan volume with only $20-$25 million in retail loans. The closure appears to have stemmed from a failure to sell less than 50% of a $190 million loan package to Wall Street.
According to another executive:
“The average loan amount as $700,000 and the average FICO score was 720, These were not risky loans. There was no shady stuff in these loans.”
The correspondent lending team at Sprout moved to Oaktree Capital Funding Corp. in June.