Sprout Mortgage Closes – NMP

Sprout Mortgage, which has often described itself as one of the nation’s fastest growing lenders and largest non-QM originators, closed its doors today, according to former employees.

The former employees, who asked not to be identified, said Sprout President Shea Pallante made a company-wide phone call this afternoon to break the news to all employees. A former employee said the call was originally scheduled for 4:00 p.m. EDT but was delayed by half an hour so that it took place at 4:30 p.m

Pallante told the workforce, which totaled more than 300 people, that the company would close its doors immediately — including its retail and wholesale divisions, employees said.

A company employee declined to confirm or deny the closure.

The call came a day before payday, employees said, adding that Pallante had not offered severance or any other compensation. He also said nothing about what would become of the loans in the company’s pipeline.

Staff said they were surprised by the announcement, with some describing themselves as shocked.

Another former employee, who asked not to be named, said: “I found out at 1:00 a.m. today that I have over a hundred employees who don’t know if they’ll get a paycheck tomorrow.”

The company was supposed to send out various emails in advance to warn employees but didn’t do so, the former employee said, adding that the company was more interested in checking everyone’s email system within 15 minutes after turning off the notification when informing them you wanted to do anything else.

The former employee said Sprout cut 50 employees in April and another 60 over the last month and that there are two investors interested in the company, one ready to commit to a $25 million investment make, another looking to make an investment preferred stock offering. Both potential deals went up in smoke on Friday, the former employee said.

“Jamie Dimon is a smart guy, and when he says a tsunami is about to hit the financial markets, he’s not kidding,” the former employee said.

Sources also told NMP that Sprout was selling its mortgages to JPMorgan Chase, but with this big financial player reducing its mortgage staff due to the housing market downturn, it didn’t bode well for Sprout. Sources also said Sprout’s entire correspondent team was fired two weeks ago and transferred to Oaktree Funding Corp.

Founded in 2016 and based in East Meadow, NY, Sprout offered over 30 unique mortgage solutions, as well as automation tools and underwriting services.

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