Discontinuation of Sprout Mortgage – NMP
Sprout Mortgage, which often billed itself as one of the nation’s fastest growing lenders and largest non-QM originators, closed today, according to former employees.
The former employees, who asked not to be identified, said Sprout President Shea Pallante held a company-wide phone call this afternoon to break the news to all staff. A former employee said the call was originally scheduled for 4:00 p.m. EDT, but was pushed back half an hour and therefore took place at 4:30 p.m.
Pallante informed staff, which numbered more than 300, that the business would close immediately – including its retail and wholesale divisions, employees said.
A company official declined to confirm or deny the closure.
The call came a day before payday, the employees said, adding that Pallante was not offering any severance or other compensation. He also said nothing about what would happen to loans in the company’s pipeline.
Employees said they were taken aback by the announcement and some described themselves as shocked.
Another former employee who asked not to be named said: ‘I found out at 1 p.m. today that I have over a hundred employees who don’t know if they will be getting a paycheck. tomorrow.”
The company was supposed to send various emails ahead of time to warn employees but did not, the former employee said, adding that the company was more interested in shutting down the messaging system from everyone within 15 minutes of letting them know they were about to do something else.
The former employee said Sprout cut its workforce by 50 people in April and another 60 last month, and there were two investors interested in the business, one ready to invest $25 million, the other seeking to make a preferred stock offering. Both of those potential deals went up in smoke on Friday, the former employee said.
“Jamie Dimon is a smart guy, and when he says there’s a tsunami that’s about to rock 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 that major financial player cutting its mortgage staff due to the housing market downturn, that 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, plus automation tools and underwriting services.