The wave of layoffs and shutdowns brought about by a slowing mortgage market has claimed another notable company with the news of nonqualified mortgage (non-QM) lender Sprout Mortgage’s closure.
Sprout president Shea Pallante informed the company’s workforce of the abrupt termination of operations during a conference call, with both retail and wholesale divisions ceasing business immediately. Thus far, it isn’t known how the lender’s shutdown will impact loans already in pipeline, which was not made clear during the meeting, according to a source who wished to remain anonymous.
Communications to New York-based Sprout Mortgage were not immediately returned. The company has yet to publicly comment on the closing. As recently as a few months ago, the company was still touting its rapid growth and the continuation of its “nationwide expansion.” It promoted two executives to regional positions in March and added a senior vice president in April.
Sprout is the second non-QM lender to suffer a hasty downfall in the past month, with First Guaranty Mortgage Corp. filing for Chapter 11 bankruptcy recently after slashing employment in hopes of staying afloat. Per a source who previously worked at the company, Sprout has had its own workforce cuts of late, trimming more than 100 employees since the spring. Attempts at finding alternative ways to keep the company going were ultimately unsuccessful, the source said.