When non-QM lender Sprout Mortgage abruptly shut down on July 6, more than 300 workers expected their last paychecks to be delivered the following day as scheduled. They also expected Sprout to offer severance packages to cushion the blow.
Instead, paychecks weren’t delivered to employees, and severance wasn’t offered, former employees said. There’s more grim news, too.
One week after shutting down, the company retroactively cut off the health insurance to May 1, although it collected insurance premiums from employees’ paychecks, according to multiple former employees and documents reviewed by HousingWire.
Some former employees, without a job and at risk of having to pay tens of thousands of dollars in medical bills, filed complaints with the New York State Attorney General’s office.
The Long Island-based lender, headed by industry veteran Michael Strauss, shut down suddenly after a deal for funding fell through, sources told HousingWire. Sprout, like many lenders, had been hemorrhaging money after a sharp rise in mortgage rates saddled it with tens of millions of dollars in loans it couldn’t sell to investors in the secondary market at par.
“Sprout collected money from our paychecks to pay the health insurance premiums in May and June, but we were told we don’t have the coverage for this period,” said a former employee who requested anonymity.
He added: “When you have a family of four and the insurance company tells you…
