Ex-Sprout CEO’s originator licences were suspended

According to a notice in the Nationwide Multistate Licensing System, an Illinois regulator suspended the originator licenses of Michael Strauss and his company after they failed address concerns about Strauss’ background. The disgraced industry executive obtained Illinois mortgage licenses late last year for his own firm, Smart Rate Mortgage LLC. “The Department, after further reviewing Smart Rate Mortgage’s application, became concerned not all pertinent information had been given regarding the owner of the industry,” the order stated. Smart Rate Mortgage LLC representatives and Strauss did not respond to repeated inquiries from the department last month. According to the order, the parties have until February 10 to file a petition to hear the decision. A spokesperson for the Illinois department, and a representative of Smart Rate did not respond to requests for comment on Thursday. Strauss was not available to speak to a female answering his phone. According to NMLS records, Strauss is listed as the principal loan officer at Jacksonville-based Smart Rate, which was established last August. The company was formed one month after Sprout abruptly closed down. Four federal lawsuits have been filed against Sprout, Strauss, and former employees. They are seeking recourse for alleged missed payment claims. According to an attorney filing in a New York federal Court, Sprout is allegedly advancing in settlement negotiations with Sprout for at least three weeks’ owed back pay. According to court filings, the deadline for a status update to a judge is February 15th. Sprout, a New York-based company, has also been approached by two separate suits from other lenders. According to court filings, the firm agreed to a $475,000 judgment against Family First Funding, a non-QM lender, in a dispute over a $5.1million loan purchase. The embattled company has not agreed to cooperate in two other suits. Merchants Bank of Indiana sued Sprout for failing to pay a $1.2million loan payment in the early 2022. Sprout counter-sued and accused MBIN of failing remit its $810,000 loan trade commitment amount. FirstFunding, a warehouse lender, is also seeking a judgment against Sprout for $262,500 in unpaid dues. This follows a post-shutdown agreement to remedy FirstFunding’s $175 million warehouse financing facility. Both cases are ongoing. In 2009, FirstFunding, a warehouse lender, reached a $2.45million settlement with the Securities and Exchange Commission regarding Strauss’s alleged role in the demise American Home Mortgage. He was prohibited by the agreement to serve as an officer or director in a public company for five year. However, he did work at a New York-based developer firm and East Meadow-based lender before forming Sprout.