While business owner Michael Strauss sudden shutdown Long Island-based Togo Mortgage in early July, there was chaos. Employees were not surprised final payment. There are no severance packages, and even health insurance was canceled back in May 2022, leaving some on the hook for huge medical bills.
The settlement came quickly, but Strauss did not seek bankruptcy protection for Sprout or its partners. The mystery about what happened to its loan pipeline and financing remains.
But Strauss, who has a $2.45 million mortgage negotiation fraud with the Securities and Exchange Commission in his name, he seems to have returned to the mortgage business. This is the story of four former employees and the company’s registration documents were reviewed by HousingWire.
Michael Jeffrey Strauss registered a company called Smart Rate Mortgages, LLC., with a start date of August 1, 2022, in Jacksonville, Florida, according to Multinational Licensing System (NMLS). The NMLS registry also shows that the company – NMLS ID 2420605 – has a license to originate loans in Illinois that was issued on November 1, 2022.
The company, Smart Rate Mortgage LLC, is registered to Beth Strauss, the wife of Michael Strauss, and is headquartered at 9424 Baymeadows Road STE 250, Jacksonville, Florida, according to the Florida Limited Liability Company report, which was signed on January 17.
The address listed by Beth Strauss on the incorporation papers is 610 Park Avenue, New York NY, which is the Strauss’s. trying to sell it for $26.5 million.
Michael Strauss did not immediately respond to requests for comment.
Michael Strauss’s Smart Rate?
The new mortgage company, however, has only one loan officer registered and no amount of loans to date, according to the mortgage technology level. Modex. The Intelligent Measure website states that the mortgage company offers purchase and refinance, jumbo, FHA, adjustable, bank statement and commercial loans.
While there is information on whether Strauss took on customers who had loans in the pipeline after Sprout closed, it is unclear whether Smart Rate originated or bought loans, or how the company funded them. new mortgages.
“It’s totally unbelievable and disgusting. We’re nowhere near paying and he had the capital to open Smart Rate Mortgage,” said a former employee who asked not to be named because of an ongoing legal case.
“How can that happen? That scares me,” said a former manager at Sprout Mortgage who spoke on condition of anonymity. “May I have a refund of my expense report, please?”
“He (Strauss) hasn’t paid 600 people and I don’t know what to say (except) he owes my team more at $60,000,” said another former manager at Sprout Mortgage. “He owes me over $50,000, $7,000 my processor, $5,000 my assistant and another $5,000 to my team. That equipment was canceled benefits back in May but it may have been classified as forced.”
(The facts are under investigation by New York authorities, not disclosed in open investigations.)
Another strike for Strauss?
In 2009, the Securities and Exchanges Commission (SEC) charges two managers c American Home Mortgage Investment Corp. with financial reporting systems: chairman and CEO Michael Strauss and former CFO Stephen Hozie. According to the SEC, the executives allegedly made a pattern of false and misleading statements that concealed losses from investors.
Strauss settled with the SEC, agreeing to pay $2.45 million. The SEC banned Strauss from owning or operating another company for five years.
In 2015, Strauss launched Sprout Mortgage, a mortgage focused on non-guaranteed (non-QM) mortgages. Last year, the rise in mortgage rates caused losses to the company in the secondary market as it struggled to sell loans that ranged from 2-4% when requested by the businessmen for more payments.
Lawsuits against Sprout have been mounting since the company closed. The company was sued b former employeecustomers and business partners, viz Banc of California, New Wave Lending Group, Commercial Bank of Indiana, FirstFunding and American Loans. The mortgage lenders have begun to respond to some of these claims, denying the various allegations.
The former employees who filed the class-action lawsuit against Sprout are waiting to hear back from their attorneys about how Strauss’ efforts to start a new business will be affected, Sprout LO said.