The Canaries in the Coal Mines Are No Longer Singing
The Federal Reserve has declared its program of monetary expansion (formerly referred to as inflation) over in an effort to fight rising prices (currently referred to as inflation). As Murray Rothbard explained, “Government intervention brings about bank expansion and inflation, and, when the inflation comes to an end, the subsequent depression adjustment comes into play.”
Adjustment in the mortgage world has come quickly, as one might expect with a near doubling of the home mortgage rate since the first of the year. On July 7, non-QM (qualified mortgage) lender, Sprout Mortgage suddenly closed its doors without notice, a day before payday. HousingWire reported, “A of Friday [July 8] around 1 p.m. Sprout failed to pay their last paychecks.” Writes Flávia Furlan Nunes:
Sprout is the second major non-QM lender to shut down operations recently. First Guaranty Mortgage Corp. (FGMC) and its affiliate Maverick II Holdings filed for Chapter 11 bankruptcy protection in late June after suddenly cutting hundreds of jobs.
Of course, up until the explosion in home loan rates, the mortgage business was on fire as people bought new homes or refinanced their current loans. Employees told the press Sprout was doing $350 million in loans per month, with plenty of deals in the pipeline that it’s doubtful will be funded. “At least one employee even has their own personal mortgage in the Sprout pipeline and has not received an update on the loan’s status, former workers told HousingWire.”
One Sprout executive was bullish on his company’s prospects, tellin
Article from Mises Wire
