Non-QM Lender Arc Home Hires Former Sprout President

The former president of Sprout Mortgage, which abruptly closed in July 2022, has landed a new job in the Non-QM marketplace.

Arc Home LLC, a Mount Laurel, N.J.-based Non-QM and non-agency wholesale and correspondent lender, said recently that it has appointed Shea Pallante as chief production officer (CPO), responsible for leading national production for Arc's TPO origination channels.

According to a news release issued by Arc Home, Pallante will be responsible as CPO for “leading a team of top-performing sales experts specializing in Non-QM, non-agency and agency loans.” In addition, Arc said, he will “contribute to the company's business and marketing strategies, which are designed to deliver a best-in-class experience for our broker and correspondent clients as well as their borrowers.”

"We're thrilled to welcome Shea to the Arc Home team,” said Arc Home CEO Richard Bradfield. “His extensive knowledge and experience in the Non-QM and non-agency space, coupled with his proven ability to lead a team of sales professionals and achieve stellar results, will be instrumental in driving our continued growth and success."

Pallante’s hiring comes eight months after the sudden shutdown of Irvine, Calif.-based Sprout Mortgage, which before its demise often billed itself as one of the nation's fastest-growing lenders and largest Non-QM originators.

The shutdown was announced to the more than 400 Sprout employees by Pallante during a companywide conference call held at 4:30 p.m. on July 6, 2022. At the time, Pallante informed the staff that the company would close its doors immediately — including both its retail and wholesale divisions. 

The call was held one day before payday, and the company offered no severance pay or other compensation. 

About a few days later, former employees filed a lawsuit against Sprout on behalf of all former staff seeking to recover unpaid wages and other compensation from the defunct mortgage lender.

The lawsuit named as defendants Recovco Mortgage Management LLC, Sprout Mortgage LLC, and Michael Strauss, Sprout’s CEO. The lawsuit stated that both Recovco and Sprout were incorporated in Delaware but had offices at 90 Merrick Ave. in East Meadow, N.Y. 

Strauss, the former CEO, has since run into trouble with state banking regulators in Illinois, who issued an order on Feb. 1 suspending his mortgage loan origination license. The order did not identify a company for Strauss, but according to the Nationwide Multistate Licensing System (NMLS), Strauss is now principal loan originator for Smart Rate Mortgage LLC, based in Jacksonville, Fla.

According to his LinkedIn profile, Pallante has not held a job since Sprout's demise. In addition to serving as president of Sprout from February 2021 through the closing last July, Pallante also served as that company's chief production officer from Dec. 16 through the closing.

Arc Home did not immediately respond to questions about Pallante’s ties to Sprout. The news release the company issued did not mention his former employer.

Before joining Sprout, Pallante held executive positions with Civic Financial Services in Redondo Beach, Calif., and BSI Financial Services Inc. in San Diego.

According to his LinkedIn profile, Pallante has a bachelor’s degree in labor law from Penn State University.

Pallante is quoted in the Arc Home news release, stating that he is “honored to be joining Arc Home, a company that is known for its commitment to providing brokers and correspondent lenders with the highest quality mortgage solutions.”

He added that he is “excited to lead national production and to deliver an exceptional client experience while continuing to provide industry-leading Non-QM and non-agency products."