Many youngsters don’t know the “Shave and a haircut? Two bits!” knock, or musical notes. Some things are timeless, like British Prime Ministers coming and going, and like what happens to certain lenders and investors when rates go up and credit spreads widen out. And we were reminded, in the cases of FHA, VA, Fannie, and Freddie, why some level of government interaction is good as “Sprout is out” was making the rounds yesterday. Sprout, which made a name for itself in non-Agency TPO activity in correspondent, wholesale, and retail channels, shut down. Unfortunately, it is not the first, won’t be the last. In this case, Sprout President Shea Pallante held a companywide phone call. (Word has it that Sprout’s entire correspondent team was let go and moved over to Oaktree Funding Corp. Those impacted can always post their resume for free here, and anyone can view them for several months for a nominal fee.) One industry vet wrote to me saying, “Like having the kids come home from college, it’s amazing how quick you can burn through cash when you have hundreds or thousands of employees on the payroll and/or branches across the nation to pay rent on.” Another wondered, “I realize non-QM is not subprime, but they were/are both non-Agency. In ‘08 we saw subprime evaporate in March and gone by June. Then jumbos in August. In March of 2020 many vanished. This time we have no subprime, non-QM volumes are still very small and may evaporate quickly unless Wall Street has an appetite for it. Fannie and Freddie high balance goes up to $970k, and private banking portfolios have a demand for it on the retail channel: A tough environment out there and its getting dicey.” (Today’s podcast is available here and this week’s is sponsored by Real Estate Connection (REC), a boutique real estate brokerage that acts as a centralized and organized, fully-managed real estate fulfillment service, connecting buyers with local qualified Real Estate Agents and walking them through the entire home purchase and selling process with the lender partner. Today’s has an interview with Brian Coester on connecting buyers, sellers, lenders, title companies, and real estate agents.)