Smart Rate Mortgage, LLC is no longer licensed as a residential mortgage company in Illinois. Meanwhile, Michael Strauss, its only loan officer, now has an inactive status on his license, according to the Illinois Department of Financial and Professional Regulation (IDFPR).
In addition, the Nationwide Multistate Licensing System (NMLS) shows that Jacksonville, Florida-based Smart Rate is no longer authorized to conduct business as of Oct. 3, indicating a voluntary surrender. Strauss’s restriction to do business started Oct. 11.
Smart Rate marked Strauss’s return to the mortgage market after abruptly shuttering Sprout Mortgage in July 2022. Former employees accused Strauss of not paying salaries and suspending their health insurance coverage retroactively despite collecting contributions from paychecks.
HousingWire contacted Strauss via social media and Smart Rate through a corporate email, but they did not respond.
Smart Rate received a license in Illinois on Dec. 20, 2022. Strauss’ MLO license in the state was issued on Dec. 28, 2022. HousingWire reported in January 2023 that Strauss was ready to start a new mortgage company after registering Smart Rate in Florida.
However, the Illinois regulator issued orders on Feb. 1, 2023, to suspend the licenses, alleging Strauss and Smart Rate did not provide all the requested information.
Strauss and Smart Rate filed petitions for administrative hearings to overturn the Department’s suspension order. While the decision was under appeal, Strauss was brokering loans.
Mortgage tech platform Modex shows that Strauss, the only mortgage loan officer at Smart Rate, originated $5.56 million in the last nine months across 29 units, mainly conventional loans (63% of the total) and refinances (53% of the total). He had an MLO license in Illinois only, according to the NMLS.
“I broker business-purpose loans completely in a manner which is fully compliant with all laws and regulations and anything said to the contrary is incorrect,” Strauss told Inside Mortgage Finance (IMF) in early September.
Smart Rate is registered in Florida to Michael’s wife, Beth Strauss, according to the Florida Limited Liability Company. The address listed is 610 Park Avenue, New York, a residential property for sale for $19.9 million, down from $26.5 million in February, according to Zillow.
Recently, ex-employees moved to protect a $3.5 million settlement with Sprout Mortgage for unpaid wages after a request from the shuttered lender to halt the agreement due to an involuntary bankruptcy petition was filed by three creditors.
Strauss founded Sprout six years after paying $2.45 million to settle a case with the Securities and Exchange Commission (SEC) over accounting fraud. The SEC said the executive caused losses to investors after engaging in a pattern of false and misleading claims at American Home Mortgage Investment Corp.