'He Did It Again': Another Mortgage Shop Tied to Michael Strauss Has Collapsed

Former Sprout boss Michael Strauss is tied to another failed business that workers say left them unemployed & without healthcare. The latest is Investor Funding Corp., a non-QM “lender” that quietly collapsed in late May.

The company was registered under the name of Strauss's wife, Elizabeth. But sources tell The Mortgage Scoop that Michael Strauss was the one actually running it. He even went to unusual lengths to obscure his involvement, allegedly recruiting for the venture under a fake name, "Jim Howington."

In today’s edition of The Scoop, we’ll give you the inside scoop on the collapse & what happens next for employees & associates. Plus, President Trump won’t sign the ROAD to Housing Act & Freedom sues an ex-exec for allegedly using confidential info to build an LOS.

Freedom Mortgage says its former VP of product management consulted or shared confidential info w/ employees of UWM & BeSmartee as he attempted to build his own LOS platform, a violation of his contract.

Per NMN, Brian Sweet used docs that would “serve as a blueprint & provide the necessary prompts for use in an AI code-generation software, like Sweet did to develop his LOS platform.” According to the lawsuit, Freedom hired Sweet in June ‘25 & asked him to lead a team that would design borrower-facing tools, including a POS application. In Jan. ‘26, he received access to proprietary info regarding Freedom’s plan to develop an LOS w/ Xpanse, the suit says. Freedom & Xpanse (which is controlled by the Middleman family) expected to later market & sell the tool to other lenders, the lawsuit claims.

Anyway, Sweet told Freedom in mid-March that he was leaving the company & said he was working on creating his own tech that he hoped to sell to other companies, w/ deals expected to generate more than $1M in revenue, per the suit.

Freedom claims Sweet’s tool is an LOS w/ doc-gen capabilities & a PPE. It was developed in consultation w/ his former colleagues at UWM, where he spent a decade, the lawsuit claimed. According to NMN, BeSmartee denied that Sweet consulted w/ the vendor to develop customer POS apps that were based on what he was developing at Freedom.

Politicians on both sides of the aisle have been trumpeting Congress’ passage of the ROAD to Housing Act, the most significant piece of housing legislation in decades. But President Trump sees it merely as political leverage, evidently.

In a social media post today, Trump said he wouldn’t sign until Congress passes the “desperately needed” Save America Act, which would require voters to provide documentary proof of U.S. citizenship (such as a passport, birth certificate, or REAL ID) to register to vote, along with a photo ID to cast a ballot.

The bill becomes law after 10 days if he doesn't sign it or veto it. If President Trump vetoes the bill, Congress will need to vote again to override the veto.

Michael Strauss was not supposed to be running Investor Funding Corp. following the demise of Sprout. On paper, he had no role at all. The non-QM lender was registered under his wife Beth’s name. But behind the scenes, ex-employees allege Strauss was calling all the shots: running day-one training, setting rates, approving decisions & selling staff on the familiar promise that he had Wall Street money, warehouse lines & everything under control.

Several ex-employees told The Scoop they joined the non-QM shop through deception. Recruiters pitched a mystery mortgage company that paid above-average & connected recruits w/ a one “Jim Howington,” a purported exec at Investor Funding.

“Jim Howington has the exact same voice as Michael Strauss," one former employee said.

When the offer letter came, it also didn’t arrive from an HR professional. It came from VP Vin Luu, Strauss’s right-hand man at Sprout. “It was professionally drafted but had no letterhead,” one source said.

What happened next involves missed paychecks, phantom insurance, 100 unfunded loans & collapse. Two other lenders are tangled in the fallout. The rest is for paid subscribers —> it's the inside reporting no one else in mortgage is doing.