Securitization was comprised entirely of mortgage loans originated by Change Lending, a Community Development Financial Institution (CDFI) certified by the United States Department of the Treasury CDFI Fund.
The loan portfolio consists of $201 million of prime residential mortgages with a weighted average LTV of 56%, FICO of 728 and coupon of 7.85%. The securitization was provided an investment grade rating by DBRS and designated as a social bond by Institutional Shareholder Services (ISS).
Financing enables Change to make homeownership more affordable for Black, Latino, and other underbanked prime borrowers.
ANAHEIM, Calif., December 29, 2022–(BUSINESS WIRE)–The Change Company CDFI LLC and its subsidiary Change Lending, LLC (“Change”) – America’s CDFI – are pleased to announce that Change has closed its sixth securitization of 2022. Investors in the $201 million offering included socially responsible asset managers seeking to finance home loans to credit-worthy Black, Latino, and low-income borrowers and communities.
Jesse Elhai, Managing Director of Capital Markets for Change, said, “Despite strong macroeconomic headwinds, today we took another step towards bringing racial and social equity to homeownership. Closing this most recent RMBS securitization by a CDFI further validates the importance of the exemptions provided to CDFIs by the CFPB. Change fairly and responsibly meets the needs of minority and low-income borrowers left behind by traditional banks and lenders. We thank our financial partners for helping us further our mission of ending structural economic inequities in homeownership. Change will continue to expand its partnerships with financial institutions seeking socially responsible investments that level the financial playing field for Black, Latino, and low-income Americans across the United States.”
The securitization, issued from Change’s shelf registration (CHNGE), closed on December 28, 2022. The securitization was comprised of loans with a weighted average FICO of 728, LTV of 56%, and note rate of 7.85%. Over 60% of the loans in the securitization were made to borrowers who were Black, Latino, or low-income or who lived in low-income communities.
Steven Sugarman, Founder of The Change Company, said, “The strong credit quality of the loans in this securitization demonstrates how CDFIs are able to serve the robust market of prime homeowners who have been left out of the financial system for noneconomic reasons. The Change Company is laser focused on serving the over $125 billion of borrowers with loan-to-values under 60% that banks denied last year. We thank our financial partners who, through their investment in this securitization, are enabling us to make fair and equitable homeownership in America more affordable.”
This transaction follows the completion of a comprehensive assessment by Institutional Shareholder Services (ISS) that validated Change’s Social Bond and Loan Framework. The analysis by ISS determined that Change’s mission-driven mortgage products, social lending, and inclusive business model, align with the Social Bond Principles established by the International Capital Markets Association and positively contributed to the Sustainable Development Goals defined by the United Nations.
Since 2018, Change has funded over $20 billion in loans to more than 50,000 families. Change will continue to finance underbanked, prime borrowers – with a primary focus on Black, Latino, and low-income borrowers – to eliminate the wealth gap in America.
Cantor Fitzgerald served as the initial purchaser and bookrunner on the transaction. Dentons US LLP served as issuer counsel to Change and Hunton Andrews Kurth LLP served as underwriter counsel in the transaction.
About The Change Company
The Change Company empowers homeowners, small businesses, and consumers to pursue their American dreams by bringing social and racial equity to banking and lending. The Change Company’s team has built businesses that have lent over $50 billion to over 250,000 borrowers across America. For more information, visit us at www.TheChangeCompany.com.
About Change Lending
Change Lending seeks to expand homeownership by providing credit-worthy loans to prime, underbanked borrowers. Since becoming a CDFI, over 70% of Change Lending’s loans have been to Black, Latino, and low- and moderate-income borrowers and communities. For more information, visit us at www.ChangeMtg.com and www.ChangeWholesale.com.
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