Change successfully closes the first AAA-rated securitization of real estate loans issued by CDFI

  • First AAA-rated RMBS securitization consisting entirely of mortgage loans originated and sold by a community development financial institution (CDFI). The credit rating was assigned by both S&P and DBRS Morningstar.

  • $283 million of residential mortgages backed by the heavily oversubscribed ESG offering have been designated as a social bond by Institutional Shareholder Services (ISS).

  • The funding enables Change to make homeownership more affordable for loans to black, Latino and other major underbanked borrowers.

ANAHEIM, California, August 25, 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 the first-ever AAA-rated securitization of residential real estate loans entirely issued by a CDFI. Investors in the $283 million Standard & Poor’s and DBRS Morningstar The AAA-rated offering included socially responsible asset managers and banks seeking to fund home loans to creditworthy black, Latino, and low- and moderate-income borrowers and communities.

Jesse Elhai, Managing Director of Capital Markets for Change, said, “We are proud to have been the first CDFI to securitize its own residential loans earlier this year. first securitization of RMBS rated AAA by a CDFI. This operation validates the importance of the exemptions granted to CDFIs by the CFPB in responding fairly and responsibly to the needs of minority and low-income borrowers. It also demonstrates the creditworthiness of prime borrowers being left behind by banks and traditional lenders. We thank our funding partners for helping us continue our mission to end structural economic inequality 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, originating from Change’s pending registration, named CHNGE 2022-NQM1, closed on August 24, 2022. The securitization consisted of 375 loans with a weighted average FICO of 741, an LTV of 77% and a interest rate of 6.33%. Change has now completed four (4) securitizations in 2022 which attracted 39 institutional investors.

Steven Sugarman, Founder of The Change Company, said, “The success of this transaction was the culmination of over 5 years of work. The securitization of loans originated by our CDFI has now been awarded the highest credit rating of AAA by the most respected rating agencies. – Standard & Poor’s and Morningstar DBRS. There is a robust market for prime borrowers who have been shut out of the financial system for non-economic reasons. Home ownership is the key to closing the racial wealth gap and achieving generational wealth. We thank our financial partners who, through their investment in this AAA securitization, enable 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), which validated The Change Company’s Social Bond and Loan Framework. ISS analysis 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 have positively contributed to the Sustainable Development Goals defined by the United Nations.

Since 2018, Change has funded over $20 billion in loans to over 50,000 families. The shift will continue to fund underbanked homeowners to close the wealth gap in America.

Barclays Capital, Cantor Fitzgerald and Performance Trust were the original buyers and joint bookrunners of the transaction. Dentons US LLP acted as issuer’s counsel for Change and Hunton Andrews Kurth LLP acted as underwriters’ counsel in connection with 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 team has built businesses that have lent over $50 billion to more than 250,000 borrowers across America. For more information, visit us at www.TheChangeCompany.com.

About the Change Loan

Change Lending seeks to expand home ownership by providing creditworthy loans to prime and underbanked borrowers. Since becoming a CDFI, more than 70% of Change Lending’s loans have gone to Black, Latino, and low-to-moderate income borrowers and communities. For more information, visit us at www.ChangeMtg.com and www.ChangeWholesale.com.

Forward-looking statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements regarding our expectations, beliefs, plans, forecasts, projections, forecasts, objectives, assumptions or future events or performance are not historical facts and can look to the future. Forward-looking statements are generally, but not exclusively, identified by the use of forward-looking terminology such as “believes”, “expects”, “could”, “may”, “will”, “should”, ” seeks”, “probable”, “intends”, “plans”, “pro forma”, “projects”, “estimates” or “anticipates” or the negative form of these words and expressions or similar words or expressions predict or indicate future events or trends and do not relate solely to historical matters. You may also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties. , and you should not regard them as predictions of future events. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: business and economic conditions generally and in the banking and non-banking financial services industries, nationally and within our local market areas; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; our ability to identify and successfully manage the risks associated with any possible future acquisition, including integration risks; changes in management personnel; interest rate risk; credit risk associated with our loan portfolio; deterioration in asset quality and increased loan write-offs; the time and effort required to resolve non-performing assets; the inaccuracy of assumptions and estimates we make in establishing provisions for probable loan losses and other estimates and projections; lack of cash; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of marketable securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; increased competition in the banking and non-banking financial services industries, nationally, regionally or locally, which may adversely affect prices and terms; the accuracy of our financial statements and related information; system failures or failures to prevent breaches of our network security; the initiation and outcome of litigation and other legal proceedings against us or to which we become subject; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, stock exchange and tax laws and regulations, and their enforcement by our regulators; government monetary and fiscal policies; and the increase in our capital requirements.

Although forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed or contemplated by particular forward-looking statements, and, accordingly, you are cautioned not to place undue reliance on such statements. In addition, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unforeseen events or circumstances, except as required by applicable law.

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contacts

Lindsay Valdeon
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