Change successfully closes the first AAA-rated securitization of real estate loans issued by CDFI
ANAHEIM, Calif.–(BUSINESS WIRE)–The Change Company CDFI LLC and its subsidiary Change Lending LLC (“Change”) – the US CDFI – are pleased to announce that Change has closed the first-ever securitization of AAA-rated 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. Today, we took another step toward racial and social equity in homeownership by closing the first securitization of AAA-rated RMBS by a CDFI. This transaction validates the importance of exemptions granted to CDFIs by the CFPB to fairly and responsibly address the needs of minority and low-income borrowers. It also demonstrates the creditworthiness of major 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 is the culmination of over 5 years of work. The securitization of loans issued 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.
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