Change Lending Achieves First AAA-Rated Securitization

Lenders  |  RE Agencies  |  Resources  |  Technology  |  Marketing  |  and more!

Change Lending Achieves First AAA-Rated Securitization

Jun 30, 2023 | News | 0 comments

Co. CDFI LLC and its subsidiary, Change Lending LLC, have achieved a notable milestone by finalizing their seventh securitization of exclusive Community Mortgages. A remarkable accomplishment in this securitization is the attainment of an AAA rating for the senior A1 class. This accomplishment is in line with Change’s mission of providing lending options to individuals who are typically overlooked. As a community development financial institution (CDFI), at least 60% of their funding efforts are dedicated to supporting borrowers with low to moderate incomes or those living in underserved regions.

According to Change, their recent securitization valued at $307 million attracted the participation of 16 distinct investors, showcasing the increasing interest and robust demand from reputable residential mortgage-backed securities (RMBS) investors. Among the 16 investors were socially conscious asset managers, banks, insurance firms, and private investment funds.

The senior A1 class of Change Company CDFI’s securities received a AAA rating from DBRS Morningstar, while the A2 class was rated as AA. Fitch Ratings, along with DBRS, assigned ratings to the A3 through B2 classes. The rating agencies justified their assigned ratings by referencing the proven track record of performance from previous issuances by Change Company CDFI, which aligns with the overall non-qualified mortgage (Non-QM) market.

Change announced that the securitization, which took place on May 25, was executed under their shelf registration (CHNGE). The securitization included loans characterized by a weighted average FICO score of 740, a loan-to-value (LTV) ratio of 71.1%, 43 months of reserves, and an 8.72% note rate, as disclosed by Change.

Change Founder Steven Sugarman collaborated closely with rating services to ensure they understood the lender’s standards and its unique role in the Non-QM market. Since 2018, as a CDFI, Change has funded over $25 billion in loans to 75,000+ families, focusing on underbanked prime borrowers, including Black, Latino, and low-income individuals in low-income communities.

The Change Co., based in Anaheim, CA, aims to bring social and racial equity to banking, while Change Lending expands homeownership for creditworthy, underbanked prime borrowers, with over 70% of loans serving Black, Latino, and low- to moderate-income borrowers and communities.