Non-bank originator Change Lending has apparently lost a certification by the U.S. Treasury Department to issue non-qualified mortgages for underserved borrowers.
The lender isn't included on an updated list of firms certified with the Community Development Financial Institution Fund,
The lender, whose parent company is The Change Company CDFI did not respond to requests for comment Friday afternoon. The CDFI Fund declined to comment.
The government certifies CDFIs to serve Black, Hispanic and low-income communities and allows the lenders to be exempt from certain regulations, like the Consumer Financial Protection Bureau's ability-to-repay rule.
Under its CDFI certification since 2018, Change Co. has become one one of the nation's largest non-QM originators, with $4.2 billion in volume last year.
A former Change Co. employee who filed the lawsuit in June in a California court claims he has documentation showing the company was "mischaracterizing the race, ethnicity, and income level of borrowers." The complaint also alleges the lender made false representations to the buyers of its mortgage-backed securities. The Change Co. in June announced a $307 million securitization of its home loans.
A Barron's investigation found the company in 2022 failed to meet its underserved lending requirements, although it told the publication it was exceeding its requirements. Barron's reporting also revealed Change's business with wealthy borrowers, including actor Johnny Depp.
The publication also noted the lender has removed CDFI logos and references from its website.
The company's founder, Sugarman, was the former chairman and CEO of Banc of California before
"We believe that Black and Hispanic/Latino borrowers who are credit-worthy should get the exact same loans from the exact same lender as wealthy white borrowers," he wrote. "Change does not discriminate... it serves all who qualify."
