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Change Lending Resolves U.S. Treasury Dispute, Continues to Serve Underserved Borrowers

Christine Stuart
Nov 20, 2023

Non-bank loan originator retains certified status, and pledges continued commitment to equal opportunity lending.

Change Lending LLC, a major non-bank loan originator, will be able to continue its mortgage offerings for underserved borrowers reaching a global settlement agreement with the U.S. Department of Treasury's Community Development Financial Institutions Fund (CDFI). 

Earlier this year Change was threatened with decertification and sued the government in federal court to stop that from happening. 

The settlement last week confirms that Change is and remains a certified CDFI lender in good standing with the Treasury and provides Change a release from future claims relating to the dispute.

“Change is proud to continue our mission of lending to all Americans, including Black, Latino, and low-income homeowners and those who live in low-income communities. We appreciate the commitment of our strategic partners who make our mission possible and demonstrated unwavering support during this uncertain period," Change CEO Carlos Salas said. "We now look forward to expanding our impact and our reach serving underserved borrowers and communities by expanding our innovative product offerings in the coming weeks.” 

The agreement resolves a longstanding dispute and reaffirms Change's CDFI status.

Key Settlement Points:

  • Certified CDFI Status: The agreement reaffirms Change as a certified CDFI lender in good standing with the Treasury.
  • Compliance with Lending Obligations: The Treasury has deemed Change compliant with its CDFI lending obligations for the fiscal year 2023.
  • Continued Focus on Equal Opportunity Lending: Change commits to remaining an equal opportunity lender, with a particular focus on providing home loans to CDFI target market borrowers.
  • Expansion of Innovative Loan Products: Change plans to launch new and innovative loan products to expand its industry-leading Non-QM (Non-Qualified Mortgage) platform, aimed at serving underserved homeowners.

As part of the settlement, Change will not need to reapply for CDFI certification until 2025, with the CDFI Fund's determination related to the 2025 application. Also, the CDFI Fund has agreed to engage in a good faith meet and confer process with Change to resolve any issues related to the 2025 application before taking any action.

The settlement agreement emphasizes that neither party has admitted fault, error, or liability, and as of the date of the settlement, the Treasury has not identified any findings or recommendations that would warrant action against Change by the CDFI Fund.

In June, an ex-employee filed a lawsuit against the company, alleging misrepresentation of its clientele. 

Reports earlier this year highlighted Change's dealings with high-profile clients like Johnny Depp. At the same time, the company itself claims to have provided significant loans to low-income borrowers and areas of persistent poverty.

According to the complaint filed in federal court, the company has provided $6.8 billion in lending to low- to moderate-income borrowers, $1.3 billion in lending to persistent poverty areas, and $3.1 billion in lending to first-time homeowners. It says that over 60% of borrowers are minorities, low-income individuals, and borrowers in low-income communities. 

"The loss of regulatory flexibility that comes with the CDFI certification will severely and disproportionately impact these underserved communities," the company states. 

Change has blamed mathematical errors for its decertification, pointing to a limited number of loans that potentially led to the fund's decision. They argue that their data was misinterpreted, especially concerning income calculations for their borrowers.

Nov 20, 2023
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