Change Lending lost its certification by the U.S. Treasury Department to issue Non-QM mortgages to underserved borrowers.
Change Lending did not appear on an updated list of firms certified with the Community Development Financial Institution (CDFI) Fund, as first reported by Barron's. The lender, The Change Company CDFI, did not respond to repeated requests for comment and the CDFI declined to comment.
In June, a former employee sued the company, alleging it “falsifies information on its annual certification by mischaracterizing its loans.”
That accusation was among several included in a wrongful termination lawsuit filed June 20 in Superior Court in Orange County, Calif., by Adam Levine, who had served as chief of staff for the company's CEO Steve Sugarman.
A source with knowledge of the company said things had been going well with the program until around March when the underwriting started changing.
“It was a good loan; rates were decent,” the source said. But the guidelines were changing; they went from a maximum of 24 months reserves required to 120 months. He added he thinks much of what’s happening has to do with Levine’s lawsuit.
Loan officers took to social media to complain about the loan program stopping.
"Change Wholesale has stopped funding loans today. They also changed the 'guidelines' to ask for 10 years (yes 10 years) reserves, with no grandfathering of loans,” one loan officer wrote on Facebook.
The Change.com website said that new guidelines for the program were coming soon.
Just last week Sugarman sent a letter to employees of the company saying: “We expect these strategic changes to be implemented in large part over the next 60 days. In the meantime, we will continue operations as usual, but will be suspending a limited number of loan programs temporarily as we retool and refresh these programs, our technology, and our competitive advantages. We regret that this will result in the inconvenience of potential borrowers who seek to close loans during the period when a program is being enhanced. But we are excited by the positive impact this project will have on our ability to offer our clients the best rates in the market.”
It’s unclear how many borrowers were unable to close loans as a result of the sudden end to the program.
