Change Lending is preparing to bring a $287.9 million mortgage-backed securities deal to market, another deal from the Community Development Financial Institution's Community Mortgage program.
The underlying portfolio consists of first-lien fixed- and adjustable-rate, expanded prime first-lien residential mortgages, according to ratings analysts at DBRS Morningstar. Change Lending gets its CDFI certification from the U.S. Department of the Treasury by lending at least 60% of its production to target markets, which includes African-Americans, Hispanics and low-income individuals and communities, according to DBRS.
Known as CHNGE Mortgage Trust 2023-4, the deal has 527 loans in the collateral pool, which have an average balance of $546,393. On a weighted average (WA) basis, the loans have a coupon of 8.8%, an original cumulative loan-to-value ratio of 66.3%, the rating agency said. While a majority of the loans in the pool, 68.4%, were fixed rate, some 30.6% were five-year, hybrid ARMs and 0.9% were hybrid ARMs with seven-year terms. Just 0.1% of loans were ARMs with 10-year terms, the rating agency said.
Barclays and Cantor Fitzgerald are managers on the deal, according to the Asset Securitization Report's deal database. Notes will be repaid from a hybrid pro rata and sequential structure, through a senior-subordinate payment priority.
While the collateral pool consists of a mix of fixed- and adjustable-rate mortgages, CHNGE Mortgage 2023-4's notes are priced to the three-month interpolated curve, according to ASR. The senior, 'AAA' rated notes are expected to price at around 250 basis points (bps) over the three-month I-Curve, while the mezzanine, 'BBB'-rated notes have a spread of 455 bps.
Virtually the entire pool of mortgages, 96.7%, are financing primary residences, while the rest of the loans are funding the purchases of second homes.
DBRS intends to assign ratings of 'AAA' to the class A-1 notes; 'AA' to the class A-2 notes; 'A' to the A-3 and A-4 notes; 'BBB' to the M-1 notes; and 'BB' and 'B' to classes B-1 and B-2 notes.
Fitch Ratings, for its part, expects to assign 'A' to the A-3 and A-4 notes; 'BBB' to the M-1 notes; 'BB' to the B-1 notes and 'B' to the B-2 notes.
