CHNGE 2022-NMQ1 is preparing to issue some $283.3 million in mortgage-backed, pass-through certificates, which will be secured by a widely varied collateral pool of residential mortgages.
Change, a lender that the U.S. Department of the Treasury certifies as a community development financial institution (CDFI), originated all of the loans. The Treasury Department requires CDFI organizations, like Change, to lend 60% of its production to certain target markets, such as low-income and other underserved communities, according to Morningstar | DBRS.
The collateral pool includes loans from about four of Change's loan programs, such as the Alt-Doc, usually made to self-employed borrowers using alternative documentation, such as bank statement; and CHM Investor, generally made to experienced real estate investors using underwriting such as rental income from the subject properties. Other loan programs include the prime plus, made to borrowers who might not qualify for loans through conventional financing or governmental channels, and the foreign national program made to non-permanent immigrants and experienced foreign national real estate investors.
Most of the 375 loans in the pool, by balance, were made through the Alt-Doc program.
Barclays Capital, Cantor Fitzgerald and Performance Trust Capital Partners are all initial purchasers on the deal, said DBRS, for which Change Lending is the sponsor, originator and servicer.
The three senior notes will be repaid on a pro-rata basis, while the mezzanine notes will be repaid on a sequential basis. All of the notes are fixed-rate, according to the rating agency, DBRS said.
As for credit enhancement, the notes benefit from subordination, DBRS said.
On average, the loans have a pool balance of $755,479. On a weighted average (WA) basis, the loans have a cumulative loan-to-value ratio of 77.6%, a FICO score of 740, a coupon of 6.2%, a debt-to-income ratio of 27.5%, according to the rating agency.
DBRS expects to assign ratings ranging from 'AAA' on the $160.3 million, A-1 notes, and 'AA' on the $27.6 million, class A-2 notes, to 'B' on the $12.4 million, class B-2 notes.
