Change Lending is coming to market with its ninth overall securitization of loans from its Community Mortgage Program, raising $345 million. The current transaction features a collateral pool that looks stronger by several measures of borrower credit, including lower loan-to-value ratios, higher FICO scores and delinquencies within acceptable limits.
CHNGE Mortgage Trust, 2023-3 is slated to close this week, offering a mix of fixed- and variable-rate notes through seven tranches of rated notes, 10 overall, according to ratings analysts from Fitch Ratings and DBRS Morningstar. The three senior note classes should repay investors with coupons of 6.73%, 7.13% and 7.64% on classes A1, A2 and A3, according to the Asset Securitization Report deal database.
The rest of the rated note classes, M-1, B-1, B-2 and B-3 should issue floating-rate notes to investors, according to ASR's database.
CHNGE 2023-3 will repay investors on a sequentially, while senior note holders will receive principal repayments on a pro rata basis, according to the rating agencies.
The U.S. Department of Treasury certifies Change Lending as a Community Development Financial Institution, and in exchange the company is required to lend at least 60% of its loan production to target markets. Those customers include marginalized groups such as African-Americans, Hispanics, low-income individuals and low-income communities, in some cases, according to DBRS.
CHNGE Mortgage Trust's collateral pool is made up entirely of loans from its Community Mortgage program, and CDFI loans are exempt from qualified-mortgage and ability-to-repay rules. Yet the loans themselves are not necessarily of poorer credit quality, according to the rating agencies. Fitch says that the current pool has lower loan-to-value ratios, higher FICO scores and cleaner payment histories, compared with CHNGE 2023-2, enough for those factors to be credit positives.
On a weighted average (WA) basis, the loans have a model FICO score of 743, compared with 740 on the CHNGE 2023-2; the LTV was 62.9%, down from 71.0%; and WA reserves amounted to $297,461 a little lower than the $314,236 seen on CHNGE 2023-2, according to Fitch.
In terms of geographically diversity, borrowers located in California account for 45.1% of the loans in the pool, with Los Angeles accounting for the largest MSA, according to Fitch.
Cantor Fitzgerald is the deal's manager, according to the ASR database.
Fitch assigns ratings of 'A' to the A-3 and A-4 notes; 'BBB' to the M1 notes; and 'BB' and 'B' to the B-1 and B-2 notes, respectively.
DBRS, meanwhile, assigns 'AAA' to the A-1 notes; 'AA' to the A-2 notes and 'A' to the A-3 and A-4 notes; 'BBB' to the M-1 notes; 'BB' to class B-1 and 'B' to class B-2.
