Mortgage banker says the license can impact ability to compete
Change Lending has reportedly lost special mortgage-writing leeway following a Barron’s investigation into whether the mortgage lender is reaching enough of the disadvantaged borrowers that the US Treasury enlisted it to help.
A Barron’s report noted Change Lending received the special license under a government program designed to increase homeownership among Black, Hispanic, and low-income borrowers.
The investigation, however, suggested Change issued a $3 million loan to a Hollywood star who is not included among those groups. Other borrowers reportedly included an NFL player, a billionaire founder, and a former Gabonese government official.
With Change Lending losing the special license, it is no longer included in an online roster from the Community Development Financial Institution (CDFI) Fund, the Treasury unit that administers the program. Also, Change Lending would now have to provide employment verification records, banking activity details, and other documentation that lenders typically require that the CDFI status had exempted it from.
Marc Halpern, chief executive of Foundation Mortgage, said Change Lending losing the exemption would deprive it of an advantage in the competitive industry of lenders specializing in non-qualified mortgages.
Barron’s noted businesses can be decertified by the CDFI Fund if they are not able to hit certain targets for lending to minority populations as well as low-income borrowers. To keep the certification, the businesses need to do 60% of their lending among those groups.
According to the report, Change Lending told Barron’s it exceeds the required lending to disadvantaged borrowers. The company has not responded to Barron’s questions on the loss of the CDFI status, it stated. However, Change Company CDFI, Change Lending’s parent company, remains on the CDFI Fund’s list of certified businesses.
Change Lending has revised its websites and marketing materials to remove the CDFI logo.
