Change Lending aims to raise $345 million in second MBS deal

The CHNGE Mortgage Trust 2022-2 is preparing to tap the capital markets for $345 million in mortgage-backed securities, in a deal that will be Change Lending’s second securitization.

Change Lending, which is certified by the U.S. Department of the Treasury as a Community Development Financial Institution (CFDI), originated all of the loans in the pool and is the deal sponsor, according to a pre-sale report from DBRS Morningstar. Change will also service the notes.

DBRS expects to assign ratings ranging from “A” on the $275.5 million class A-1 notes; to ‘B’ on the $16.9 million class B-3 notes.

Cantor Fitzgerald and Performance Trust Capital Partners will be the initial note purchasers on the deal, which is expected to close on February 24. Nationstar Mortgage is the deal’s master servicer.

CDFI-originated loans are not required to comply with the Ability to Repay (ATR) rules of the Consumer Financial Protection Bureau (CFPB), but the rating agency noted that the mortgages included in the pool were generally made to creditworthy borrowers.

The non-qualified mortgage (QM) pool of 606 loans is comprised almost entirely of fixed-rate loans (90.8%), with 90.8%, with just 8.9% hybrid adjustable-rate-mortgages. The mortgages also have an average loan balance of $569,785, and first-time buyers represent just 28.3%.

On a weighted average (WA) basis, the loans have:

• a coupon of 5.2%

• a FICO score of 735

• original cumulative loan-to-value (CLTV) ratio of 69.0%

• a seasoning of just one month

The mortgages are largely financing purchases (57.4%) on primary residences, which account for 97% of the collateral pool. Another 34.7% of the mortgages are cash-out refinance mortgages, and 7.9% are rate/term refinancings, according to DBRS.

Most of the properties in the portfolio are single-family homes, planned unit developments (PUD) and townhomes and (89.7%).

In terms of geographic diversification, California accounts for 65.8% of the pool, the largest state in the pool, followed by Florida with 15.1% and Texas, with 5.7%.