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First ever RMBS transaction comprised entirely of mortgage loans originated by a Community Development Financial Institution was also designated a Social Bond by Institutional Shareholder Services.
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$297 million of residential mortgage loans backed the significantly oversubscribed ESG issuance which included over two dozen institutional investors.
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Offering allows Change to improve the cost of capital for loans to Black, Latino, and other underbanked prime borrowers
The Change Company, America’s Community Development Financial Institution (CDFI), is pleased to announce that it has closed the first ever securitization of residential home loans originated entirely by a CDFI. Investors in the $297 million offering included socially responsible asset managers and banks seeking to finance home loans to credit-worthy Black, Latino, and low- and moderate-income borrowers and communities.
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Jesse Elhai said: “We are proud to become the first CDFI to successfully securitize its own residential loans. This inaugural securitization validates the importance of CDFIs to fairly and responsibly meet the needs of minority and low-income borrowers.”
Jesse Elhai, Managing Director of Capital Markets for Change, said, “We are proud to be the first CDFI to securitize its own residential loans. This inaugural securitization validates the importance of the exemptions provided to CDFIs by the CFPB to fairly and responsibly meet the needs of minority and low-income borrowers under Regulation Z. We thank our new financial partners for helping us demonstrate that CDFIs are essential to ending structural economic inequalities in homeownership. Change will continue to expand its partnerships with financial institutions seeking socially responsibly investments that level the financial playing field for Black, Latino and low-income Americans across the United States.”
Steven Sugarman, Founder of The Change Company, said, “As we celebrate Black History Month, we are reminded that homeownership is the key to closing the racial wealth gap and achieving generational wealth. We thank our new financial partners who, through their investment in this securitization, are demonstrating their commitment to fair and equitable homeownership in America.”
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This transaction follows the completion of a comprehensive assessment by Institutional Shareholder Services (ISS) which validated The Change Company’s Social Bond and Loan Framework. The analysis by ISS determined that Change’s proposed framework, mission-driven mortgage products, social lending, and inclusive business model, aligns with the Social Bond Principles established by the International Capital Markets Association and positively contributed to the Sustainable Development Goals defined by the United Nations.
Since 2018, Change has funded over $20 billion in loans to more than 50,000 families. Through future securitizations, Change will continue to enhance its ability to bank the underbanked, eliminate the wealth gap, and level the playing field for diverse homeowners and small business owners.
Cantor Fitzgerald and Performance Trust served as the initial purchasers and joint bookrunners on the transaction. Dentons US LLP served as issuer counsel to Change Lending and Hunton Andrews Kurth LLP served as underwriter counsel in the transaction.
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