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 US 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 DBRS Morningstar pre-sale report. The change will also serve the ratings.
DBRS expects to assign ratings ranging from “A” to 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 first purchasers of notes under the agreement, which is expected to close on February 24. Nationstar Mortgage is the prime contractor for the agreement.
Loans issued by CDFI are not required to comply with Consumer Financial Protection Bureau (CFPB) Capacity to Repay (ATR) rules, but the rating agency noted that mortgages included in the pool were generally granted to creditworthy borrowers.
The non-qualified mortgage (QM) pool of 606 loans is composed almost entirely of fixed rate loans (90.8%), with 90.8%, with only 8.9% variable rate hybrid mortgages. Mortgages also have an average loan balance of $569,785 and first-time buyers make up just 28.3%.
On a weighted average (WA) basis, the loans have:
• a coupon of 5.2%
• a FICO score of 735
• Initial cumulative loan-to-value ratio (CLTV) of 69.0%
• a seasoning of only one month
Home loans largely finance purchases (57.4%) of main residences, which represent 97% of the pool of collateral. According to DBRS, 34.7% of mortgages are cash-in refinance mortgages and 7.9% are rate/term refinances.
Most of the properties in the portfolio are single family homes, planned unit developments (PUD) and townhouses and (89.7%).
In terms of geographic diversification, California represents 65.8% of the pool, the largest state in the pool, followed by Florida with 15.1% and Texas with 5.7%.