Change Lending keeps CDFI certification after agreement with US Treasury 

The lender will continue to originate non-QMs for underserved borrowers

Non-bank originator Change Lending will continue to originate non-qualified mortgages (non-QMs) for underserved borrowers after it reached a tentative deal with the U.S. Department of Treasury that would keep the firm certified as a Community Development Financial Institution (CDFI).

The CDFI certification is a designation given by the Treasury Department CDFI Fund to specialized organizations that provide financial services to low-income communities and people who lack financing.

At least 60% of a lender’s financing must target low- and moderate-income borrowers or customers in underserved communities. 

In a new agreement, the CDFI Fund has withdrawn its decertification of Change Lending from the CDFI Fund and, in exchange, the lender will drop its lawsuit against the Treasury Department, according to a letter sent to Change’s attorneys from the Department of Justice on Oct. 31. 

Change is now in good standing with the CDFI Fund and its next planned certification review is not until 2025, the originator said. 

“We are pleased to have resolved any misunderstandings with the CDFI Fund and appreciate the CDFI Fund’s collaborative approach and willingness to agree to this settlement in principle. We believe that today’s agreement will benefit all stakeholders. Change is proud to be certified as a CDFI and to continue our mission,” Carlos Salas, CEO of Change Lending, said in a statement. 

The agreement puts an end to a short-lived legal dispute with the Treasury Department.

Change Lending was removed from the CDFI Fund’s list of certified program lenders in August after a Barron‘s investigation found that the lender failed to meet its underserved lending requirements in 2022. 

Change sued the CDFI Fund in late August claiming the Fund’s “flawed analysis and mathematical errors” led to the decertification decision.

A federal judge sided with Change in September, allowing the originator to continue its mortgage offerings for underserved borrowers until at least December. 

Since becoming a CDFI in 2018, Change has funded more than $25 billion in loans to more than 75,000 families, according to the lender. 

In October, the company sued Adam Levine, CEO Steven Sugarman’s former chief of staff, after the former high-ranking employee accused the firm of retaliation when he notified executives of employees “mischaracterizing loans” to skirt federal reporting requirements. 

Levine was fired in March over multiple accusations of workplace misconduct.

Change accused Levine of committing fraud and breaching his contract with the firm to advance his scheme to extort Change and its principals for over $10 million.  

In 2015, Levine’s former employer, TPG Global, also sued him for taking confidential documents and distributing them to media outlets after being denied a promotion. 

A federal judge that year ordered Levine to return TPG’s confidential information back to the company.

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