By Heather Perlberg, Austin Weinstein and Tom Schoenberg | Bloomberg
The US Securities and Exchange Commission is probing The Change Company, an Irvine-based lender that pledges to promote homeownership in underserved communities, over its mortgage-backed securities, according to people with direct knowledge of the matter.
As part the investigation, the regulator is also looking into some of the actions of its chief executive officer, Steven Sugarman, said the people, who asked not to be identified discussing the investigation that hasn’t been made public. Buyers of instruments backed by The Change Company’s loans have included some of Wall Street’s largest money managers, according to data compiled by Bloomberg.
Sugarman was formerly the chief executive of Banc of California. He resigned in 2017 amid an investigation by SEC into whether the bank misled investors.
“Neither Change nor its leadership is aware of any SEC investigation,” the firm said in a statement. “Loans included in Change’s mortgage-backed securities have been vetted by third-party due diligence firms who have issued certifications attesting to the accuracy of the data and sufficiency of the scope of their reviews,” the company added, in addition to providing an Aug. 24 attestation letter from an outside lawyer.
The SEC, which hasn’t accused anyone of wrongdoing in the matter and whose investigations don’t always lead to enforcement actions, declined to comment.
Over the past few years, The Change Company has grown to be one of the US’s most active Community Development Financial Institutions, or CDFIs. That tag from the Treasury Department can let firms that work to bolster historically neglected communities get special tax and financing support.
The lender says it has funded more than $20 billion in loans to more than 50,000 families as part of its mission to “level the playing field for diverse homeowners and small business owners.” Public mortgage records show…
Read the full article here
