Change Lending Lawsuit Against US Treasury

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California-based Change Lending has taken legal action against the U.S. Treasury after losing its special community-lender status, which allowed the firm to generate billions of dollars annually through low-documentation mortgages. The firm claims that its certification as a Community Development Financial Institution (CDFI) was wrongly revoked due to errors made by officials analyzing its lending records.

Alleged Mistaken Decertification

Change alleges that officials at the CDFI Fund, the Treasury agency responsible for managing the program, made mistakes in evaluating the lending records provided by the company. As a result, Change’s required lending targets to underserved groups were not deemed to have been met, leading to the loss of its CDFI certification.

Lawsuit Details

The lawsuit was filed in the U.S. District Court for the Central District of California. In the legal action, Change is requesting a judgment to reinstate its CDFI status, arguing that its lending practices should make it eligible for this distinction. The company is also seeking a temporary injunction to restore its certification during the case proceedings.

No Comments from CDFI Fund and Treasury

A spokesman from the CDFI Fund, one of the defendants in the lawsuit, declined to provide any comments regarding this matter. The Treasury also did not respond to a request for comment. A spokesman representing Change had no immediate comment to offer.

Previous Coverage

‘s reported last week that Change seemed to have lost its CDFI status as it was removed from the CDFI Fund’s online list of certified institutions. According to Change’s filing, the decertification became effective on August 17.

Former Change Employees Questioned by SEC Investigators


Former employees of Change have revealed that they were interviewed by Securities and Exchange Commission (SEC) investigators. The investigators were concerned about the accuracy of the firm’s government disclosures regarding mortgages given to Black and Hispanic borrowers. These employees alleged that Change managers had influenced them to misrepresent racial and ethnic identifications on the forms.

Change Denies Allegations

Change responded to these allegations by stating that any claims suggesting they encourage misrepresentations are false.

Commitments as a CDFI

As a Community Development Financial Institution (CDFI), Change was obligated to allocate 60% of its lending to certain groups, which include Hispanic, Black, and low-income borrowers. This designation allowed the company to have more flexibility in writing mortgages. Consequently, it became the largest originator of nonqualified mortgages in the nation, catering to borrowers with unique features like interest-only periods and balloon payments.

Analysis Reveals Benefit to Wealthy Borrowers

An analysis published in July examined lending records and regulatory filings. It discovered that wealthy borrowers, including actor Johnny Depp and NFL legend Tony Gonzalez, were among the primary beneficiaries of the lending flexibility designed to assist underserved groups.

Furthermore, the analysis revealed that Change fell short in increasing lending to Black borrowers compared to industry standards. Additionally, only a small percentage of its loans in key markets were affordable for individuals with low incomes.

Change’s Response

In response, Change maintained that it surpasses its lending requirements as a CDFI. It also emphasized that its lending to high-net-worth individuals does not diminish its commitment to serving underserved borrowers.

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