Barron’s:
https://www.barrons.com/articles/low-income-mortgages-change-johnny-depp-7dfbbf23(I was able to link once using DuckGo browser)
Excerpt: U.S. Treasury Department as a lender that helps Black, Hispanic, and low-income mortgage applicants achieve their dream of homeownership. Not included among any of those groups is one of its biggest borrowers: actor Johnny Depp. Change's $3 million loan to the Hollywood star is among the hundreds of millions of dollars that the company has spread among well-heeled borrowers for homes across the country, including in some of the nation's priciest areas, such as Beverly Hills and Newport Beach, Calif. Other borrowers include National Football League legend Tony Gonzalez, the billionaire founder of a Shanghai-based blood-plasma concern, and a former Gabonese government official who has been charged in the looting of the Central African country that her family has ruled for decades. Change's cadre of high-net-worth borrowers makes it an outlier among Community Development Financial Institutions, a class of lenders under the Treasury Department that are tasked with serving populations that mainstream financial businesses often overlook. So does its size:
Last year, Change made $6 billion in loans. It was the country's biggest originator of non-qualified loans, which include mortgages with interest-only periods and balloon payments, according to Scotsman Guide, a publisher of mortgage-business data. Change brands itself as “America's CDFI,”in recognition of the national reach it shares with few other lenders in the Treasury program that more commonly consists of community-based banks and nonprofits. CDFIs—large and small, for- and not-for-profit—are exempted from strict mortgage underwriting rules implemented after the 2008-09 global financial crisis. In exchange, the CDFIs are required to hit certain targets for lending to minority populations and low-income borrowers …
Barron's analysis of lending records and regulatory filings shows that wealthy borrowers are major beneficiaries of Change's lending leeway. It pitches itself as a crusader for economic equality, though Barron's reporting indicates that Change's business extends well beyond the disadvantaged communities that its exemptions are supposed to help … Change is required to do 60% of its lending within one of four groups: Hispanic, Black, or low-income borrowers, or borrowers in designated low-income neighborhoods. One investor drawn to Change's aura of social-mindedness was Netflix, which invested $10 million in the company in 2021, a chunk of the $100 million that the streaming service set aside for Black-economic-empowerment initiatives following the murder of George Floyd. The year after it received that investment, Change's lending to Black borrowers declined, data show, even as the overall industry lent more of its dollars to Black borrowers.Source,
Barron’s - July 17, 2023
Comments
Change is the largest of many “CDFI”s (Community Development Financial Institutions) that received a special exemption from federal mortgage lending standards by a series of acts of Congress. (The laws under which they operate appear to have evolved / changed over time, but some date back to 1977). Most importantly, the standard “ability to pay” verification on the part of borrowers for federal backed mortgages is not a requirement for receiving a loan under the program - supported by tax dollars. 60% of the loans are supposed to go to minority, poor or underserved groups. But there is no prohibition per se against lending to wealthy individuals.
Barron’s is obviously pushing this issue. The lengthy article reads more like an investigative piece with a slant (more typical of the NYT) rather than the type of less controversial reporting the magazine is noted for.
Re the “ability to pay” exemption: Here’s a justification offered by Change founder Steven Sugarman to justify Johnny Depp’s receiving a $3 million refinance loan …..
”Depp is a “fantastic example” of the type of wealthy borrower Change is able to serve. “He had lots of lawsuits with his old business manager. He had the Amber Heard lawsuits. He wasn't currently employed. And he's an actor, and he has volatile income, … I'm not saying he shouldn't get a loan from a bank. I'm saying he couldn't.”
Poor Johnny.