Change Co. sues servicer over multiple nonpayments

Change Lending is seeking over $1 million in damages from a mortgage banker it says violated a servicing purchase agreement.

The plaintiff firm, a large player in a government-sponsored lending program, is suing Village Capital & Investment over transactions involving government-backed loans. Village allegedly owes Change a combined $1.3 million in part for failing to complete its 2023 purchase of a pool of an unspecified number of servicing assets. 

"Through its wrongful actions and tortured interpretation of the PSA, VIllage Capital obtained a windfall at Change Lending's expense," the suit, referring to the pool of loans, said.

The lawsuit was filed Wednesday in a Nevada federal court, and a summons was issued Thursday to Village, which is based in the Las Vegas suburb of Henderson. Neither company nor an attorney for Change responded to requests for comment Friday morning. 

Village, a servicer which originates government-backed refinance products, reported over $4 billion in loan volume in 2024 according to Home Mortgage Disclosure Act data. The Change Company, parent of Change Home Mortgage, is a large non-qualified mortgage lender and is a designated member of the Treasury's Community Development Financial Institutions Fund.

What bills does Village Capital allegedly owe Change?

The breach of contract case stems from a June 2023 contract in which Village agreed to purchase the servicing assets. Although Change serviced the loans in an interim servicing period through August 2, Ginnie Mae didn't recognize the switch to Village until September 1, the lawsuit said. 

Change, at the request of Ginnie Mae, on August 21 remitted a principal and interest payment advance of $2.6 million. When informed of the payment, Village allegedly withheld $659,464, suggesting Change was responsible during the interim servicing period. 

"Village Capital did not make the payment to GInnie Mae, yet kept the reimbursements received from mortgage borrowers," an attorney for Change wrote.

Further, Change claims Village has withheld the remaining 10% of purchase price of the MSRs, across two scheduled payments totalling $642,704. The counterparty allegedly never provided required document exception reports on the loan pool, and later accused Change of not satisfying other contractual obligations. 

The total sum also includes another $18,170 Change advanced to the Federal Housing Administration during the disputed interim servicing period, which the FHA reimbursed to Village later on.

Village is one of the industry's largest holders of Department of Veterans Affairs-backed loans, with nearly 11,000 in 2024 representing nearly $3.9 billion. 

The Anaheim, California-based Change Company in June touted a massive judgment against a former employee it blamed for causing the lender to temporarily lose its CDFI certification in 2023.