Multifamily

Apartment buildings, which make up about 40% of the looming maturities, are at the center of the refinancing wave. Many U.S. owners bought their properties using three-year floating rate loans during the easy money era.

While the total dollar volume of apartment originations fell last year, the number of companies making loans increased from 2022, the Mortgage Bankers Association said.

A decline in interest rates during the first quarter drove a Freddie Mac indicator higher for the first time since mid-2023, while a leading investment firm announced a deal aimed at boosting originations for government-sponsored enterprise financing.

In talks with OCC officials, "it became obvious that we would not gain near-term approval given their recent experience with multifamily and CRE positions," FirstSun CEO Neal Arnold says. The companies announced other revisions to their deal, too.

Regulatory reform – rather than Biden's proposed solutions – is needed to fix the inventory crisis, some say, but others applauded the president's buyer cost-cutting initiatives.

The city claims it can build the rental units quicker through this mechanism rather than low income housing tax credits.

Income-producing loans secured by real estate are under pressure at banks, the government-sponsored enterprises, insurers, and in CMBS to varying degrees.

Stress tests suggest systemically important depositories could weather current risks. Meanwhile, single-family arrears remain low, but that business could be impacted.

Since 2019, distressed loans have increased 77%, but it is just a small portion of the $691 billion currently outstanding.

Fewer of these mortgages are paying off, adding to the amount of credit on investors' books, the Mortgage Bankers Association said.

Decreased availability of bank capital for new commercial construction helped slow activity from the previous nine quarters, according to a new report.

But overall volume is still expected to be 38% lower than 2022's commercial real estate originations, as higher interest rates remain a drag.

But when compared past periods of upheaval, those rates remain relatively low, the Mortgage Bankers Association report showed.

Economic turbulence affected borrowers during the quarter and will likely impact their ability to refinance maturing loans, the Mortgage Bankers Association said.

The underlying loans are subject to certain ATR rules per the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Shellpoint Mortgage Servicing, will fund advances of delinquent principal and interest until loans become 90 days.

Weaker economic conditions, rising interest rates and expected changes in investment returns drove the reduced expectations, the Mortgage Bankers Association said.

The sector is not immune to the same economic instability that affects the single-family residential market, the Mortgage Bankers Association said.

Volumes set a record in 2021 and they've held up better than expected this year, but declines are forecasted for the sector some banks are using to partially offset single-family's slump.

Some 75% of the loans, or a count of 38, are partial term interest-only (IO) loans, and just six, or 22.9% of the pool are full-term IO loans. Just one loan, has an amortizing balloon.

The sponsors got the portfolio through multiple acquisitions from May through October.