Multifamily

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.

The transaction is also the first securitization for ACREC. The entity is also taking on multiple roles, acting as sponsor, issuer and collateral manager.

Ten classes of multifamily mortgage pass-through certificates will be issued from the trust, which is secured by 29 loans on 29 properties.

Late payments on office loans have trended upward recently, but longer lease periods may mitigate the potential for distress in that sector, the Mortgage Bankers Association said.

Growing CRE mortgage volumes raised the bar for the coming year despite lingering concerns, according to the CRE Finance Council.

Experts expect only a small uptick in distressed mortgages, either through default or inability to refinance, which will create some opportunity for debt buyers

Raising the capital gains tax and code changes could have more of an impact on the public debt market than rising interest rates, according to a panelist at the Urban Land Institute's Spring event.

Short-term late payment rates rose again and later stage delinquencies remain at elevated levels compared to those prior to the pandemic, the Mortgage Bankers Association said.

However, the number of borrowers who failed to remit payment but were not yet 30 days overdue increased.

About 3.4 million renters believe themselves to be at risk of eviction, but when the moratorium ends, the actual number may be between 130,000 and 660,000, according to a Zillow report published Monday.

New assistance for renters may help but past efforts, while necessary, failed to get relief to renters in an expedient way, said David Brickman, who is now the head of a new agency lending platform backed by Barings and Meridian Capital.