🚨 Stale Listings & Spiking Defaults
No Smoke Without Fire!
A $536M Chicago skyscraper just hit special servicing over a missed $2.5M payment. Less than half a percent of the loan balance.
The borrower ran out of time.
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The same thing is happening across multifamily real estate right now.
For three years, lenders kept kicking the can on troubled loans, waiting for interest rates to fall so borrowers could refinance.
That wait is over.
$300 billion in multifamily loans come due this year, and borrowers keep coming back to their lenders with the same answer: the numbers do not work.
The CMBS special servicing rate just hit 11%, the highest it has been in over a year.
Office and multifamily loans both saw sharp increases in a single month.
On the home loan side, 878,000 borrowers are now seriously behind on payments or in foreclosure, the highest number since 2018.
Two property types. Two pipelines. Both filling up at the same time.
The investors who know where distressed deals are building right now are the ones who buy at the best price.
Here’s where the deals are forming:
In this edition of the AltReports:
🏢 CMBS Distress Finds Its Next Targets
🏠 FHA Stress Starts Breaking Through
📦 Unsold Homes Keep Piling Up
🌪️ Insurance Costs Start Forcing Sales
🏘️ Multifamily’s Refi Wall Is Here
Video of the Week: How He Bought A 14-Unit With No Money Down
Chart of the Week: Multifamily Investors Pivot to Oversupply Risks
Podcast of the Week: Oil Shock, CMBS Issuance and Private Credit Signals
CMBS Special Servicing Rate Hits Highest Level in Over a Year
The CMBS special servicing rate just climbed to 11%, its highest point in over a year.
Office and multifamily loans drove the move, each posting nearly 45 basis point increases in a single month.
Here is what the loan-level data says about where distress is concentrating next.
FHA Delinquencies Push Seriously Distressed Loans to Highest Level Since 2018
878,000 borrowers are now seriously behind on payments or in foreclosure, the highest number since 2018, and FHA loans drove more than 80% of that increase.
Cure rates among FHA borrowers dropped sharply since last summer, pointing to a specific segment now running out of options.
This is where residential distress is building fastest.
52% of Homes Have Been Sitting Unsold for 60 Days or More
That represents $347 billion in unsold inventory and 630,000 more sellers than buyers.
Some of those sellers are getting anxious, and anxiety creates a very specific kind of opportunity for buyers who know where to look.
Find out where stale listings are concentrating and what that means for pricing.
Insurance Premiums Rose 70% Since 2019 and Are Now Pushing Mortgages Into Delinquency
A Dallas Fed study found that rising premiums pushed roughly 31,000 mortgages into delinquency in 2022 alone.
The households least able to absorb that increase are concentrated in specific markets, and those markets overlap with something distressed investors will want to see.
See which markets are tipping toward forced sales.
$300 Billion in Multifamily Debt Matures This Year. Lenders Are Done Waiting.
$300 billion in multifamily debt matures this year alone, and borrowers who counted on refinancing into a lower rate environment are running out of options.
The distress showing up in CMBS data right now is only the visible portion of what is moving through the system.