Multifamily REO Stable at $69B in Q3 2020 But Trouble Lurks

2020’s third-quarter numbers are in. Multifamily loans and REO show stability. But distress is brewing…

Multifamily-Loans REO Chart Q3 2020

Distressed Multifamily Loans and REO

On the surface, it seems to be slim pickings for multifamily investors this quarter, with just $69B in multifamily REOs, and less than $1B in non-performing multifamily loans in the nonaccrual stage.

However, digging deeper into the data, it is clear that there is quite a bit of built-up distress in the pipeline. While newly delinquent multifamily loans are only up a little over $150M this year, nonaccrual stage multifamily loans almost doubled by the end of the third quarter.

What to Expect

REO investors should prepare for a major uptick in multifamily REOs in the coming months. Rent forbearances and on-going tenant payment delays due to economic distress will continue to take a toll on apartment owners’ cashflow.

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