Dive Brief:
- Multifamily was one of only two property sectors to see its commercial mortgage-backed securities special servicing rate improve in August, dropping two basis points from July to 8.37%, according to Trepp. Six months earlier, it was 8.3%, and one year ago, it was 8.61%.
- The multifamily CMBS delinquency rate remained unchanged month over month at 7.69% in August, according to Trepp. Six months earlier, it was 6.85%, and one year ago, it was 6.86%.
- Office, retail and lodging posted increases that pushed Trepp’s overall commercial real estate CMBS special servicing rate up 33 bps from July to 11.42% in August — its highest level since February 2013. With several large loans returning to performing status, the CRE delinquency rate decreased 1 basis point MOM to 7.85% in August, despite increases in lodging, retail, office and industrial.
Dive Insight:
Distress hasn’t just improved among CMBS loans. Delinquencies on bank-held multifamily loans improved to 1.41% in Q2 2026, down from a multiyear high of 1.47% in Q1, according to a CRED iQ analysis of FDIC data from all insured institutions.
Meanwhile, banks' total multifamily loan portfolios rose 3.6% year over year to $667.6 billion in Q2, according to CRED iQ. The dollar amount of delinquent loans fell from $9.78 billion in Q1 to $9.41 billion in Q2.
Delinquencies on loans between 30 and 89 days past due dropped, but 90-plus day delinquencies and net charge-offs increased.
“That combination, easing delinquency, rising realized losses, is consistent with a workout-driven cycle rather than a resolving one,” according to CRED iQ. “Today’s rate is still roughly 6.7 times the 2019 low of 0.21%, though well below the 5.90% Global Financial Crisis peak.”
Multifamily investors also say banks are increasingly getting more aggressive about resolving issues with distressed properties.
For instance, this week, Machine Investment Group and RPM Living Investments purchased 75 West, a 490-unit multifamily community in Dallas. The firms sourced the investment through “an off-market, lender-driven process,” according to a Sept. 14 press release.
Shimon Greenspan, CFO of Long Beach, California-based apartment owner Westland Real Estate Group, told Multifamily Dive that lenders initially allowed borrowers to “extend and pretend.” But over the last 90 days, he said more people have realized interest rates won’t come down soon enough to rescue owners.
“I think we're going to start to see a lot of that stuff work out in ways that it hadn't previously been forced to work out,” Greenspan said.
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