June Securitization Forbearance Report
The COVID-19 pandemic continues to have a profound economic impact across the country. At present, all states are in some stage of re-opening. Nevertheless, unemployment claims remain high and there is much uncertainty about an economic recovery and – for many tenants and borrowers – concerns around how to make their next rent or loan payment.
In March, Freddie Mac implemented a forbearance relief plan that allows qualifying multifamily borrowers to defer up to three months of mortgage payments, and yesterday we announced new supplemental loan repayment options for affected borrowers. We’ve released our third report that details this program by looking at June data. Read the report.
We found that master servicers reported 1,189 forborne securitized loans, or roughly 5% of our total securitized loan population. This equates to about $7.9 billion of outstanding unpaid principal balance (UPB) and represents 2.6% of our total securitized UPB. By comparison, in our May 26 Forbearance Report, we noted a total of 1,011 forborne loans for $6.4 billion UPB. Other key findings of the report include:
- Just over one-half of securitized pools have at least one loan forborne.
- Of the total $7.9 billion forborne loans, 8.6% are student housing and 10.4% are seniors housing facilities.
- A higher percentage of the forborne loans are Small Balance Loans, at 75% by loan count, but 30% by UPB. Since these properties have fewer units, each tenant experiencing stress has a larger impact on small property operators.
- The vast majority of forborne loans would need to sustain an effective gross income drop in excess of -10% in order to fall below a 1.00x debt service coverage ratio (DSCR).
- Forbearance requests are distributed across the country in 40 states and the District of Columbia. The top states for requests are New York, Texas, Florida, Maryland and California.
- Prior to the COVID-19 crisis, the multifamily market was on solid ground and the credit quality of those forborne loans was relatively strong. Of the loans requesting forbearance, 76% have a pre-crisis debt service coverage ratio (DSCR) above 1.25x. Meanwhile, roughly 97% of forborne loans have a pre-crisis mark-to-market Loan-to-Value (LTV) ratio of less than or equal to 80%.
- About 11% of all the forborne loans have maturity dates before 2024. The remaining 89% of the forborne loans do not mature until 2024 or later.
Check out these links for additional information about our forbearance relief program and its impact to our multifamily securitizations.
- May Forbearance Report
- April Forbearance Report
- COVID-19 Forbearance Resources for Investors
- Forbearance Frequently Asked Questions