Multifamily mortgage lending staged a strong recovery in 2025. Origination volume climbed 32% from 2024 to $381.8 billion, according to the Mortgage Bankers Association’s (MBA) annual report on the multifamily lending market, marking a turnaround after several challenging years for the sector, even as lending volume remained well below its 2021–2022 highs.
While lending activity is recovering, substantial challenges remain for multifamily borrowers with maturing loans. In February, MBA reported that 13% of the multifamily loan balance it tracks is scheduled to come due in 2026, totaling an estimated $287 billion. Although MBA projects that the loan maturity wall will ease in 2027, multifamily owners could face tougher refinancing terms, forcing borrowers in some markets to inject fresh cash or sell.
Multifamily Sector Complexity
A closer look at the numbers reveals a more complex picture of multifamily debt, with a widening divide that could shape multifamily investment decisions, lender workouts and transaction opportunities.
Trepp, a commercial real estate data and analytics provider, reported in October that $11.6 billion of the $635.82 billion in private-label commercial mortgage-backed securities (CMBS), commercial real estate collateralized loan obligations (CRE CLOs) and Freddie Mac multifamily loans was delinquent in August. However, half of that delinquent debt was concentrated in private-label CMBS deals, even though these loans accounted for only 12% of the total outstanding balance.
Stephen Buschbom, head of applied research and analytics at Trepp, notes that the distribution of delinquent multifamily debt has changed substantially over the past two years. Changes in reported delinquency rates may reflect differences not only in the loans entering each lending channel but also in those leaving loan pools, particularly in CRE CLOs, where an issuer can buy a troubled loan out of the pool. He stresses that understanding multifamily delinquency requires examining both the lending channel and property age.
“When you read that 70% of the maturity wall can’t refinance at par, you need to dig deeper,” says Buschbom, noting that the data point could include loans that are only $1 underwater when refinancing at par, a shortfall the borrower could easily cover. “Even $100,000 is manageable,” says Buschbom. “It makes more sense to look at loans that are going to require 20%-plus cash-in where there is realistic concern about a borrower’s ability to stroke a check or find capital to plug the gap.”
Trepp’s analysis of multifamily CMBS loans maturing through 2027 shows that refinancing proceeds fall short of the outstanding loan balance for 64% of that debt, and 50% would need a cash infusion exceeding 20% of the loan balance.
Pain Point: CMBS Pre-1980s Vintage
Trepp’s analysis by lending channel and property age shows that multifamily distress is heavily concentrated among private-label CMBS loans on backed by properties built before 1980.
Properties built before 1980 also have the highest delinquency rates within the Freddie Mac and CRE CLO lending channels, although at lower levels than CMBS loans. Properties built between 1980 and 2000 and those built in 2001 or later both have significantly lower delinquency rates.
Buschbom notes that while many expected the CRE CLO loans to be the ‘problem child,’ CRE CLO delinquency rates have fallen sharply from a year ago because of loan buybacks.
“The fact that we haven’t seen a CRE CLO issuer fail tells you how much liquidity continues to support that space,” says Buschbom. “Equity may be taking a hit, but it’s largely not the bondholders’ problem,” he adds.
According to Trepp, continued loan buybacks and strong issuance are supporting the CRE CLO market.
For properties built before 1980, delinquency rates are 13.6% for CMBS, 5.5% for CRE CLO loans and 2.4% for Freddie Mac loans, compared with overall rates of 6.0%, 2.3% and 1.1%, respectively.
These older properties often require substantial capital expenditures, while rent growth has fallen short of projections.
Pre-1980 properties account for 79% of the delinquent CMBS multifamily balance but only 35% of the total CMBS multifamily balance.
Three States Account for Nearly Two-Thirds of Pre-1980 Delinquency Value
Trepp reports that New York, California and Texas have the largest delinquent loan balances for pre-1980 multifamily properties, together accounting for 62% of the total delinquent balance for these properties. However, in California, a single property in San Francisco, Parkmerced Apartments, accounts for more than three-quarters of the state’s delinquent loan value.
Value of Delinquencies by State for Pre-1980 Multifamily Properties
New York: $2.0 billion
California: $1.4 billion
Texas: $1.1 billion
Source: Trepp
In Texas, Houston stands out, with the third-largest pre-1980 multifamily delinquent balance among metropolitan areas. Lonnie Hendry, chief product officer at Trepp, describes Houston as several distinct markets within one metropolitan area, shaped by limited zoning restrictions, continued expansion and competition among amenity-rich properties.
“In Houston, you’re the best property until they build next door and put downward pressure on your rent,” says Hendry.
Across the top 10 metropolitan statistical areas Trepp identified for pre-1980 delinquency, lending channels vary significantly. In the Denver metro area, CMBS loans account for none of the delinquent balance, with Freddie Mac loans accounting for 85%. By contrast, 84% of the delinquent balance in the Chicago market stems from CMBS, with 16% from Freddie Mac and none from CRE CLO loans. In Atlanta, CRE CLO loans account for 75% of the delinquent balance.
Capital in Search of Opportunity
According to Trepp, multifamily has experienced the greatest easing of CMBS underwriting standards over the past year, while substantial institutional capital remains available.
“There is so much capital waiting to be deployed and looking for opportunity,” says Buschbom. “This is nothing like 2008 when liquidity evaporated completely,” he adds. “The big question is how much the loan extension game will continue to be played, or whether servicers will start taking a harder line. It’s a difficult question to answer because so much depends on borrowers’ liquidity and borrowers’ wants and willingness to stay in the game,” says Buschbom.
Brokers: Separate Operating Performance from the Debt Problem
For brokers, opportunities may extend beyond traditional acquisitions and dispositions to include recapitalizations, lender-directed sales, partnership restructuring and sales of assets whose owners cannot or will not contribute additional capital.
The key is to recognize that multifamily is not experiencing uniform market conditions. Well-capitalized owners with attractive properties and manageable debt may still be able to refinance, invest and acquire assets. Owners facing higher interest rates, lower net operating income, elevated expenses or maturing loans may have far fewer options.
Brokers should evaluate a property’s operating performance separately from its debt structure. A building with healthy occupancy and cash flow but an unworkable capital structure may present a very different investment opportunity from one suffering from persistent vacancy, declining rents and high operating expenses.
