CREDIT PROFILE OF CURRENT LENDING POINTS TO RISING MATURITY DEFAULTS
The credit risk profile of new apartment mortgages weakened over the course of 2012, owing in part to competition for lending opportunities between the government-sponsored enterprises (GSE) and lenders without preferential access to capital, including banks, life companies, and the conduit.
Term defaults are limited by underwriting to in-place cash flow and a low probability that cash flow will decline. Defaults on current originations are instead clustered at maturity, reflecting interest rate and policy risks that are largely mispriced in conventional credit risk models.
Read more...Multifamily Lending Market Overheating | Chandan Economics