Multi-Housing News: What to Expect From Multifamily Underwriting This Year

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Multifamily owners can expect easing of the tightest underwriting and reserves seen during the height of the pandemic, but lenders say that they are still carefully scrutinizing rent collection, concessions and rental rates. Market supply and employment trends will also play important roles in underwriting as the industry continues to navigate COVID-19 impacts.

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At the height of the pandemic, at least six months of reserves were required for all but the very lowest of leverage deals, typically 55 percent loan-to-value. One clear result was more borrowers choosing lower-leverage loans because they required little or no reserves. In 2020, van Os noted, Greystone observed an increase in loans with leverage of 65 percent or lower.

“Greystone has been able to get waivers on the lower reserves depending on the sponsor, market and if the property is exhibiting strong collections,” van Os reported, adding that the GSEs will “stretch a little bit more” for top agency borrowers.

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