CRE

Rule changes would come after a fraud investigation uncovered falsified numbers at a leading finance firm, according to the Wall Street Journal.

First Foundation in Dallas recently got a $228 million capital injection led by Fortress Investment Group. Now it's announced plans to pivot away from its heavy focus on multifamily loans, which lost value as interest rates rose.

For at least the fifth consecutive quarter, the Providence, Rhode Island, company increased its allowance for credit losses on general office loans, which continue to be a problem area for banks.

First Foundation will use the large investment to shrink its multifamily loan portfolio, which has weighed down its earnings since interest rates began rising.

A decline in interest rates during the first quarter drove a Freddie Mac indicator higher for the first time since mid-2023, while a leading investment firm announced a deal aimed at boosting originations for government-sponsored enterprise financing.

Federal Reserve Governor Lisa D. Cook highlighted concerns over private credit growth, commercial real estate distress and escalating cyber threats in remarks on financial stability at the Brookings Institution Wednesday.

In talks with OCC officials, "it became obvious that we would not gain near-term approval given their recent experience with multifamily and CRE positions," FirstSun CEO Neal Arnold says. The companies announced other revisions to their deal, too.

Treasury Secretary Janet Yellen didn't directly address the turmoil at New York Community Bank, and said that while some smaller institutions could be hit by a changing commercial real estate market, she doesn't anticipate these mortgages will become a systemic risk.

Stress tests suggest systemically important depositories could weather current risks. Meanwhile, single-family arrears remain low, but that business could be impacted.

The Federal Reserve released its semiannual financial stability report highlighting elevated asset values, funding issues and pockets of leverage as top concerns.

Providing support to affordable rental developments is a key component in the Biden administration's efforts to increase housing supply.

But a great deal of variation in distress levels were reported between individual markets and property sectors, according to two new reports.

Decreased availability of bank capital for new commercial construction helped slow activity from the previous nine quarters, according to a new report.

Economic analysis from the real estate advisory CBRE finds that community banks are particularly imperiled by their exposure to commercial real estate loans. Others see looming risks in indirect lending.

But when compared past periods of upheaval, those rates remain relatively low, the Mortgage Bankers Association report showed.

The Federal Deposit Insurance Corp. said in its quarterly banking profile that the banking industry remains resilient despite a challenging economic backdrop, but exposure to commercial real estate losses and interest rate risks could make continued stability difficult.

Banks could be in for a long, slow trickle of bank failures and consolidation in the coming months and years, particularly if inflation persists and interest rates keep rising. A downturn in commercial real estate could add to banks' problems.

Federal Deposit Insurance Corp. Chairman Martin Gruenberg said that the rise of hybrid and remote work, alongside rising interest rates, could be creating lingering risk in the maturity of some bank loans.

CEO Michael Nierenberg hinted at an upcoming partnership, as the rebranded New Residential reported a quarterly loss from residential mortgages plus management internalization costs.

The two companies will integrate platforms to streamline sales in the single-family, build-to-rent property market.