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MBA Releases Templates for Servicer Communications with Existing ARM Borrowers in Preparation for LIBOR Expiration

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Falen Taylor
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(202) 557-2771

WASHINGTON, D.C. (April 26, 2021) – The Mortgage Bankers Association (MBA) released today two templates for residential mortgage servicers’ communications with borrowers with existing London Interbank Offered Rate (LIBOR)-indexed adjustable-rate mortgages (ARMs). LIBOR is the leading reference rate for adjustable-rate single-family mortgages in the U.S. A permanent cessation of most tenors of U.S. dollar LIBOR will occur after June 30, 2023.

“MBA continues to work closely with public and private sector entities to provide members with the resources they need to ensure a smooth transition for the mortgage industry and consumers,” said Pete Mills, MBA’s Senior Vice President of Residential Policy and Member Engagement.

MBA members will have access to an editable version of the templates where they can make adjustments as they see fit. One is structured as a notice for existing ARM borrowers, and the other as a letter to existing ARM borrowers. The templates stress that any index changes will not affect most other terms of an ARM, including the maximum interest rate paid during the life of the loan or the timing of any interest rate reset. When LIBOR is no longer available or is deemed unsuitable, lenders will replace LIBOR with a new index to determine the future interest rate and payment changes to a borrower’s ARM.

In 2019, MBA developed and released a separate template intended for mortgage lenders to share with consumers interested in applying for a LIBOR-indexed ARM. For more information and to download the templates, please visit MBA’s LIBOR Transition Resources page.

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    5 Trends Shaping the Future of Rental Housing After the Pandemic

    There are five trends witnessed during the pandemic that will be shaping the future of rental housing and apartments for years to come, according to National Apartment Association (NAA) President and CEI Bob Pinnegar.

    “The world continues to change as vaccines roll out. During the past year, businesses have adapted, consumers have altered purchasing habits and industries are adjusting to a new normal. The rental housing industry is no different, and apartments will continue evolving in response to the pandemic,” Pinnegar said in a release.

    Here is what Pinnegar said about the five trends he sees, in a recent Washington Post column.

    No. 1: A new outlook on amenities

    “There has been a shift in the amenity world—shareable areas to individual spaces.

    “Shared spaces such as fitness centers and pools are still important, but communities have shifted their focus to in-home amenities like larger kitchens, balconies, in-unit washer and dryers and high-speed Wi-Fi.”

    No. 2: Virtual tours and decision making

    “For obvious reasons, there’s now a larger number of prospective residents virtually searching for new homes.”

    While it was previously only part of the process of selecting a new community, virtual touring has been a catalyst to “invest in new technology, high-quality videos and specialized training to give prospects a more complete picture of the community.”

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      Top 10 Markets for Self Storage Construction

      As of March, some 126 million square feet of storage space was underway or in the planning stages across the U.S., Yardi Matrix data shows.

      The self storage sector maintained its strength throughout the first quarter of 2021, with continued positive street-rate performance and steady development activity across the country. Despite the rising cost of construction materials, self storage developers continued to add new projects to the pipeline.

      As of March, more than 125.7 million square feet of self storage space was under construction or in the planning stages across the U.S., accounting for 8.4 percent of the nation’s total inventory, up 20 basis points month-over-month, according to Yardi Matrix data.

      The table below highlights the top 10 markets for self storage construction, ranked by total square footage under construction or in the planning stages as of March 2021.

      Rank Metro Under Construction + Planned SF Percentage of Stock
      1 Phoenix 4,403,920 13%
      2 Orlando 2,723,743 11.1%
      3 Las Vegas 2,640,682 14.7%
      4 Central New Jersey 2,569,287 21.1%
      5 Southwest Florida Coast 2,539,216 14.5%
      6 San Fernando Valley – Ventura County 2,460,172 13.3%
      7 Fort Worth 2,445,617 10.3%
      8 Tampa – St. Petersburg – Clearwater 2,400,997 8.9%
      9 Sacramento 2,335,268 13.2%
      10 San Diego 2,295,792 12.7%

      Source: Yardi Matrix

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        Marketing Manufactured Housing Communities During the Pandemic

        Valerie Lombardi of Ascentia Real Estate shares strategies for working in unprecedented conditions and changing the misconceptions about MHCs.

        The manufactured housing industry has been coping with the effects of the pandemic better than most sectors have due to a combination between the ever-growing need for affordable housing and the limited new supply, most experts agree.

        Although fundamentals remained strong, those managing and marketing manufactured housing properties had to tailor their strategies to keep both tenants and employees safe, while also maintaining operations at a normal level. Ascentia Real Estate Holding Co. Marketing Director Valerie Lombardi told Multi-Housing News that the company quickly adjusted to working in an unknown environment. In the interview below, Lombardi expands on the unique issues the manufactured housing industry is facing, and discusses what owners and managers can do to break the stigma.

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          Renters Seek Out Affordable Alternatives

          According to the latest Assurant survey, many renters either became roommates or moved into more affordable units due to COVID-19.

          An Assurant survey showed that nearly 75 percent of renters shifted towards more affordable rental options during the pandemic.

          In the firm’s latest Multifamily Housing Renter Perspective Study, 40 percent of 608 renters surveyed between Jan. 20 and 26 said they relocated to more affordable units.

          The survey also showed that another 34 percent of renters moved into another unit as a roommate for a more affordable living situation. When asked if renters would renew their lease if the lease terms were shortened and rent stayed the same, 78 percent of renters said they would.

          Assurant’s survey also showed that 46 percent of participants needed rent relief in 2020, with another 24 percent adding that they would definitely need rent relief in the next three months.

          Last year, the survey was released in June and showed that 42 percent of renters were unsure about their rental stability going forward.

          In this year’s survey, 68 percent of property management companies and landlords reported that they are still implementing COVID-19 plans whether that be in the form of safety or financial issues.

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            Lack of Home Supply, Rising Costs Keep Renters in Place

            The latest Marcus & Millichap report finds market conditions that should be beneficial for multifamily properties.

            Multifamily renters who may be looking to buy a home are finding tight supplies, escalating prices and increasing financing costs. Those market conditions mean the demand for multifamily rentals will remain elevated, according to a new research brief by Marcus & Millichap.

            The report noted the number of existing houses listed for sale in February was down 32.6 percent year-over-year, the largest annual drop ever recorded. The few listings were snatched up quickly with homes staying on the market an average of 20 days, also a new low.

            The lack of homes available for sale come at the same time prices to buy a house, both existing and new, are rising along with increasing financing costs. The April research brief states the median price of an existing home was up 16.2 percent year-over-year in February to $334,500.

            New home prices rose 5.5 percent to a median price of $347,200. The report notes the 30-year mortgage rate rose above 3.1 percent in the past few weeks, up 40 basis points since early January.

            Rising costs of labor and materials, particularly lumber, are also contributing to higher home prices. Higher lumber prices have added an estimated $24,000 over the past year to the cost of a new home, according to the National Association of Home Builders.

            The combination is keeping more potential homebuyers out of the market, particularly to many renters who may be looking for homes priced less than $250,000.

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              Will You Be Ready When the Eviction Moratorium Ends?

              By David Pickron

              Recently I was at a birthday party where young children were participating in some old-fashioned games. One that struck me particularly was musical chairs. As an adult, I now realize the anxiety that was generated by that game; will I be left out or will I be the last one standing? As each round progressed and more players and chairs were removed, I could see that unique mixture of fear and fun fill the faces of these children as they competed to be the last person with a chair to call home.

              Over the past year in meeting with landlords across the country, I have come to know that look all to well as we have tried to navigate the eviction moratorium that has affected our industry. You may have even seen that face in your mirror this morning.

              As March 2021 ended, once again the eviction moratorium was continued to June 30. For most of us I don’t think this came as any great surprise. Even though the legislature approved rental relief for affected landlords, there just wasn’t enough time to get that money out to landlords (these are the same people who were able to get PPP business loans out and funded within weeks). I predict that this will be the last extension and I’m already prepared for many of you to let me have it if I am wrong. I hope and pray I am right. Let’s assume that I am right, and that the eviction moratorium completes its run at the end of June. The rental-housing market will immediately be thrust into an unforgiving version of adult musical chairs.

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                NMHC Rent Payment Tracker Finds 79.8 Percent of Apartment Households Paid Rent as of April 6

                Washington, D.C. – The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 79.8 percent of apartment households made a full or partial rent payment by April 6 in its survey of 11.6 million units of professionally managed apartment units across the country. This marks one year of tracking rent payment data following the onset of the pandemic.

                This is a 1.9 percentage point increase from the share who paid rent through April 6, 2020 and compares to 82.9 percent that had been paid by April 6, 2019. This data encompasses a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.

                “This month’s data is more evidence of a recovering economy and the resilience of the multifamily industry,” said Doug Bibby, NMHC President. “While we are not out of the woods yet, there is light at the end of the tunnel. The recently passed American Rescue Plan included $26 billion in rental assistance as well as billions more of housing resources that will prove critical to keeping families safely and securely housed and the nation’s rental housing sector stable.

                “As we look forward to growing housing demand and a return to normalcy, it is imperative that temporary policies put in place in response to the pandemic are carefully considered. Specifically, the current extension of the national eviction moratorium should be the last. Moratoriums do not address the underlying financial stress of apartment residents; instead, they force households to accumulate insurmountable levels of debt.

                “The industry and its residents have weathered the last year with creativity, compassion and dedication. Now is the time for lawmakers to move ahead with policies aimed at solving the housing affordability challenges that predated the pandemic.”

                The NMHC Rent Payment Tracker metric provides insight into changes in resident rent payment behavior over the course of each month, and, as the dataset ages, between months. While the tracker is intended to serve as an indicator of resident financial challenges, it is also intended to track the recovery as well, including the effectiveness of government stimulus and subsidies.

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                  Commercial and Multifamily Mortgage Delinquencies Decreased in March

                  CONTACT
                  Adam DeSanctis
                  [email protected]
                  (202) 557-2727

                  WASHINGTON, D.C. (April 1, 2021) – Delinquency rates for mortgages backed by commercial and multifamily properties decreased again in March, reaching the lowest level since the onset of the COVID-19 pandemic, according to the Mortgage Bankers Association’s (MBA) latest monthly CREF Loan Performance Survey. The survey was developed to better understand the ways the COVID-19 pandemic is impacting commercial mortgage loan performance.

                  “Commercial and multifamily mortgage delinquencies fell for the third straight month in March and are now at their lowest level since the pandemic disrupted the economy and commercial real estate a year ago,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “There continues to be significant differences in loan performance by property type, with higher delinquencies rates for lodging- and retail-backed mortgages.”

                  Key Findings from MBA’s CREF Loan Performance Survey for March 2021:

                  • The balance of commercial and multifamily mortgages that are not current decreased again in March to its lowest level since April 2020.
                  • 95.0% of outstanding loan balances were current, up from 94.8% in February.
                  • 3.2% were 90+ days delinquent or in REO, down from 3.5% a month earlier.
                  • 0.3% were 60-90 days delinquent, unchanged from a month earlier.
                  • 0.5% were 30-60 days delinquent, down from 0.6% a month earlier.
                  • 0.9% were less than 30 days delinquent, up from 0.8%.

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                    Urban Living Still Holds Strong Pull for Renters Study Says

                    Urban living still appeals to high income earners, and renters living in big cities are less likely to relocate to suburbs, according to a new study from StorageCafe.

                    Amid a year defined by significant disruptions, the rental market saw an increase in the share of Americans relocating – 18 percent more renters changed residences in 2020 compared to 2019. Out of all the renters moving, 68 percent of people picked urban living over the suburbs

                    Despite the pandemic and many renters moving for reasons related to COVID-19, the “exodus towards suburban or smaller towns that many anticipated on a grand scale actually materialized for a smaller fraction of the renter cohort,” the study says.

                    While about 32 percent of renters who wanted to move did choose the suburbs in the last year, that number is close to pre-pandemic renter patterns.

                    Highlights of the report:

                    • More renters moved in 2020 vs. 2019, with most upgrading to bigger homes.
                    • Los Angeles saw the most renter applications in 2020, with 60 percent of the people who moved staying in the state.
                    • 77 percent of the renters moving to New York City and 72 percent of those relocating to Philadelphia came from a different state.
                    • Millennials make up 48 percent of renters who relocated last year, followed by members of Gen Z.
                    • Only 21 percent of renters moving out of big cities relocated to suburbs.
                    • Columbus, Ohio, attracted the most renters relocating from suburbs – 77 percent, and Phoenix the fewest – 23 percent.

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