Agency Multifamily Stress Surfaces: GSE Delinquency Jumps to 0.97% in Q1

A multifamily property is any residential building containing two or more separate dwelling units under one roof — from a side-by-side duplex to a 300-unit apartment complex — where each unit has its own kitchen, bathroom, and entrance, and each unit generates independent rental income.

A lease is a legally binding contract between a landlord and a tenant that grants the tenant exclusive use of a property for a specified period in exchange for rent — establishing every right, obligation, and financial term that governs the rental relationship.

Ginnie Mae (Government National Mortgage Association) is a wholly government-owned corporation within HUD that guarantees mortgage-backed securities backed by FHA, VA, USDA, and HUD loans. Unlike Fannie Mae and Freddie Mac, Ginnie carries the full faith and credit of the U.S. government — its guarantees are backed by the federal government, not a private shareholder company.

Freddie Mac (Federal Home Loan Mortgage Corporation, FHLMC) is a government-sponsored enterprise (GSE) that purchases mortgages from lenders, packages them into securities, and sells them to investors. Along with Fannie Mae, it supports the conventional mortgage market for 1–4 unit residential properties.

Fannie Mae (Federal National Mortgage Association) is a government-sponsored enterprise that buys conforming mortgages from lenders, packages them into mortgage-backed securities, and sells them to investors on the secondary market. This recycling of capital allows lenders to issue new loans continuously — keeping residential credit available and rates lower than they would otherwise be.

APR (Annual Percentage Rate) is the total annualized cost of a loan expressed as a percentage, incorporating both the interest rate and lender fees — origination charges, discount points, broker fees — spread across the full loan term. Mandated by the Truth in Lending Act, it gives borrowers a standardized number that's always higher than or equal to the stated interest rate.

A basis point (BP or BPS) is one-hundredth of one percentage point — 0.01% or 0.0001 in decimal form — used as a precise unit of measurement for interest rates, yields, spreads, and other financial figures where small changes carry large consequences.

A spread is the numerical difference between two rates or yields — most commonly the gap between real estate cap rates and 10-year Treasury yields, or between mortgage rates and benchmark interest rates. Investors read spreads as a signal of whether real estate is attractively priced, fairly valued, or dangerously expensive relative to risk-free alternatives.

A survey is a professional measurement and mapping of a property's legal boundaries, easements, encroachments, and physical improvements, prepared by a licensed land surveyor.

PCE — Personal Consumption Expenditures — is the Federal Reserve's preferred measure of inflation in the United States. Published monthly by the Bureau of Economic Analysis, it tracks changes in the prices of goods and services consumed by households. The Fed's official inflation target is 2% Core PCE — the version that strips out volatile food and energy prices.

The Consumer Price Index (CPI) measures the average change in prices paid by urban consumers for a fixed basket of goods and services — including housing, food, transportation, and medical care — over time. It is the most widely used gauge of inflation in the United States, published monthly by the Bureau of Labor Statistics.

Negative leverage occurs when the cost of debt exceeds a property's unlevered return — meaning every dollar you borrow makes your overall yield worse, not better. It happens when the interest rate on your mortgage is higher than the property's cap rate.

GDP (Gross Domestic Product) is the total value of goods and services produced in an economy—the primary measure of economic output and growth—used to define recession (two consecutive quarters of negative growth) and confirm expansion-phase or contraction-phase.

An ADU (accessory dwelling unit) is a secondary, self-contained dwelling on the same lot as a primary residence—such as a detached garage apartment, converted basement, or backyard cottage.

The process of evaluating a borrower's credit, income, and the property to determine loan eligibility and terms.

A mortgage is a loan used to purchase real estate, with the property serving as collateral—if you stop paying, the lender can foreclose and sell the property to recover their money.

Leverage is using borrowed money to control a larger asset than you could afford with cash alone—and it amplifies both returns and risk.

Cap rate measures a property's annual net operating income as a percentage of its purchase price or current market value, assuming an all-cash purchase.