Summer Regulatory Summit eBook

Summer Regulatory Summit

July 8-10, 2024 San Jose, CA

@ www.csbs.org ♦ @csbsnews

CONFERENCE OF STATE BANK SUPERVISORS 1300 I Street NW / Suite 700 / Washington, DC 20005 / (202) 296-2840

July 8-10, 2024 Summer Regulatory Summit San Jose, CA

ATTENDEES Alabama State Banking Department Corscadden, Scott

scott.corscadden@banking.alabama.gov anne.gunter@banking.alabama.gov

Gunter, Anne

Alaska Division of Banking and Securities Schmidt, Robert

rob.schmidt@alaska.gov

Arizona Department of Insurance and Financial Institutions Caravetta, Alena

alena.caravetta@difi.az.gov

Arkansas State Bank Department Roberts, Eric

eroberts@banking.state.ar.us

California Department of Financial Protection and Innovation Acevedo, Kara

kara.acevedo@dfpi.ca.gov fanilla.cheng@dfpi.ca.gov marilyn.davis@dfpi.ca.gov cloey.hewlett@dfpi.ca.gov john.king@dfpi.ca.gov louis.laverone@dfpi.ca.gov sukyee.lok@dfpi.ca.gov avy.mallik@dfpi.ca.gov sheila.oliver@dfpi.ca.gov stephanie.shea@dfpi.ca.gov joyce.tsai@dfpi.ca.gov quincy.vien@dfpi.ca.gov summer.volkmer@dfpi.ca.gov

Cheng, Fanilla Davis, Marilyn

Hewlett, Clothilde

King, John

Laverone, Louis

Lok, Sukyee Mallik, Avy

Nahnsen-Robison, Catherine

catherine.nahnsen-robison@dfpi.ca.gov

Oliver, Sheila Shea, Stephanie

Tsai, Joyce Vien, Quincy

Volkmer, Summer

Yee, Paul

paul.yee@dfpi.ca.gov greg.young@dfpi.ca.gov

Young, Greg

Connecticut Department of Banking Chambers, Joseph

joseph.chambers@ct.gov

Delaware Office of the State Bank Commissioner Collison, Lisa

lisa.collison@delaware.gov carrie.garey@delaware.gov

Garey, Carrie

District of Columbia Department of Insurance, Securities and Banking Bakker, Sara

sara.bakker@dc.gov samuel.fuller@dc.gov

Fuller, Samuel

Florida Office of Financial Regulation Hughes, Terry

terry.hughes@flofr.gov

Georgia Department of Banking and Finance Bohannon, Brittany

bbohannon@dbf.state.ga.us hensminger@dbf.state.ga.us bfears@dbf.state.ga.us dmccaskill@dbf.state.ga.us msneed@dbf.state.ga.us kvaughn@dbf.state.ga.us

Ensminger, Heather

Fears, Bo

McCaskill, Dawn Sneed, Melissa Vaughn, Kevin

Hawaii Division of Financial Institutions Mewha, Harley

hmewha@dcca.hawaii.gov james.c.paige@hawaii.gov

Paige, James

Idaho Department of Finance Messerly, Loren

loren.messerly@finance.idaho.gov erin.vanengelen@finance.idaho.gov

Van Engelen, Erin

Illinois Department of Financial & Professional Regulation DeCarlo, David

david.decarlo@illinois.gov jacob.hamilton@illinois.gov

Hamilton, Jacob

Indiana Department of Financial Institutions Bray, Miranda

mbray2@dfi.in.gov gdremonas1@dfi.in.gov

Dremonas, George

Orr, Kristy

krorr@dfi.in.gov

Iowa Division of Banking Hingst, Zachary

zak.hingst@idob.state.ia.us shauna.shields@idob.state.ia.us

Shields, Shauna

Kansas Office of the State Bank Commissioner Patel, Pratik

pratik.patel@osbckansas.org brock.roehler@osbckansas.org luis.solorio@osbckansas.org

Roehler, Brock Solorio, Luis

Louisiana Office of Financial Institutions Finley, Jonathan

jfinley@ofi.la.gov

Michigan Department of Insurance and Financial Services Arnold, Chad

arnoldc4@michigan.gov rodriguezd2@michigan.gov

Rodriguez, Derek

Minnesota Department of Commerce Barness, Kasie

kasie.barness@state.mn.us mark.hastie@state.mn.us jacqueline.olson@state.mn.us

Hastie, Mark

Olson, Jacqueline

Mississippi Department of Banking & Consumer Finance Rogers, Stephanie

stephanie.rogers@dbcf.ms.gov perryanne.thimmes@dbcf.ms.gov

Thimmes, Perry Anne

Wiggins, Bridgette Winters, Chase

bridgette.wiggins@dbcf.ms.gov chase.winters@dbcf.ms.gov

Missouri Division of Finance Stanley, Bart

bart.stanley@dof.mo.gov

Montana Division of Banking and Financial Institutions O'Sullivan, Kelly

kosullivan@mt.gov

Nebraska Department of Banking and Finance Bailar, Darcy

darcy.bailar@nebraska.gov william.lawrence@nebraska.gov

Lawrence, William

New Hampshire State Banking Department Davidow, Catherine

catherine.j.davidow@banking.nh.gov joshua.c.hipps@banking.nh.gov robert.j.lamberti@banking.nh.gov

Hipps, Joshua Lamberti, Robert

New York State Department of Financial Services Darche, Samantha

samantha.darche@dfs.ny.gov matthew.fagan@dfs.ny.gov polly.klycepennoyer@dfs.ny.gov nick.krafft@dfs.ny.gov terry.mcmahon@dfs.ny.gov

Fagan, Matthew

Klyce Pennoyer, Polly

Krafft, Nicholas McMahon, John

North Carolina Office of Commissioner of Banks Crowder, James

jcrowder@nccob.gov bspangler@ncdoj.gov estandrews@nccob.gov

Spangler, Benjamin St.Andrews, Eugene White, Stephanie

sryals@nccob.gov

North Dakota Department of Financial Institutions Krebs, Corey

ckrebs@nd.gov rrspah@nd.gov

Spah, Ryan

Ohio Division of Financial Institutions Castricone, Robert

robert.castricone@com.ohio.gov matthew.green@com.ohio.gov

Green, Matthew

Oregon Division of Financial Regulation Anderson, Kirsten

kirsten.l.anderson@dcbs.oregon.gov alex.cheng@dcbs.oregon.gov nicole.ferroux@dcbs.oregon.gov stephen.gordon@dcbs.oregon.gov

Cheng, Alex

Ferroux, Nicole Gordon, Stephen

South Dakota Division of Banking Jensen, Brock

brock.jensen@state.sd.us

Tennessee Department of Financial Institutions Branch, Sarah

sarah.branch@tn.gov

Espensen, Daniel Gatlin, Rachel McPeak, Troy

daniel.espensen@tn.gov rachel.gatlin@tn.gov troy.mcpeak@tn.gov

Texas Department of Savings & Mortgage Lending Berry, Iain

iberry@sml.texas.gov

Utah Department of Financial Institutions Allred, Paul

pallred@utah.gov

Berrett, Shaun Blanch, Layne

shaunberrett@utah.gov

lblanch@utah.gov

Washington Department of Financial Institutions Choi, Jeanju

jeanju.choi@dfi.wa.gov ali.higgs@dfi.wa.gov corrie.mann@dfi.wa.gov jack.mcclellan@dfi.wa.gov catherine.mele@dfi.wa.gov rick.st.onge@dfi.wa.gov amanda.starnes@dfi.wa.gov deborah.taellious@dfi.wa.gov

Higgs, Ali

Mann, Corrie McClellan, Jack Mele, Catherine St. Onge, Rick Starnes, Amanda Taellious, Deborah

West Virginia Division of Financial Institutions Lawson, Kathy Wisconsin Department of Financial Institutions Michels, Tara

klawson@wvdob.org

tara.michels@dfi.wisconsin.gov

SPEAKERS Center for Responsible Learning Harnick, Ellen

ellen.harnick@responsiblelending.org

CliftonLarsonAllen, LLP Abiola-Banjac, Folashade

folashade.abiola-banjac@claconnect.com

FairPlay Saleh, Kareem

kareem@fairplay.ai

Federal Deposit Insurance Corporation

pworthing@fdic.gov

Worthing, Paul

Federal Reserve Bank of Atlanta Bailey, Brian

brian.bailey@atl.frb.org

Federal Reserve Bank of San Francisco

robert.moore@sf.frb.org

Moore, Robert

Klaros Group Alt, Konrad

konrad@klarosgroup.com

Orrick McGuire, James

jmcguire@orrick.com

SBS Cybersecurity Thomas, Christy CSBS STAFF Barbieri, Dana Dockter, Lauren Jarmin, Jennifer Krasnow, Alejandra Lambert, Matthew Madison, Rich Milhorn, Brandon Monnet, Sebastien Pfaff, Mary Margaret Quist, Mary Beth Land, Kelly

christy.thomas@sbscyber.com

dbarbieri@csbs.org ldockter@csbs.org jjarmin@csbs.org akrasnow@csbs.org mlambert@csbs.org kland@csbs.org rmadison@csbs.org bmilhorn@csbs.org smonnet@csbs.org mpfaff@csbs.org mbquist@csbs.org nross@csbs.org ltinsley@csbs.org tvasile@csbs.org bzubrick@csbs.org

Ross, Nathan Tinsley, Lisa Vasile, Tony

Zubrick, Brennan

Summer Regulatory Summit July 8-10, 2024 | All Times Pacific Time | San Jose, CA

Monday, July 8 1:00 PM

Welcome Remarks | Almaden Ballroom, Lobby Level 1:00 PM-1:15 PM Clothilde Hewlett Commissioner, California Department of Financial Protection & Innovation

Sebastien Monnet Vice President, Workforce Development & Acting Chief Learning Officer, Conference of State Bank Supervisors

1:15 PM

Strengthening the State System - Let's Talk RegTech/SupTech 1:15 PM-2:00 PM Brandon Milhorn President & CEO, Conference of State Bank Supervisors

Mary Beth Quist Senior Vice President, Bank Supervision, Conference of State Bank Supervisors

Brennan Zubrick Vice President, Research & Analytics, Conference of State Bank Supervisors

2:00 PM

Break 2:00 PM-2:15 PM

2:15 PM

Banking as a Service and Bank/Fintech Partnerships 2:15 PM-3:15 PM Konrad Alt Partner & Co-Founder, Klaros Group

3:15 PM

Break 3:15 PM-3:30 PM

3:30 PM

Leveraging A.I. to Assess Automated Decisioning Models 3:30 PM-4:30 PM Kareem Saleh Founder & CEO, FairPlay

4:30 PM

Open Forum 4:30 PM-5:00 PM

5:30 PM

Networking Reception | Market & Patio, Lobby Level 5:30 PM-7:30 PM

Tuesday, July 9 8:00 AM

Breakfast | Market, Lobby Level 8:00 AM-9:00 AM

9:00 AM

Legal Track: Anatomy of an Enforcement Action | Almaden Ballroom 1, Lobby Level 9:00 AM-10:00 AM Kirsten Anderson Deputy Administrator, Oregon Division of Financial Regulation

Scott Corscadden Supervisor, Bureau of Loans, Alabama State Banking Department Erin Van Engelen Consumer Finance Bureau Chief, Idaho Department of Finance

George Dremonas (moderator) General Counsel, Indiana Department of Financial Institutions Supervision Track: Commercial Real Estate Insights | Almaden Ballroom 2, Lobby Level 9:00 AM-10:00 AM Brian Bailey Senior Policy Adviser, Division of Supervision & Regulation, Federal Reserve Bank of Atlanta

10:00 AM

Break 10:00 AM-10:15 AM

10:15 AM

Legal Track: Model Laws - Adoption, Implementation, and Current Risks | Almaden Ballroom 1, Lobby Level 10:15 AM-11:15 AM Mark Hastie Director of Non-Depository Financial Institutions, Minnesota Department of Commerce

Zachary Hingst Legal Counsel, Iowa Division of Banking

Kathy Lawson General Counsel, West Virginia Division of Financial Institutions

Mary Pfaff (moderator) Senior Director, State Legislative Analysis, Conference of State Bank Supervisors Supervision Track: The Future of Supervision, Regulation, and Examination Tools | Almaden Ballroom 2, Lobby Level 10:15 AM-11:15 AM Mary Beth Quist Senior Vice President, Bank Supervision, Conference of State Bank Supervisors

11:15 AM

Break 11:15 AM-11:30 AM

11:30 AM

Legal Track: Interstate Cooperation, Collaboration, and Information Sharing | Almaden 1 Ballroom, Lobby Level 11:30 AM-12:30 PM Matt Lambert Deputy General Counsel, Policy, Conference of State Bank Supervisors Supervision Track: Cybersecurity & Vendor Risk Management | Almaden Ballroom 2, Lobby Level 11:30 AM-12:30 PM Christy Thomas Audit Manager, SBS Cybersecurity

12:30 PM

District Lunches & Conversations 12:30 PM-2:00 PM District I Lunch | Santa Clara 1, 2nd Floor District II Lunch | Santa Clara 2, 2nd Floor District III Lunch | San Carlos 1, 2nd Floor District IV Lunch | San Carlos 2, 2nd Floor District V Lunch | Plaza, 2nd Floor

2:00 PM

Legal Track: DIDMCA | Almaden Ballroom 1, Lobby Level 2:00 PM-3:00 PM Ellen Harnick Executive Vice President & Director of State Policy, Center for Responsible Lending

James McGuire Partner, Orrick

Matt Lambert (moderator) Deputy General Counsel, Policy, Conference of State Bank Supervisors Supervision Track: Federal Regulators Panel | Almaden Ballroom 2, Lobby Level 2:00 PM-3:00 PM Robert Moore Assistant Vice President, Community Banking Organizations, Federal Reserve Bank of San Francisco

Paul Worthing Regional Director, San Francisco Region, Federal Deposit Insurance Corporation

3:00 PM

Break 3:00 PM-3:15 PM

3:15 PM

Legal Track: NMLS & SES Policy Briefing | Almaden Ballroom 1, Lobby Level 3:15 PM-4:15 PM Lisa Tinsley Senior Director, Product Policy, Conference of State Bank Supervisors Alejandra Krasnow Senior Director, Product Policy, Conference of State Bank Supervisors Rich Madison Vice President, Product Policy, Conference of State Bank Supervisors Supervision Track: Data Analytics | Almaden Ballroom 2, Lobby Level 3:15 PM-4:15 PM Shaun Berrett Chief Examiner, Utah Department of Financial Institutions

Kristy Orr Senior Field Manager and Chief Analytics Officer, Indiana Department of Financial Institutions

Shauna Shields Bank Bureau Chief, Iowa Division of Banking

Brennan Zubrick (moderator) Vice President, Research & Analytics, Conference of State Bank Supervisors Legal Track: Open Forum | Almaden Ballroom 1, Lobby Level 4:15 PM-4:45 PM Supervision Track: Open Forum | Almaden Ballroom 2, Lobby Level 4:15 PM-4:45 PM

4:15 PM

Wednesday, July 10 7:30 AM

Breakfast | Market, Lobby Level 7:30 AM-8:30 AM

8:30 AM

CSBS Bank and Nonbank Policy, Supervision, and Legislative Insights | Almaden Ballroom, Lobby Level 8:30 AM-9:30 AM Dana Barbieri Vice President, Legislative Affairs, Conference of State Bank Supervisors

Nathan Ross Vice President, Policy, Conference of State Bank Supervisors

Tony Vasile Vice President, Nonbank Supervision and Enforcement, Conference of State Bank Supervisors

9:30 AM

Break 9:30 AM-9:45 AM

9:45 AM

Combating Fraud in Financial Services 9:45 AM-10:45 AM Folashade Abiola-Banjac Principal, CliftonLarsonAllen LLP

10:45 AM

Closing Remarks 10:45 AM-11:00 AM Sebastien Monnet Vice President, Workforce Development & Acting Chief Learning Officer, Conference of State Bank Supervisors

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Anatomy of an Enforcement Action Hometown Lenders

CSBS Summer Regulatory Summit July 9, 2024

Confidential Information

Hometown Lenders Golf Championship

“We saw a bit of a kindred goal between Korn Ferry Tournament trying to help people get to that next level and how our company had evolved.”

Who Are We?

• Back in the Day:

Kirsten Anderson

Kelly O’Sullivan

Scott Corscadden

Erin Van Engelen

George Dremonas

• Today: We’re like totally professionals.

Why Are We Here?

Goal: Improve enforcement. Bonus, perhaps have fun in the process.

Agenda

• Enforcement Actions by the Panelists

• Audited Financials

• Investigation

• What’s Next?

• Q&A

Enforcement Actions by Panelists

• Revoked

 Alabama and Montana

• Terminated-Surrendered/Cancelled (Failure to Renew)  Idaho and Oregon

Oregon Action

Audited Financials (Hindsight Peek @ Prevention) • Excerpt from Financial Statements December 31, 2022. NMLS Upload Date: April 24, 2023. Note 2 - Going Concern *** [A]s of the year ended December 31, 2022, the Company had a net loss of $27 million and stockholder’s equity of $12 million. To date in 2023, the Company has continued to operate at a loss. These factors create an uncertainty about the Company’s ability to continue as a going concern. Management’s plans include the following: Cost Reduction *** Stockholder Contributions ***

Oregon’s Analysis

Audited Financials (cont.) Revenue Expenses

Advertising Spend

• 2014 • 2015 • 2016 • 2017* • 2018 • 2019 • 2020 • 2021 • 2022 #

32M 33M 36M 39M 46M 83M

31M 32M 36M 38M

2.2M 2.7M 2.3M 2.1M 1.7M 2.3M 2.6M 4.7M 6.4M

47M (900K loss) 84M (600K loss)

144M 229M 128M

128M 223M

167M (27M loss)

*Taylor Jr. buys controlling interest #Going concern risk; 500K donation to children’s hospital; 5-year golf sponsorship signed

Investigation

• Regulator Calls

– Panelist Lightning Round

 What went right on those calls?

 What can be improved for future calls?

 What would you do differently?

– Attender Thoughts?

• Other Investigative Tools

• Timeline

• Alternatives to Enforcement

Timeline - Oregon

2017 – Taylor buys controlling interest 2018 – First net loss of $900k 2019 – Loss of $600k

5/20/21 Fannie Mae suspends Seller/Servicer (does not disclose to state regulators until September 2023) 12/31/22 – Liquidity crunch with upside down current ratio but still profitable on loans held for sale at 4.05 Late 2022 –10/23 – Hometown closes hundreds of FHA and VA loans but does not remit MIP or funding fees 3/31/23 – Back to right side on current ratio at 106, but margin on loans held for sale drops to almost even at 0.89 6/31/23 – Current ratio down slightly to 104, but margin on loans held for sale drops to negative .07 6/23 - 10/23 – MLO count reduces from 400 to 69 8/23 – 9/23 – Hometown contacted borrowers of loans sold to Siwell and told them to send first payment to Hometown not Siwell 9/23 – Loans purchased by Equity Prime from Hometown are not insured when they should be 9/23 – 10/23 – Hometown fails to forward funds on renovation loans to Equity Prime 9/13/23 – Fannie Mae issues Termination 10/5/23 – Notice to states on Hometown & Box invitations sent out 10/6//23 – Staff cut and transition to broker model 10/6/23 – Alabama issues Notice of Intent to Revoke license 10/17/23 – Washington issues temporary C&D 10/30/23 – CA DFPI issues Order Summarily Revoking Residential Mortgage Lender and/or Servicer License 11/2/23 – Montana holds call with former MLO for Hometown Lenders 11/6/23 – Montana issues temporary C&D 11/15/23 – Alabama issues Final Order revoking license 11/17/23 – Ohio issues a Notice of Intent to Revoke 11/22/23 – Kentucky issues Emergency Order of Suspension 11/27/23 – Maine issues C&D 12/28/23 – Montana issues Final Order of Revocation of Licenses and Imposition of Civil Penalties 1/10/24 – Michigan enters Order for Summary Suspension of Registrations 1/10/24 – Montana issues Notice of Violation, Proposed Imposition of Civil Penalties and Opportunity for Administrative Hearing 1/26/24 – Montana issues Final Order and Imposition of Civil Penalties 2/26/24 – Connecticut issues Notice of Automatic Suspension, Notice of Intent to Revoke Mortgage Lender License… 6/3/24 – Hometown Lenders files Chapter 11

Timeline - Montana

• • • • • • • • • • • • • • • • • • •

10/18/2023 10/23/2023 10/30/2023 11/2/2023 11/3/2023 11/3/2023 11/6/2023 11/17/2023 11/21/2023 12/6/2023 12/20/2023 12/22/2023 12/28/2023 1/3/2024 1/9/2024 1/10/2024 1/22/2024 1/25/2024

MBOH emails us, no response from HTL, need info on their loan

Subpoena Duces Tecum to Hometown Lenders

Subpoena Duces Tecum to MBOH

Call with Colleen Wood, branch manager for HTL

Call with HUD OIG George Richardson. They can't share info

Email from Evan Extine, The Stanton Law Firm Temporary cease and desist to Hometown Lenders

Notice of proposed revocation lender and broker license and $75,000 civil penalty

Final Cease and Desist Order to HTL as servicer

Subpoena Duces Tecum - ICE Technologies – Encompass

Crosby complaint - unsure who to pay on Jan 1

Division sent letters to borrowers

Final revocation to Hometown Lenders

Email from Doris Britton to Matt - your payment is due to HTL use this link Subpoena Duces Tecum-Applied Business Software-The Mortgage Office

Notice of Violation, HTL, Taylor and Britton

Call from Frank Childress -Represents First Horizon Bank

Email from Commissioner to Childress

2/9/2024

Dismissal of Notice of Violation

What’s Next ( Freestyle Segment)

• Contacting Customers

• Bond claim

• Federal Partners

• Multistate enforcement protocol? What does that look like?

• Closing Thoughts?

Q&A

Closing with More Golf

“The call was bounced back with an automatic recording that said: ‘This number is not currently set up to receive calls.’”

Thanks for Your Time

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title

2024 CRE - Turbulence Ahead?

July 09, 2024 Brian Bailey S&R – CRE Subject Matter Expert

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title

The views expressed in this document and presentation are those of the author and do not necessarily reflect the views of the Federal Reserve Bank of Atlanta, the Federal Reserve Board of Governors, or the Federal Reserve System.

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title Greater Uncert inty Ah ad?

• Resilient Economy • Mixed Commercial Real Estate (CRE) Performance • Challenged CRE Finance

3

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Labor Market Conditions

Source: Bureau of Labor Statistics; Federal Reserve Bank of Kansas City; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

Data through May 2024

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Labor Market Conditions

Source: Bureau of Labor Statistics; Federal Reserve Bank of Kansas City; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

Data through April 2024

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Inflation (CPI)

Source: Bureau of Labor Statistics; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

Data through May 2024

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Inflation (CPI & PCE)

Source: Bureau of Labor Statistics; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

Data through May 2024

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title U.S. Inflation and Gasoline Price Trends

8

Source: Bureau Labor Statistics,; U.S. Energy Administration; Federal Reserve Bank of Atlanta, Center for Real Estate Excellence

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title onsumer Delinquencies

Source: Equifax. NY Fed

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title FOMC Summary Economic Projections 1Q24 v 2Q24

1Q 2024

2Q 2024

10

Source: Federal Reserve/Board Of Governors

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Offi e Vacancy Rates, YoY Change 2024 Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

11

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Offi e Vacancy Rates, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

12

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Multifamily Vacancy Rate, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

13

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Multifamily Vacancy Rates Year-Ago Change, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

14

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title Multifamily New Supply New Supply as a % of Inventory, Rapid Supply Growth Is Creating and May Extend Challenges

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 1.7% 1.5% 1.2% 1.3% 1.0% 1.1% 1.3% 1.6% 1.3% 0.7% 0.5% 0.8% 1.3% 1.8% 2.0% 2.1% 2.3% 2.2% 2.2% 2.6% 2.3% 2.4% 3.1% 1.2% 1.4% 1.8% 1.2% 1.2% 1.4% 4.8% 3.7% 2.7% 1.8% 1.1% 1.5% 1.2% 2.8% 1.2% 0.6% 0.3% -0.5% 1.3% 1.4% 1.8% 1.8% 2.9% 1.7% 2.6% 3.2% 1.8% 3.1% 4.6% 1.7% 1.9% 2.1% 1.2% 1.2% 1.5% 8.9% 4.2% 2.5% 1.2% 1.4% 2.0% 2.2% 6.5% 2.9% 1.1% 0.2% 2.4% 4.2% 4.8% 5.0% 5.7% 5.3% 3.5% 4.7% 5.5% 5.0% 5.9% 7.8% 4.4% 3.6% 3.8% 2.5% 1.3% 1.8% 1.2% 1.2% 1.5% 2.5% 2.1% 3.9% 2.2% 2.2% 1.8% 0.8% 0.1% 1.6% 2.0% 2.7% 4.5% 3.1% 4.3% 3.8% 3.4% 4.8% 3.3% 2.7% 3.1% 0.7% 1.4% 2.2% 2.1% 1.6% 2.1% 5.2% 2.6% 1.8% 3.0% 2.0% 2.1% 2.7% 3.5% 4.3% 1.9% 0.4% 0.9% 3.4% 4.0% 6.0% 4.1% 6.0% 5.2% 3.7% 5.9% 5.8% 4.4% 6.5% 2.1% 4.4% 5.1% 3.2% 2.1% 2.7% 0.8% 0.6% 0.4% 0.4% 0.3% 0.6% 0.7% 0.5% 0.5% 0.6% 0.1% 0.1% 1.1% 1.0% 1.0% 1.8% 1.9% 1.9% 1.8% 1.9% 1.8% 1.2% 1.9% 0.9% 0.5% 0.7% 0.7% 1.0% 1.1% 2.0% 1.2% 0.8% 0.5% 0.2% 1.0% -0.1% 0.1% 0.1% 0.1% 0.5% 0.4% 0.6% 0.7% 1.1% 2.4% 1.4% 0.9% 0.7% 1.8% 0.5% 2.0% 2.7% 0.9% 1.1% 1.8% 0.6% 0.6% 0.9% 2.0% 2.0% 1.4% 1.1% 0.8% 1.4% 1.2% 2.6% 2.2% 0.2% 0.4% 1.1% 1.8% 2.1% 2.5% 3.3% 4.2% 3.4% 3.5% 3.6% 3.4% 3.0% 3.9% 1.9% 1.8% 2.1% 1.4% 1.8% 1.9% 5.4% 5.1% 2.9% 1.3% 0.8% 0.9% 1.0% 1.5% 2.0% 0.5% 0.0% 1.0% 1.8% 4.5% 4.3% 2.9% 4.2% 4.6% 4.1% 3.2% 3.7% 3.8% 4.3% 1.9% 2.6% 3.1% 2.2% 1.3% 1.9% 0.8% 0.7% 0.8% 0.5% 0.7% 0.0% 0.5% 0.2% 0.3% 0.1% -0.1% 0.2% 0.0% 0.3% -0.1% 1.3% 1.0% 0.2% 1.1% 1.1% 1.5% 0.9% 1.5% 0.6% 0.6% 0.6% 0.2% 0.4% 0.6% 0.9% 1.1% 0.6% 1.5% -0.2% 0.0% 0.6% 0.4% 1.7% 0.8% 0.0% 0.7% 1.7% 3.5% 2.0% 3.1% 3.4% 2.1% 1.4% 5.4% 1.8% 2.4% 4.2% 1.0% 2.0% 3.6% 2.4% 1.2% 1.8% 1.2% 1.2% 2.8% 2.5% 1.6% 1.3% 2.7% 4.2% 1.6% 0.7% 0.1% 0.4% 1.3% 2.9% 3.4% 3.3% 2.7% 1.1% 2.0% 3.6% 2.9% 2.5% 3.6% 1.4% 1.1% 1.2% 0.8% 1.3% 1.6% 2.9% 1.7% 0.8% 0.6% 0.8% 2.1% 4.7% 2.7% 3.3% 0.3% 0.0% 0.7% 2.5% 0.6% 2.6% 2.0% 2.7% 2.9% 4.4% 4.6% 3.4% 5.7% 7.5% 3.2% 2.8% 2.5% 1.4% 2.0% 2.1% 4.0% 1.8% 1.4% 2.3% 0.6% 1.3% 1.6% 1.4% 0.9% 0.7% 0.3% 0.5% 1.5% 1.4% 3.0% 2.4% 3.2% 2.5% 1.5% 3.9% 2.8% 2.6% 3.0% 0.7% 1.6% 2.1% 1.2% 1.6% 1.8% 2.6% 2.7% 1.1% 2.2% 0.0% 0.8% 3.1% 2.2% 2.8% 0.3% 0.0% 0.3% 0.2% 0.7% 1.5% 1.8% 2.2% 1.6% 1.7% 2.1% 1.7% 1.4% 3.5% 1.3% 1.4% 1.2% 0.8% 1.2% 1.3% 0.6% 0.4% 0.4% 0.5% 0.4% 0.4% 0.5% 0.7% 0.4% 0.3% 0.0% 0.1% 0.3% 0.7% 0.8% 1.1% 0.4% 1.0% 1.1% 1.2% 1.1% 0.9% 1.1% 0.2% 0.5% 0.6% 0.5% 0.6% 0.5% 2.0% 1.0% 0.8% 1.3% 0.6% 0.6% 1.2% 0.9% 1.2% 0.0% 0.2% 0.6% 1.5% 2.3% 2.6% 2.1% 1.4% 3.8% 2.7% 3.2% 2.6% 3.3% 2.2% 2.0% 1.3% 2.3% 0.8% 1.2% 1.3% 3.4% 2.6% 0.3% 0.7% 0.8% 0.7% 1.1% 2.0% 0.3% -0.1% -0.4% 0.5% 0.5% 0.5% 0.6% 0.5% 0.4% 0.2% 1.3% 0.1% 1.6% 1.0% 1.2% 0.5% 0.9% 1.4% 0.5% 0.7% 0.8% 0.8% 0.0% 0.6% 0.5% 0.1% -0.1% 0.9% 1.0% 1.1% 0.5% 0.1% 0.1% 1.5% 2.0% 2.7% 4.8% 2.5% 3.4% 4.9% 5.0% 3.8% 3.4% 3.7% 1.5% 2.9% 3.8% 1.8% 2.8% 0.0% 0.6% 0.6% 0.1% 0.3% 0.5% 0.2% 0.3% 0.6% 0.4% 0.4% 0.7% 1.1% 0.3% 1.2% 1.8% 2.7% 3.3% 2.6% 2.4% 2.2% 1.8% 2.2% 2.6% 0.9% 1.8% 1.8% 1.5% 1.8% 1.8% 1.1% 1.9% 1.6% 1.1% 0.6% 0.2% 0.5% 0.7% 0.3% 0.0% 0.5% 0.6% 1.6% 1.6% 2.0% 1.9% 1.7% 2.7% 2.5% 4.2% 4.3% 4.3% 4.7% 1.4% 1.7% 1.5% 1.0% 1.4% 1.6% 3.3% 1.2% 0.0% 1.1% 2.3% 1.7% 2.2% 2.0% 1.2% 1.6% 1.2% 1.4% 3.5% 5.2% 4.8% 5.5% 7.5% 4.8% 3.3% 5.1% 4.9% 5.8% 8.3% 3.2% 3.6% 4.4% 3.2% 1.9% 2.6% 0.7% 0.7% 0.5% 0.5% 0.6% 0.6% 0.8% 0.5% 0.8% 0.7% 0.6% 0.4% 0.7% 0.9% 1.1% 1.1% 2.1% 1.7% 1.4% 1.2% 1.4% 1.9% 1.5% 0.4% 0.8% 1.3% 1.2% 1.2% 0.9% 1.3% 0.6% 0.8% 0.8% 0.6% 0.1% 0.2% 0.1% 1.1% 0.7% 0.3% 0.5% 0.9% 2.3% 1.6% 1.3% 3.0% 1.8% 2.6% 2.2% 2.2% 2.4% 4.2% 1.4% 2.6% 3.2% 1.5% 1.0% 1.4% 1.9% 5.6% 2.5% 2.3% 2.2% 2.3% 2.6% 5.0% 2.0% 0.7% 0.3% 0.8% 2.8% 3.2% 4.3% 2.8% 4.3% 5.7% 4.2% 4.7% 4.8% 4.5% 6.7% 2.6% 2.7% 3.3% 1.9% 2.3% 2.6% 1.1% 5.3% 3.3% 0.9% 1.2% 2.7% 0.7% 0.5% 0.5% 0.3% 0.0% 2.1% 3.3% 2.9% 3.3% 2.7% 4.2% 4.5% 1.7% 3.3% 2.9% 2.8% 3.8% 1.6% 2.1% 3.5% 2.0% 1.9% 2.3% 2.7% 3.0% 1.0% 1.6% 1.1% 1.3% 1.7% 3.0% 2.6% 0.0% 0.0% 0.1% 1.0% 2.3% 2.2% 1.7% 2.0% 2.9% 2.8% 2.6% 3.5% 4.5% 4.9% 1.7% 2.4% 3.1% 2.5% 1.1% 1.7% 6.7% 3.0% 1.6% 1.8% 2.0% 0.7% 6.1% 3.1% 4.4% 1.9% 0.3% 0.8% 6.3% 5.1% 3.2% 4.5% 3.0% 4.0% 3.7% 4.8% 2.1% 4.0% 8.2% 2.7% 3.4% 3.8% 1.5% 1.9% 2.5% 1.5% 0.5% 0.4% 2.9% 1.7% 0.8% 0.9% 0.5% 2.1% 0.5% 2.4% 0.9% 1.5% 2.0% 2.1% 2.5% 1.8% 3.5% 2.2% 4.0% 3.7% 2.1% 6.4% 0.4% 2.5% 3.0% 1.4% 2.0% 2.2% 1.1% 1.7% 0.0% 1.9% 0.3% 2.4% 0.6% 1.6% 3.6% 3.1% 0.3% 1.4% 3.2% 3.4% 5.6% 2.4% 5.7% 6.3% 5.5% 4.9% 6.0% 5.4% 6.0% 1.5% 2.9% 3.7% 1.6% 1.9% 2.3% 2.4% 2.4% 2.1% 2.4% 3.3% 3.0% 3.2% 2.3% 3.1% 1.1% 1.4% 2.5% 3.2% 4.3% 4.2% 3.5% 3.6% 3.2% 2.8% 4.4% 2.2% 3.2% 3.8% 2.4% 2.1% 3.2% 1.6% 2.0% 2.4% 0.8% 0.4% 0.8% 0.1% 0.6% 0.1% 0.5% 0.3% 0.6% 0.3% 0.0% 0.1% 1.7% 1.5% 1.5% 2.3% 2.3% 1.4% 1.3% 1.6% 1.5% 1.1% 0.6% 0.1% 0.7% 0.9% 0.6% 0.6% 0.9% 0.9% 3.4% 0.1% 1.0% 0.7% 1.2% 0.6% 0.4% -0.1% 0.4% 0.2% 3.0% 1.4% 4.3% 2.9% 3.3% 1.1% 3.4% 2.0% 2.2% 1.9% 1.8% 0.5% 0.9% 1.7% 1.7% 1.1% 0.5% 1.2% 3.6% 2.3% 0.9% 1.6% 1.5% 1.0% 1.5% 1.4% 1.4% 0.5% 0.4% 0.9% 1.1% 3.1% 1.5% 1.9% 2.1% 4.1% 2.0% 3.4% 3.1% 4.0% 3.3% 2.5% 2.1% 2.4% 1.5% 1.7% 1.9% 1.8% 1.3% 1.1% 1.4% 1.4% 1.0% 2.0% 2.0% 1.8% 1.2% 1.1% 1.6% 2.3% 3.6% 2.7% 2.5% 2.5% 2.2% 2.6% 2.9% 2.6% 2.3% 2.5% 0.7% 1.4% 1.9% 1.8% 1.0% 1.5%

United States Atlanta - GA Austin - TX Boston - MA Charlotte - NC Chicago - IL Cincinnati - OH

Dal las-Fort Worth - TX

Denver - CO Detroi t - MI

Fort Lauderdale - FL

Houston - TX

Jacksonvi l le - FL Kansas Ci ty - MO Las Vegas - NV Los Angeles - CA Loui svi l le - KY

Memphi s - TN

Miami - FL

Mi lwaukee - WI Minneapol i s - MN

Nashvi l le - TN New York - NY

Northern New Jersey - NJ

Orlando - FL

Palm Beach - FL Phoenix - AZ Raleigh - NC Richmond - VA Sal t Lake Ci ty - UT San Antonio - TX San Franci sco - CA

San Jose - CA Tampa - FL

Washington - DC

Source: Green Street; S&R - Risk Analysis Unit/Federal Reserve Bank of Atlanta

15

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title e Multifamily Revenue Growth Revenue and Occupancy Growth

Top 50 U.S. Markets Revenue and Occupancy Growth

10.0% 15.0% 20.0%

0.0% 5.0%

-10.0% -5.0%

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Source: Green Street; S&R - Risk Analysis Unit/Federal Reserve Bank of Atlanta

16

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Retail Vacancy Rates, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

17

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Retail Vacancy Rates Y ar-Ago Change, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

18

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Industrial Vacancy Rat s, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

19

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Industrial Vacancy Rates Year-Ago Change, 2024Q1

Source: CoStar; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

20

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL Upcoming CRE Debt Maturity Wall (in $ Billions)

CMBS – commercial mortgage-backed securities CLO – collateralized loan obligation

Source: MSCI – Real Capital Analytics; S&R – Risk Analysis Unit/Federal Reserve Bank of Atlanta

Click to edit Master title style Secondary Title NONCONFIDENTIAL // EXTERNAL The value: between $8 - $32 Million

• Appraisers are not the only professionals having difficulty establishing value.

• In this example, multiple

brokerage companies were asked to provide opinions of value on the same office building in one of the better U.S. office markets.

Source: Google.com; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title Change in Value Includes Both Transactions and Appraisals (May 2024)

Except for malls, most CRE segments have seen a modest decline in value over the past 12 months. The Office and Self-storage sectors have seen notable declines in the past 12 months. Apartment, Mall and Office values have declined from the 2021/2022 peak by over 25%.

10%

5%

0%

-2%

-3% -5% -3%

-10%

-6%

-6% -8%

-9%

-13%

-14%

-20%

-16%

-17% -19%

-17%

-20%

-23%

-30%

-26%

-26%

-40%

-37%

Past Year

Recent Peak

Source: Greenstreet; Center for Real Estate Excellence/Federal Reserve Bank of Atlanta

NONCONFIDENTIAL // EXTERNAL

Click to edit Master title style Secondary Title YOY Change in Value by Sector May 2024

Greenstreet

MSCI RCA

YOY%

YOY%

Transaction + Appraisal

Transaction

Apartments

-8.9% -16.9% -1.8% -8.7% -7.2%

-6%

Office Retail

-14%

-2%

Industrial

8%

Hotels

-3%

Data: Greenstreet’s index includes both transactions and appraisals. MSCA RCA’s index includes only transactions.

Source: Green Street; MSCI RCA; S&R-Risk Analysis Unit/Federal Reserve Bank of Atlanta

24

© 2024 Federal Reserve Bank of St. Louis