The Federal Reserve’s lending program is credited with helping the MBS and ABS sector even though investor demand is falling short of expectations.

The rating service its stepping away from rating new commercial MBS backed by single-borrower hotel loans due to uncertainty prompted by the coronavirus. Only one such deal has been issued since April.

The HOPE Act seeks to create a liquidity facility for commercial MBS borrowers who weren’t eligible for PPP or MSLP. The bill suggests financial institutions originate Treasury-guaranteed preferred equity instruments to qualified borrowers.

But another study found income overstatement commonly existed in commercial CMBS underwriting between 2013 and 2019, contributing to the rapid deterioration during the pandemic.

Not surprisingly, mortgages on retail and lodging properties were hit the hardest in the economic fallout of the coronavirus. Agency multifamily MBS issuance rose significantly in the second quarter. (Includes data chart.)

Commercial real estate trade groups have urged the Senate Banking Committee to expand the Federal Reserve’s Main Street Lending Program.

The net asset value of the Blackstone Real Estate Income Fund dropped by 24% to $443 million as of March 31 from $584 million at the beginning of the year.

The $413.3 million commercial MBS backed by a portfolio of hotels was originally announced in February but postponed due to market volatility caused by the coronavirus pandemic.

The bulk of loans from the July 6 Term ABS Loan Facility have gone to investors in legacy commercial MBS.

The delinquency rate on commercial MBS could still be headed higher, but with smaller increases, according to industry experts.