Renter mobility and multifamily mortgage default risk

Renter mobility is a major concern for the performance of multifamily mortg ages. If enough new renters are not found to replace those that move. vacan cy rates can quickly escalate to where cash flows are negative and property mortgages are in jeopardy, In this study we examine how differences in ren ter mobility patterns by property type can affect mortgage credit risk with in submarkets of an MSA. We expand the default model developed by Goldberg and Capone (2000) to use unique distributions of rental unit turnover and v acancy durations for large and small multifamily rental properties, Monte C arlo simulations then show how credit risk on multifamily mortgages is affe cted if owners of small properties are able to keep tenants longer than own ers of larger properties can. The model can be used to explore other potent ial intra-MSA differences in property market dynamics. (C) 2001 Academic Pr ess.