On Thursday, March 29, the Committee on Financial Services held a hearing titled “The Federal Regulators Response to Recent Bank Failures” to examine events leading up to the closure of Silicon Valley Bank (SVB), and Signature Bank in New York by state and federal banking regulators.
Signature collapsed earlier this month after its customers rushed to pull deposits. The bank held over $35 billion in real-estate loans at the end of 2022, which accounted for nearly half of its total loans at the time, according to Federal Deposit Insurance Corporation (FDIC) data. When regulators seized Signature Bank, New York Community Bank bought almost $13 billion of Signature's loan portfolio. However, it excluded Signature's significant multifamily housing portfolio, leaving the fate of thousands of buildings across New York City in question.
According to TreppBank Navigator data, $25.5 billion of Signature Bank’s $35.2 billion commercial real estate (CRE) portfolio is made on properties in the New York metro area. By these estimates, Signature Bank held a 12% share of the bank CRE lending market in the New York metro area, with a strong focus on multifamily loans. University Neighborhood Housing Program’s (UNHP) Building Indicator Project (BIP) has been monitoring the Signature multifamily portfolio for years, in order to protect vulnerable renters from deteriorating building conditions and displacement, which are too often the consequences of financial and physical distress in rental housing. Their data set shows high risk trends and is used by regulators and financial institutions. UNHP found that Signature’s multifamily housing portfolio has 3,000 buildings containing over 80,000 apartments - almost 80 percent of which are rent-stabilized. 3.86% of the portfolio is likely distressed and over the last 5 years, housing code violations increased by 113%. Who ends up with these loans is incredibly important to maintaining stability for New York renters.