The $1.8 trillion multifamily mortgage market has a new tool to help small-balance borrowers find and secure financing for their projects.
Multifamily investors seeking $1 million to $10 million loans must navigate through over 3,000 potential financing sources and then complete the process to secure the loan. This long, challenging process can be streamlined by using a new digital lending platform offered by Walker & Dunlop (WD 0.58%) .
Powered by machine learning, the Walker & Dunlop platform is able to connect small-balance borrowers to multiple quotes quickly. Quotes are generated using predictive algorithms based on property details and real-time proprietary data on rents, expenses, and sales comparables. This simplified process is similar to online platforms for residential mortgage quotes, but this is the first time such an option is available for multifamily borrowers.
For Walker & Dunlop, offering this platform is expected to support growth in small-balance multifamily lending. The company states that multifamily loans under $10 million accounted for $80 billion in total loan volume in 2020, representing 22% of all commercial mortgage originations that year. The benefits to these borrowers are numerous as well.
According to the company, the automated underwriting process creates a faster, more transparent borrowing experience. The platform uses predictive algorithms to analyze property cash flows and proprietary data on real-time rents, expenses, and sales comparables and then generates quotes for the borrower to review in minutes.
For multifamily borrowers, the automation of loan sizing and pricing allows for more efficient review of their financing options in order to tailor the loan to their project needs.
In another win for proptech, streamlining the multifamily lending experience is an opportunity for small investors to access funds quickly and with greater transparency. The result may allow small investors to increase their transaction activity for better growth in 2022 and beyond.