H
ouston's multifamily market is showing signs of significant distress, with 12 properties worth $340 million scheduled for foreclosure auction. This marks a notable increase from the few properties listed last month. Two Falls Apartment Group properties, Falls of Las Villas and Falls of Alta Vista, are among those facing foreclosure.

    According to Terri Clifton, president of Better World Properties, fewer than half of the scheduled properties will likely be auctioned off, as lenders often negotiate new terms or extensions to avoid outright foreclosure. "You're starting to see lenders take it to foreclosure with the possibility that they'll come up with something," she said.

    Houston ranked fifth nationally for commercial foreclosure starts in the third quarter, with 1,791 filings recorded by Attom Data Solutions. Rising interest rates and a tightening financial market have limited refinancing or debt restructuring options for both lenders and borrowers.

    The current market conditions are largely attributed to overvaluation during low-interest years, resulting in a 20% drop in multifamily property values. This has created a significant gap between the properties' worth and their loan amounts. Lenders may file for foreclosure as leverage for further negotiation without an immediate intent to seize the property.

    Some lenders are quietly pursuing deals to pass existing loans to buyers of struggling properties, sidestepping the expenses tied to foreclosure. However, many deals still fall through due to potential buyers assessing financial risks.

    Below is a list of multifamily properties scheduled for foreclosure action:

    * Village at Piney Point: $74 million loan from Fannie Mae

    * The Palms on Westheimer: $54.6 million loan from DLP Lending Fund LLC

    * Pecan Square Village: $38.7 million loan from DLP Lending Fund LLC

    * Pine Lake Village: $10.6 million loan from Lument REO LLC

    * Ridge Point: $18.8 million loan from Lument REO LLC

    * Green Tree Place Apartments: $20.1 million loan from Lument REO LLC

    * Falls of Las Villas and Falls of Alta Vista: $33.5 million loan from Owemanco Mortgage Holding Corp. and TIG Romspen US Master Mortgage LP

    * Reserve at 63 Sixty Three: $37.3 million loan from Reserve 63 LLC

    * Park North: $56.3 million loan from Arbor Realty Trust

    * Sutter Ranch: $18.2 million loan from Berkeley Point Capital LLC

    * The Vintage: $24.7 million loan from CBRE Capital Markets