CRE loan maturity management, explained.

What happens when a commercial real estate loan comes due

The life of one maturing loan, in five steps

1. The loan is made2019: $38.5 million on an office building, 4.15% fixed, eight years, payments set on 25 years. 94% leased, worth $55 million.
2. The years passEvery payment on time. Rates rise, tenants shrink, and buyers start paying less for offices.
3. The loan is sized again before its dateToday's income, today's value, today's rate. The new loan would be $8.97 million short. This is where the decision is made, early or late.
4. Refinance, extend or work outThe options are compared, the loan is graded, the decision is approved and written up for examiners.
5. The balloon is paid or re-datedA refinance pays it; an extension moves it to a later date, which comes round again.

Step 3 is the subject of this guide. The bank, building, people and figures in this example are fictional.

Four surprises about CRE loans that reach their balloon date

Balloon, refinance gap, debt service coverage, extension

Fourteen terms are defined in the one-page summary.

Why most CRE loans end with a balloon, and how the refinance gap opens

In shortA short term on a long payment schedule leaves most of the loan unpaid at maturity, so repayment depends on a new loan sized on new facts. When income or value has fallen, or rates have risen, the new loan is smaller than the balloon and a gap opens. Maturity management is finding that gap early enough to close it.

Lenders like short terms on income property because each maturity is a chance to look again. The OCC's handbook calls it "a built-in restructuring trigger, for example, a loan with a five-year tenor and payments based on a 20-year amortization", which lets the bank "periodically review the strength of the primary and secondary repayment sources and re-underwrite the credit".2 Borrowers like long amortization because it keeps the monthly payment low. The price of both is the balloon.

The three questions behind every maturity

How the gap opens on one loan

In the guide's example, all three moved against the loan at once. Net operating income fell from $3,664,000 at origination to $2,610,000 underwritten today, as tenants left and the largest one shrank. The value fell 40.7%, from $55.0 million to $32,625,000, as the cap rate rose and income fell. The rate on a new office loan at the example bank is 7.10% against the 4.15% the borrower pays now. The balloon is $30,174,256; the largest new loan the bank's terms allow is $21,206,250.

The building still pays: coverage on today's 4.15% payment is 1.11x on trailing income. The trouble sits at the date, when the loan has to be replaced on 2026 terms.

How big the 2026 CRE maturity wall is, who holds it, and why it keeps moving

In shortAbout $875 billion of commercial and multifamily mortgages is scheduled to mature in 2026, 17% of everything outstanding. Banks and other depositories service $396 billion of it. The total keeps moving because lenders extend loans into later years: a record $384 billion was pushed into 2025, and the same comparison of the MBA's surveys shows about $212 billion added to 2026.

The best-known count of CRE maturities is the Mortgage Bankers Association's annual survey. Its February 2026 release found that 17% of the $5.0 trillion of commercial and multifamily mortgages held by lenders and investors, about $875 billion, was scheduled to mature in 2026, down 9% from the $957 billion scheduled for 2025, with $652 billion scheduled for 2027.4

Two cautions come with the figures. They are unpaid balances at the end of the prior year, so the balloons will generally be smaller.4 And they are schedules, and in recent years a large share has been extended into later years.5,6

Who holds the 2026 maturities

Depositories, mostly banks, carry the largest dollar amount: $396 billion of the commercial mortgages they service, 21% of the balance, comes due in 2026, against $452 billion (25%) for 2025 and $441 billion (25%) for 2024.4,5,7 Commercial mortgage securities and similar vehicles face $200 billion, 25% of theirs, and credit companies and warehouse lenders $163 billion, 29%.4 Life insurers face $76 billion (10%), and the multifamily and health care loans held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae $39 billion (4%).4

The bank share is spread across many institutions. The Federal Reserve's H.8 release puts commercial real estate loans at all US commercial banks at about $3.14 trillion in September 2026, seasonally adjusted, and about 70% of the CRE held by domestically chartered banks sits outside the 25 largest.8

The FDIC's 2026 Risk Review puts the median bank's CRE loans at 200% of its capital and allowance, 289% at banks of $10 billion to $100 billion and 311% at banks of $1 billion to $10 billion.9 A bank at three times capital in CRE, a fifth of which matures in a year, re-underwrites well over half its capital's worth of loans every twelve months.

Why the wall moves: extensions

Each year's wall is made of new maturities plus old ones carried forward. Colliers, comparing the MBA's surveys year over year, counted $384 billion of loans extended from earlier years into 2025, up 42% from $270 billion into 2024 and about 40% of all 2025 maturities. Office owners received $85 billion of those extensions, 45% of the $187 billion of office loans due in 2025.6

The MBA's earlier survey scheduled $663 billion for 2026;10 its February 2026 survey counts $875 billion,4 so the same comparison shows about $212 billion added to 2026, a little over half the 2025 figure. The MBA's chief economist called 2025 "a transition year" in which "lenders were no longer simply extending loan terms".4

The guidance that governs a maturing CRE loan, and what changed by October 2026

In shortNo regulation tells a bank what to do with a maturing loan. Four texts shape the answer: the 2023 interagency workout statement (how examiners grade extensions and restructurings), the OCC's 2024 refinance-risk bulletin (watch maturities across the portfolio), the appraisal rules (when a renewal needs a new valuation) and ASU 2022-02 (which extensions must be disclosed). The model-risk guidance changed in April 2026.

The 2023 statement is supervisory guidance: it explains how examiners will judge a loan. It is the text they carry into a CRE file review, and its appendix of worked examples is the closest thing the industry has to a grading key.

How to size a maturing loan: coverage, loan-to-value and debt yield, worked through

In shortSize the loan three ways at the lender's current terms for its property type and take the smallest result. The test that gives the smallest loan names the problem: value, rate or income. The gap is the balloon less that loan. Rates move the answer, so sizing has to be repeated as the curve moves.

Coverage, loan-to-value and debt yield on a maturing loan

No regulator sets the numbers; each bank's credit policy does, and the OCC's handbook says effective policies set minimum coverage, loan-to-value limits and a minimum debt yield for each type of loan or property.2

The Fed's stress-test documentation notes that lenders "generally require a minimum DSCR between 1.2 and 1.5" to refinance a balloon.21 The fictional example bank's rate sheet, which its screens show, prices office refinances at 7.10% (a 5-year Treasury input of 3.85% plus a 3.25% spread), with 25-year amortization, 1.25x minimum coverage, 65% maximum loan-to-value and a 10% minimum debt yield.

Which limit binds, and the fix it points to

Rates rose again in 2026, and every coverage test moved with them

Refinance rates are built on Treasury yields, and the 5-year Treasury has moved a long way since the loans now maturing were written. Market data from FRED: it averaged 2.49% in February 2019, 0.27% in August 2020, 4.77% in October 2023 and 3.70% in December 2025, then 4.80% in September 2026; it closed at 4.78% on October 29, 2026.3

The guide's example follows its own fictional rate sheet, a 3.85% Treasury input plus the office spread, because that is what its screens show. A lender working the same file would rerun it at the day's Treasury. On any loan, a higher rate shrinks the loan the coverage test allows and thins the coverage of an extended loan; it moves the gap only when coverage becomes the binding test. Rate assumptions are policy settings, and they go stale. Refresh them with the curve.

How the 2023 workout statement grades an extension: the office example, scenario by scenario

In shortExaminers grade a renewed loan by the borrower's ability to pay on reasonable terms, shown with current evidence. The statement's office example renews the same 1.12x loan twice: with a new appraisal and new financials it stays a pass; with an estimate and old statements it becomes special mention. Below-market, interest-only terms to a slow payer make it substandard.

The statement reaffirms two principles from 2009. Lenders "that implement prudent CRE loan accommodation and workout arrangements after performing a comprehensive review of a borrower's financial condition will not be subject to criticism for engaging in these efforts, even if these arrangements result in modified loans that have weaknesses that result in adverse classification". And loans to borrowers "who have the ability to repay their debts according to reasonable terms will not be subject to adverse classification" solely because the collateral is worth less than the loan.1 Both protections depend on the file.

The office example, three renewals of one loan

The example starts with a $15 million office loan, amortized over 20 years, with a $13.6 million balloon after five years, made at 75% of a $20 million value and 1.30x coverage. Hybrid work cuts the building's income. At maturity the lender renews it three different ways.1

Scenario 1 has the worse loan-to-value, 102% against 94%, and keeps its pass. Scenario 2's lower figure came from the lender's own estimate, and the examiner noted that the lender "failed to request current financial information and to obtain an updated collateral valuation, representing administrative weaknesses".1 Scenario 2 also had real weaknesses, a falling revenue trend and slowing leasing, so documentation was one problem among several. It was the one the lender fully controlled.

What examiners need to see in the file

Three accounting rules that bite at maturity

Refinance, extend, restructure, forbear or exit: the five paths a maturing loan can take

In shortEvery maturing loan ends on one of five paths. The size of the gap and the sponsor's ability to fill it decide which are open. Starting early keeps more of them open; starting late usually leaves a short extension or a forced sale.

How the A note and B note work

A restructuring is "a formal, legally enforceable modification in the loan's terms", in the statement's words.1

The best-known form at maturity splits the debt in two. Note A is sized to what the property supports today and keeps paying. Note B is the rest; the lender charges it off but keeps it as a claim, which bankers call a hope note. The statement says that when a collateral-dependent loan is split this way, Note A should be sized using the fair value of the collateral, that a properly structured and performing Note A generally would not be adversely classified, and that Note B is classified loss.1

The statement's shopping-mall example shows how differently two restructurings of the same $10 million loan are graded.1

Which path fits which loan

One simple way to sort maturing loans is by thresholds on the gap as a share of the balance. The example bank's: refinance when the loan passes or a paydown under 5% closes the gap; extend with conditions for gaps of 5% to 32%; work out above 32% or when the loan is already with special assets. Treat such lanes as a first sort for the officer.

When a CRE renewal needs a new appraisal, and how far values have fallen

In shortA renewal of a loan the bank already holds needs no new appraisal by rule unless new money is advanced and conditions have materially changed, but it always needs a valid evaluation. Office values are still about a third below their 2022 peak, so most office files need a fresh number, ordered early enough to be read before the decision.

The appraisal rules exempt a renewal of an existing loan if "there has been no obvious and material change in market conditions or physical aspects of the property that threatens the adequacy of the institution's real estate collateral protection", or if "there is no advancement of new monies, other than funds necessary to cover reasonable closing costs". Either way, the bank "shall obtain an appropriate evaluation".20

The agencies' FAQs add two points people misremember: "there is no provision in the agencies' appraisal regulations specifying the useful life of an appraisal or evaluation", and "a final credit decision or action should only occur after the financial institution receives, reviews, and accepts the appraisal or evaluation".22

Six signs a new valuation is due

For a renewal that is part of a workout, the 2023 statement lists material deterioration in six things that should make a lender consider a new appraisal or evaluation: project performance; conditions in the market and for the property type; the difference between actual conditions and the original appraisal's assumptions; changes to the project's specifications; loss of a significant lease or take-out commitment; and increases in pre-sale fallout.1

In the guide's example, two fired at once: a 20.5% tenant gave back a quarter of its space, and office cap rates had moved from 6.25% to about 8%.

As is or as stabilized

Commercial appraisals often carry more than one value: "as is" today, and "as complete" or "as stabilized" once leasing is finished. The statement says lenders typically use "the market value conclusion (and not the fair value) that corresponds to the workout plan objective and the loan commitment".1 A maturity sized on an as-stabilized value for a building that is losing tenants overstates the loan the bank can make.

When the agencies raised the commercial threshold in 2018 they estimated that "an evaluation takes approximately 30 minutes less to review than an appraisal", a reminder that the time saved by skipping an appraisal is small next to the risk of a stale value.11

Eight ways maturity decisions go wrong, and the evidence that prevents each

In shortMost maturity mistakes come from starting late, sizing on old numbers, or testing the guarantor against one loan. The Fed's own stress-test model has to multiply its default estimate by four for loans approaching maturity with thin coverage, which says how sharply risk rises in the last stretch.

Federal Reserve staff research on bank loans adds that "higher LTVs, larger property sizes, and greater local remote work tendencies are all associated with increased delinquency risk, particularly for office loans".26 A bank's own share, measured on its own loans at its own terms, is usually smaller and far more useful.

Where CRE refinance risk sits in October 2026: banks, securities, and the extend-and-pretend debate

In shortBank CRE loans look healthy on the surface: 1.23% of banks' nonfarm nonresidential loans were noncurrent at June 30, 2026. The stress shows in commercial mortgage securities, where Trepp counts 8.02% of loans delinquent and office over 12%. Regulators call refinance risk the thing to watch, and two Federal Reserve studies disagree about whether bank extensions were prudent.

At June 30, 2026, 1.23% of banks' nonfarm nonresidential loans, $1,943.2 billion in all, were noncurrent, with 1.10% of multifamily and 0.99% of construction loans.27 Past-due and nonaccrual nonfarm nonresidential loans fell 14 basis points in the quarter to 1.52%.27 Part of the reason is modification: the FDIC counts $11.6 billion of modified CRE loans in 2025, 0.38% of the CRE-secured portfolio, 82% of them performing.9

Commercial mortgage securities show the stress more plainly. Trepp's delinquency rate rose to 8.02% in September 2026, the highest since 2020; office was 12.16%, multifamily 8.04%, lodging 6.18%, retail 6.58% and industrial 1.14%.25

The OCC and the Fed on CRE refinance risk in 2026

Extend and pretend, or a sound extension: two Federal Reserve studies disagree

Critics call it "extend and pretend" when a lender extends a loan the borrower cannot repay, to put off recognizing a loss. Two Federal Reserve studies read the bank extensions made since the pandemic differently.

Earlier Fed research found that "banks modify more CRE loans than CMBS, contributing to better loan performance when property incomes decline".33 For one bank the useful part of the debate is the test it implies. An extension with a paydown, a market rate and current evidence is the kind the Board paper describes. An extension at the old rate to a borrower who cannot pay is the kind the New York Fed paper warns about. A bank can sort its own extensions by those features and see which kind it grants.

Who works a maturing CRE loan today, step by step, and where the weeks go

In shortFive or six people touch every maturing loan, and most of the elapsed time is spent gathering and rebuilding numbers. No regulator or study publishes how long the work takes. The typical split below is an estimate to replace with your own.

Five roles on one maturity, from portfolio manager to chief credit officer

Seven steps from the maturity report to a term sheet

Twenty-three working days, ten of them chasing documents

The 180-day and 120-day clock

Four ways lenders run maturities today

Linden Crossing's maturity: 41 documents, three options side by side and a 24-month extension approved 112 days early

In shortThis is the example from the top of the page, inside the product. Every night six agents re-size every loan maturing in the next 18 months at the bank's current terms. When Linden Crossing's 41 documents are in, its decision pack is built in under two minutes. Priya Ranganath, the portfolio manager, recommends a 24-month extension; Lena Whitford confirms the grade and Ruth Abernathy, the chief credit officer, approves it 112 days before maturity.

1

The maturity wall, re-sized overnight

Priya's home screen is a calendar of every month for two years. Each cell shows the dollars maturing and the number of loans, and its shade is the dollars that would not refinance at today's terms. The summary underneath reads: 138 loans and $1.06 billion maturing in 18 months, $83.6 million of it across 50 loans that would not refinance, 31 decision packs due within 120 days, 30 ready and 12 decided.

The overnight run beside the calendar lists what changed: two loans moved into a gap after new documents arrived, a 2021 value is too old to rely on, and Linden Crossing has all 41 documents in.

2

March 2027, fanned into three lanes

One click opens a month. March 2027 holds 10 loans and $84 million, of which $19.0 million would not refinance. Its loans fall into three lanes: refinance (four loans that pass, or where a paydown under 5% closes the gap), extend with conditions (four, $5.7 million short) and work out (two, $13.3 million short). Each card shows what today's terms would lend against what is owed.

Brantlow Commerce Tower, an office loan in Durham, is $8.4 million short, 38.9% of its balance. It belongs with the special assets officer now, five months before its date.

3

Linden Crossing's decision pack, built from 41 documents

Priya opens Linden Crossing and builds the pack. The agents read the rent roll, 13 leases, three operating statements, two appraisals, the guarantor's statement and his 2025 return, and show each step on screen as they work: 1 minute 37 seconds in all.

The refinance test shows the three limits side by side. At the bank's office terms, 65% of the new $32,625,000 value lends $21,206,250; coverage would allow $24.4 million and debt yield $26.1 million, so loan-to-value binds. The pack reads: "Fails by $8,968,006."

4

Refinance, extend or restructure, side by side

The options page puts the three answers next to each other with the numbers a credit officer grades on. Refinancing needs an $8,968,006 paydown that would leave the guarantor $2,431,994, below his $5.0 million covenant. Restructuring into a $24.0 million A note and a $6.2 million B note means a charge-off, a substandard grade and nonaccrual.

Extending 24 months with $3.0 million down, a 7.10% market rate, a $1.2 million leasing reserve and a cash sweep below 1.20x leaves $27,174,256 at 1.12x coverage, 83.3% loan-to-value and a 9.6% debt yield. The page proposes pass, on the watch list, and marks the extension as a disclosed modification.

5

Recommended, confirmed and approved, 112 days early

Priya recommends option B and signs with her password and the meaning of her signature, "Evidence reviewed, extend as written". The exposure is above $25 million, so Lena Whitford confirms the grade and Ruth Abernathy approves.

The accommodation memo carries 12 cited sources. The term sheet to the sponsor (paydown, rate, reserve, sweep and the reaffirmed $7.5 million partial guarantee) goes out only after the last approval, and the decision goes into the log examiners read.

The solution's design targets are a decision pack for every maturing loan 120 days before its date, and every maturing loan re-sized each night at today's terms. They are targets, to be measured on your own book.

The whole book under a cap-rate what-if, the wall by quarter, a guarantor's other guarantees and the decision log

In shortOne loan is the story. These screens show the rest: the whole book re-sized under a what-if, the wall by quarter and property type, the ranked list, the rent roll rebuilt to underwritten income, the value and the sizing calculator, the guarantor's other guarantees, the signature, a source page, the decision log and the bank's own credit policy as settings.

The rates on these screens come from the fictional bank's sample rate sheet: a 3.85% 5-year Treasury input plus a spread for each property type. The example follows them exactly. Real market rates appear only in Part A, section 05, with their source and date; a bank using the solution keeps its own rate sheet current.

Agents re-size every maturity nightly; a credit officer confirms the grade and approves up to $25 million

In shortEach agent has one job and limits it does not cross. None of them changes a loan's terms, sets a value, grades a loan or sends terms to a borrower. The credit officer confirms the grade and approves up to $25 million; above that, or for any downgrade to substandard, the chief credit officer approves. Every figure carries its source.

Six agents, from maturity watcher to options and memo writer

The portfolio manager recommends; credit confirms the grade and approves

The recommendation, each approval, the option, the grade and the memo as drafted are written to the decision log and cannot be changed afterward. The term sheet is sent only after the last approval. Settings changes are versioned on the audit trail.

A wall re-sized every night, a cited decision pack for each loan and a log an examiner can read

In shortIt reads the loan system's maturity schedule, the documents borrowers and appraisers already send, market data and the bank's own credit policy. It leaves behind a wall re-sized every night, a cited decision pack and memo for each loan, approvals by limit, and a decision log. Your systems of record stay where they are.

The example book: 138 maturing loans, 50 that would not refinance, 19 short by 10% or more

Loan system, appraisals and market data the nightly re-size reads

For each, check whether it has an API, a file feed or only screens, and who owns it.

Sized at today's terms, cited to the page, approved by limit

What a maturity decided late costs you in interest, grades and staff weeks

In shortStart from your own book. Nobody publishes the hours a maturity takes or what a late decision costs, so the figures that matter are yours. A few published facts frame them: how much of a bank book matures each year, how long a restructured loan stays off accrual, and how much modification work banks already do.

Counting staff hours and days decided before each maturity

The lost paydown, the repeat short extension, the grade that never moved

Staff hours released and interest kept from nonaccrual: the return on deciding maturities early

In shortPut in your own numbers. The calculator values two things: the staff hours released when files arrive assembled and sized, and the interest kept when a loan is decided before it can slide to nonaccrual. Every default is an assumption to replace.

Staff hours, decisions months ahead and interest kept accruing

Your staff hours and accruing interest from early maturity decisions

At the calculator's defaults, 90 maturities saving 30 hours each release $148,500 of staff time, just short of the $150,000 cost; the interest kept on two drifting loans carries the case. A bank with fewer, simpler maturities should weigh the earlier decisions and the evidence in each file as well.

Maturities a year, written refinance terms and past findings: a readiness score for your maturity desk

In shortPick the answer closest to your team today. Eight questions score 0 to 2; the last is for reflection. The meter adds up your score as you go, and each question says why it matters and what a strong answer sounds like.

Explore, replay 20 to 30 maturities, or size the whole wall

Sizing at your current terms, cited evidence and who decides: sixteen questions for refinance-risk software vendors

In shortAsk every vendor the same questions, us included. The answers show how a loan is sized, what is read, whose terms apply, what evidence you keep and who decides, and how you would test it on loans you already decided.

We found no published independent test of any maturity or refinance-risk vendor, as of October 2026. Re-sizing loans you already decided is the fairest comparison you can run.

Last year's maturities first, this quarter's beside your team: a twelve-week trial decided on three numbers

In shortMeasure first, then test on last year's maturities where you know the outcome, then run beside your team on this quarter's live loans. Decide with three numbers. None of these steps commits you to a vendor.

1. Measure last year: for every maturity, days decided before the date, staff hours on five of them, and the age of the value and statements used.
2. Write your terms down: refinance terms by property type, the valuation rule, extension rules and approval limits.
3. Pick 25 past maturities across property types, with the documents in the file at the time, and the committee's own sizing.
4. Run live beside your team for five weeks on the next six months of maturities, with your officers grading and approving every decision.
5. Decide with three numbers: sizing agreement with your committee, days decided before maturity, and staff hours per decision.

Sizing agreement, days decided early and staff hours per maturity

The maturity wall, refinance gaps, extensions and new appraisals: questions CRE lenders ask

In shortThe questions lenders and buyers search for most, each answered on its own.