CRED iQ tracked 82 modified commercial mortgage-backed securities and commercial real estate collateralized loan obligation loans with a combined $2.36 billion in outstanding balance from May through July 2026. The composition of those modifications matters because it suggests lenders are no longer relying almost exclusively on maturity extensions to manage distressed collateral. Instead, forbearances and combination modifications are carrying meaningful weight alongside straight extensions, and the balance is concentrated in midsize loans rather than mega-loans. The property type with the most modifying is no longer hotels or office, but multifamily.
Maturity date extensions remained the single largest category, with 21 loans totaling $802.5 million, or 34 percent of modified balance and 25.6 percent of the loan count. Forbearances followed at 15 loans and $514 million, or 21.8 percent of balance. Combination modifications, which pair an extension with other relief such as a paydown, rate adjustment or reserve requirement, accounted for 10 loans and $345.6 million, or 14.7 percent of balance. The remaining 36 loans, representing $695.4 million or 29.5 percent of balance, fell into other or miscellaneous modification categories. Taken together, extensions, forbearances and combination modifications made up 70.5 percent of modified balance, down from the near-universal extend-and-pretend theme of recent reports.
The source data shows multifamily loans led modification activity by a wide margin, a shift from the hotel- and office-driven distress of previous quarters. Multifamily accounted for 35 loans totaling $1.14 billion, or 48.4 percent of modified balance. Hotel followed with 15 loans totaling $493.8 million, or 20.9 percent. Retail had six loans totaling $236.7 million, or 10 percent. Office, long the poster child for CRE distress, accounted for 17 loans totaling $226.2 million, or 9.6 percent, a smaller share than either multifamily or hotel. Mixed-use had five loans totaling $160.5 million, or 6.8 percent, while other property types had three loans totaling $67.6 million, or 2.9 percent, and industrial had one loan totaling $31.2 million, or 1.3 percent.
The loan size distribution also changed. Unlike the prior report, where loans of $100 million or more drove the bulk of modified balance, midsize loans dominated this period. Loans from $20 million to $50 million represented 38 loans totaling $1.22 billion, or 51.7 percent of modified balance. Loans from $50 million to $100 million included eight loans totaling $554.3 million, or 23.5 percent. Loans of $100 million or more totaled just two loans and $280.0 million, or 11.9 percent. The $10 million to $20 million band had 18 loans totaling $275.1 million, or 11.7 percent, while loans under $10 million had 16 loans totaling $28.8 million, or 1.2 percent. The average modified loan balance was $28.7 million and the median was $23.1 million, reinforcing that distress is showing up in the broad middle of the market rather than in a handful of trophy-asset workouts.
The May-to-July 2026 data points to a modification landscape that is broadening rather than concentrating. Multifamily has overtaken hotel and office as the property type generating the most modification activity, a reminder that distress rotates across sectors as financing conditions and local fundamentals shift. The loan size distribution has also flattened, with midsize loans in the $20 million to $50 million band now carrying the largest share of modified balance. And the modification tool kit itself looks more varied, with forbearances and combination structures closing the gap on the maturity extensions that once defined extend and pretend. Still, the data does not show distress has eased: $2.36 billion in loans needed some form of relief over three months, and more than 70 percent of that balance came in the form of extensions, forbearances or combination modifications built to buy borrowers time.