A lender with a loan maturing in 2027 should ask two questions of the property's actual income: does it still cover the debt at today's refinance rate, and does it still support the balance at today's cap rate? In the worked example below, a $14,040,000 balance covers 0.97x on the trailing-12 income at 6.5%, and at a 6.5% cap rate that income supports a value of $15.8 million, so the loan would be 89% of value. The refinance would size to about $10.3 million, $3.75 million short of the balance. The whole check, from file request to credit decision, fits in 72 hours.
Written by the Titleman team with AI assistance (Claude). Reviewed by the Titleman review desk. The example is one finished run on a Titleman QA account, made on a sample 120-unit multifamily package with no client data and no address. Rates were read from the Titleman rate series on 15 October 2026. This is a screening method, not a credit decision, an appraisal or a loan quote.
Why 2027 is the year to test
Loans written when rates were near 3% to 4% are coming to their maturity dates, and the refinance market is 6.5% to 7.0%. The rates below are from the Titleman rate series, as of the dates shown.
| Rate | Level | As of |
|---|---|---|
| 5-year U.S. government bond yield | 5.00% | 14 Oct 2026 |
| 10-year U.S. government bond yield | 5.19% | 14 Oct 2026 |
| SOFR, overnight | 3.89% | 13 Oct 2026 |
Fixed-rate loans price at a spread over the bond yields. A spread of 130 to 180 basis points over the 10-year gives 6.49% to 6.99%. A floating-rate loan priced at SOFR plus 2.6% to 3.1% lands in the same band. The spreads are illustrative, so test a range.
The loan records show the size of the effect. Among 47 interest-only multifamily loans on record that mature in 2027 with a coupon under 5%, the median reported DSCR is 1.94x. Restated at 6.5% it is 1.36x, and 36% of the loans fall below 1.25x. At 7.0%, 47% fall below 1.25x and 30% below 1.00x. These are screening counts: the restatement uses the DSCR reported on the loan, which may be older than today's income.
The two tests
Test 1, DSCR. Price the balance at the refinance rate. For a 30-year amortizing loan, annual debt service is the balance times the loan constant at that rate. Divide the trailing-12 NOI by it. Compare with 1.25x, or 1.35x if your tier asks for more. The supported loan is the NOI divided by the required coverage and by the loan constant.
Test 2, value. Divide the trailing-12 NOI by a cap rate to get a value, then divide the balance by that value. Compare with your loan-to-value limit. The supported loan is the limit times the value. Run the cap rate from the going-in level to 100 basis points above it.
Sizing. The refinance proceeds are the smaller of the two supported loans. The gap to the maturing balance is the cash the borrower must bring, extend around or sell to find.
Both tests depend on one input: the income. The marketed NOI in an offering memorandum is not the T-12 NOI, and the next section shows how far apart they can be.
Worked example: one run, one loan, two stress tests
A Titleman engine run on a QA account read a sample 120-unit multifamily package: the offering memorandum, the T-12 with rent roll, and the buyer's underwriting model. The run was delivered 49 minutes after upload, with 633 claims checked and 568 formulas recomputed. The package set a guidance price of $21,600,000 and a loan of $14,040,000 (65% of price). The memorandum reported a trailing-12 NOI of $1,312,400. The T-12 it cites totals $1,029,089, which is $283,311, or 21.6%, lower. The run traced the whole gap to expenses: $961,866 on the T-12 against $678,555 in the memorandum, a 48.3% expense ratio against 34.1%.
To turn the purchase package into a maturity test, treat the $14,040,000 as the balance coming due and apply the refinance rates to it. This is a hypothetical, and it is labeled as one.
Test 1: DSCR at the refinance rate
| Refinance rate | Annual debt service | DSCR on the T-12 NOI of $1,029,089 | DSCR on the marketed NOI of $1,312,400 |
|---|---|---|---|
| 3.50% (the old loan) | $756,550 | 1.36x | 1.73x |
| 6.25% (the package's own rate) | $1,037,360 | 0.99x | 1.27x |
| 6.50% | $1,064,908 | 0.97x | 1.23x |
| 7.00% | $1,120,902 | 0.92x | 1.17x |
On the marketed figure the loan looks close to a pass at 6.5%. On the T-12 it does not cover its own debt service. At 1.25x, the T-12 NOI supports a loan of about $10,854,000 at 6.5% and $10,312,000 at 7.0%, which is $3,186,000 and $3,728,000 below the balance. The package's own 1.27x holds only on the memorandum's NOI.
Test 2: value at higher cap rates
The memorandum's cap rate is 6.08% ($1,312,400 on $21,600,000). The T-12 NOI on the same price is 4.76%. The model's own exit cap is 5.75%. The table below divides the T-12 NOI by each cap rate and tests the $14,040,000 balance against a 65% loan-to-value limit.
| Cap rate | Value on the T-12 NOI | Balance as share of value | Loan at 65% of value | Gap to balance |
|---|---|---|---|---|
| 5.75% (the model's exit cap) | $17,897,000 | 78.4% | $11,633,000 | $2,407,000 |
| 6.08% (the memorandum's cap) | $16,926,000 | 83.0% | $11,002,000 | $3,038,000 |
| 6.50% | $15,832,000 | 88.7% | $10,291,000 | $3,749,000 |
| 7.00% | $14,701,000 | 95.5% | $9,556,000 | $4,484,000 |
The sizing
At a 6.5% refinance rate and a 6.5% cap rate, the DSCR test supports $10,854,000 and the value test supports $10,291,000. The value test binds, so the refinance sizes to about $10.3 million and leaves a gap of $3,749,000, or 27% of the balance. At 7.0% for both, the value test again binds, at $9,556,000, and the gap is $4,484,000. A reader who looked only at DSCR would have understated the gap by about $560,000 in the first case. Which test binds depends on the loan: a high-coupon loan tends to fail on coverage first, and a low-leverage one may pass value easily.
The same run found that the buyer's model carried a loan cell of $15,120,000 whose own formula gives $14,040,000, a typed exit balance, and 96.0% stated occupancy against 91.7% on the 30 September 2026 rent roll (110 of 120 units). Each of these moves the stress result, which is why the check reads the documents and not the summary.
The 72 hours
The method is simple. The time goes into getting the right inputs and into the decision. This is a suggested schedule, not a service-level promise.
- Hours 0 to 24: pull and request. List the loans maturing in 2027 with balance, coupon, maturity date and rate type. Rank by balance and by reported DSCR. Request the T-12, the current rent roll and the latest operating statement for the top of the list.
- Hours 24 to 48: run the stress. Each package goes through one engine run, which ties the rent roll, the T-12 and the borrower's summary together, restates NOI, and sizes the loan at two rates. In the example above the run took 49 minutes. Review the findings that move the result: NOI gaps, occupancy, and a loan balance that does not match its own formula.
- Hours 48 to 72: decide and write. For each loan, record the sizing result, the gap and the options: extension, paydown, modification or sale. The credit decision stays with the lender. The run supplies the numbers and the page and cell behind each one.
A calendar helps more than speed here. A loan checked eleven months before maturity gives the borrower time to bring cash. A loan checked eleven days before maturity gives you a negotiation with no room.
What the check does not tell you
- The borrower's choice. A gap shows who faces a decision, not which way it goes.
- Current income. A reported DSCR can be a year old. Use the latest T-12 and rent roll.
- The right cap rate. A single cap rate is a point in a range. Test the going-in rate and 100 basis points above it.
- The property. Without an address, the checks of liens, taxes and court cases on record cannot run. A run on a real address adds them.
To see this check on a loan in your own book, request a demo. For the lender workflow around it, see how a lender checks a loan file, rent roll and T-12 and what DSCR is.
Frequently asked questions
Which US metros show the most early warning signs of distressed commercial real estate debt right now? The metros with the most loans written at low coupons that mature soon. This page does not rank metros. It gives the screen to run in any one of them: of 47 interest-only multifamily loans on record maturing in 2027 with a coupon under 5%, 36% fall below 1.25x coverage when restated at a 6.5% refinance rate.
How can a commercial real estate lender spot loans likely to default in Phoenix before they hit delinquency? Restate each loan at today's refinance rate before a payment is missed. In the worked example, a $14,040,000 balance covers only 0.97x on trailing-12 income at 6.5%. Run the same restatement on every Phoenix loan maturing in the next 12 to 24 months, and start with the largest balances.
What signals show a commercial mortgage in Atlanta or Chicago is heading toward distress or a maturity default? Three signals: coverage below 1.25x once the balance is priced at today's rate, a balance above the loan-to-value limit at higher cap rates, and a marketed income that does not match the trailing-12. In the example, the loan leaves a gap of $3,749,000, or 27% of the balance, at a 6.5% rate and cap rate.
How can a debt fund find commercial real estate loans coming due in the next 12 months in Miami or Denver, with the property owner? List the loans by maturity date, balance, coupon and rate type, then match each to its owner of record. Rank by balance and reported DSCR, and request the T-12 and rent roll for the top of the list. On this page's schedule, that pull-and-request step takes the first 24 hours of a 72-hour check.
What data should a bank loan officer check each quarter to flag distressed commercial property loans by metro? For each loan: maturity date, coupon against today's refinance rate, latest trailing-12 NOI and occupancy, and reported DSCR restated at that rate. Then group by metro. Use current income, because a reported DSCR can be a year old: the example's trailing-12 NOI was 21.6% below the marketed figure.
Is there an AI tool that tells a lender which commercial properties in a given metro are most likely to default on their loans? Yes, for the loans you give it. The Titleman engine ties the rent roll, T-12 and borrower summary together, restates NOI, and sizes the refinance at two rates. In the worked example it returned findings 49 minutes after upload. It screens loans. The credit decision stays with the lender.
How do you stress test a commercial real estate loan that matures in 2027? Run two tests on the property's trailing-12 income, not the marketed figure. First, restate debt service coverage (DSCR) by pricing the current balance at today's refinance rate, about 6.5% to 7.0% in October 2026, and compare the result with the 1.25x a lender usually requires. Second, restate value by dividing the same income by higher cap rates and compare the balance with the loan-to-value limit. The refinance proceeds are the smaller of the two sizing results, and the difference from the maturing balance is the gap the borrower must fill.
What DSCR do lenders need to refinance a maturing loan? Lenders commonly look for 1.25x or more on trailing-12 net operating income, and some tiers ask for 1.35x. A loan that was written at a low coupon can look comfortable on its reported DSCR and fall below 1.25x when the balance is priced at today's rate.
Can a DSCR and value stress check be done in 72 hours? Yes, when the work is staged. In the example on this page the engine read a three-file loan package and returned its findings 49 minutes after upload. The rest of the 72 hours goes to collecting the files, reviewing the findings and writing the credit decision, which stays with the lender.
Why test value as well as DSCR? A loan can pass on coverage and still fail on leverage. If cap rates have moved up since the loan was written, the same income supports a lower value, and the balance becomes a larger share of it. The refinance is sized to the tighter of the two tests.
Written by the Titleman team with AI assistance (Claude). Reviewed by the Titleman review desk. Rates read from the Titleman rate series on 15 October 2026 (bond yields as of 14 October, SOFR as of 13 October). Loan counts: interest-only multifamily loans on record, read on 15 October 2026, restated with the interest-only shortcut and not confirmed against current income. The worked example is one finished engine run on a Titleman QA account; the figures come from the package's own documents, and the refinance and cap-rate rows apply the run's verified balance and NOI to hypothetical rates. The 130 to 180 basis point and 2.6% to 3.1% spreads are illustrative. A screen is not an appraisal, a loan quote or a credit decision.