There’s a new risk in your underwriting assumptions. Many just don’t know it yet. Arbor Realty Trust just reported earnings. The numbers are ugly. 21 foreclosures in 2025. Up from 6 the year before. $500M in REO assets. And the average occupancy across their foreclosed properties? 45%. But the cause is what should get your attention. I’m not making a political argument. I’m making an underwriting argument. CEO Ivan Kaufman said ICE raids are gutting occupancy in Houston, San Antonio, Dallas, Atlanta, and parts of Florida. Properties that were 90% occupied one day dropped to 65% the next. A 25-point occupancy swing. Overnight. This isn’t a market cycle. It’s a policy shock. How fragile is your demand? A huge chunk of tenant demand in these markets was never stress-tested against enforcement risk. Nobody modeled “what happens if 20% of my tenants disappear in a week.” Arbor says they’ll cut their REO balance from $500M to $250M by end of 2026. That’s management guidance during distress (while under a DOJ investigation, no less). Take it with a grain of salt. But if even half those assets hit the market, pricing on distressed workforce housing is about to compress. Only if you underwrite the new reality, though. The old model assumed demand was stable and the risk sat on the rate side. The new model has to account for tenant bases that can evaporate based on a single policy decision made in Washington. If your occupancy depends on demand that can vanish with one executive order, that’s not a market risk. That’s a concentration risk. Price it accordingly. What are you seeing in your markets? https://lnkd.in/eFWjW2Su