Arbor Realty Trust Facing Legal Probe Into Lending Practices, Disclosures
By Andrew Coen July 12, 2024 2:57 pm
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Arbor Realty Trust (ABR)’s lending practices are under regulatory scrutiny by federal prosecutors.
FBI agents and U.S. District Court officials with the Southern District of New York are investigating the mortgage real estate investment trust over its lending practices and disclosures about loan performance, Bloomberg reported, citing people familiar with the matter.
“We routinely cooperate with regulatory inquiries and are very confident that we conduct ourselves properly,” Arbor said in a statement. “We look forward to our second-quarter earnings call.”
Officials at the FBI did not immediately respond to a request for comment. The Southern District of New York declined to comment.
The federal investigation into Arbor comes on the heels of it reporting 20 nonperforming loans with an unpaid principal balance of $464.8 million in its first-quarter earnings report in May. The company reported 16 nonperforming loans in the fourth quarter, which it attributed largely to floating-rate loans on apartment assets in the Southern U.S. originated prior to the Federal Reserve’s aggressive interest rate hike policy starting in early 2022.
Arbor is currently the 15th most shorted stock as of Friday, according to MarketWatch, an indication that investors expect its stock price to fall. The real estate investment trust’s stock was down 16.81 percent to $12.92 a share as of mid-afternoon on Friday.
Andrew Coen can be reached at acoen@commercialobserver.com
