Among other reasons, controlling financial distress in the conventional multifamily sector is important because of the neighborhood destabilizing effects of partially occupied and vacant buildings and the potential lending cutbacks that could be made by financial intermediaries whose loan portfolios may contain substantial numbers of older, failing rental properties.This article develops the case for a heightened national concern for the importance of this inventory to the housing welfare of the nation, particularly lower income and minorities; and then by analyzing the known levels of distress in the FHA insured unsubsidized stock. Failure rates in this portion of the multifamily sector are sufficiently great to suggest that similar problems already plague the conventional market and that such distress should be of major policy interest. The final section propose the development of a multifamily research and demonstration program as a basis for national action.