(Reuters) -Short seller Hindenburg Research on Tuesday took a short position in Axos Financial, alleging lax underwriting standards and glaring issues with its loan portfolio, sending the bank's shares down 7%.

Hindenburg said the bank was exposed to the riskiest asset classes, and had increased its total exposure to the deteriorating commercial real estate (CRE) market, while its peers backed away from the sector.

Its customer base in the commercial and multifamily segments comprised "borrowers who couldn't get loans from other banks," which has resulted in problem loans for the bank, the short seller said in its report.

Axos Financial did not immediately respond to a Reuters request for comment.

Shares of the bank, which counts former U.S. president Donald Trump among its borrowers, were down about 4% this year.

According to a public financial disclosure report filed with the U.S. Office of Government Ethics last year, Trump has two outstanding mortgages worth over $100 million with Axos Bank.

The two 10-year mortgages enabled Trump to finance the Trump Tower and the Trump National Doral golf course in Miami, the filing showed. They were issued in 2022 at 4.25% and 4.9%, respectively.

The CRE market, impacted by elevated interest rates and lower occupancy, has been a key cause of concern for investors, after New York Community Bancorp's recent turmoil.

NYCB posted a surprise quarterly loss in January and slashed its dividend, due to its exposure to commercial real estate, and wiped billions off its market value.

The lender has pledged to shrink its CRE footprint, as higher U.S. interest rates continue to pressure the market.

Last month, Starwood Real Estate Income Trust also temporarily limited share redemptions to avoid forced sales of its real estate holdings.

Reuters could not independently verify the claims in the report.

(Reporting by Arasu Kannagi Basil and Pritam Biswas in Bengaluru and Koh Qui Ging in New York; Editing by Shinjini Ganguli)