MBA report finds dip in Q3 commercial and multifamily mortgage performance

MBA report finds dip in Q3 commercial and multifamily mortgage performance

December 7, 2009

Delinquency rates continued to increase in the third quarter for most commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report. "Commercial and multifamily mortgages continued to feel stress in the face of the weakened economy," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The deterioration in commercial and multifamily loan performance is generally in line with what is being seen in other parts of the economy, with loans backed by commercial properties continuing to perform far better than construction and development loans."
Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of 'commercial real estate' despite the fact that they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties.
Between the second and third quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.17 percentage points to 4.06 percent. The 60+ day delinquency rate on loans held in life company portfolios rose 0.08 percentage points to 0.23 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.11 percentage points to 0.62 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac remained unchanged at 0.11 percent. The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.51 percentage points to 3.43 percent.
Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows:
► CMBS: 4.06 percent (30+ days delinquent or in REO);
► Life company portfolios: 0.23 percent (60+days delinquent);
► Fannie Mae: 0.62 percent (60 or more days delinquent)
► Freddie Mac: 0.11 percent (90 or more days delinquent);
► Banks and thrifts: 3.43 percent (90 or more days delinquent or in non-accrual).
The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.
The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.
To view the Commercial/Multifamily Delinquency Report, click here.
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