Commercial and multifamily mortgage delinquency rates continued to drop for banks and rise for commercial mortgage-backed securities (CMBS) during the second quarter of 2012. Delinquency rates also declined for Fannie Mae during the second quarter, and increased by 0.01 percentage points for life companies and 0.04 percentage points for Freddie Mac according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.
“Commercial and multifamily delinquency rates for life companies, Fannie Mae and Freddie Mac all remain quite low, and the delinquency rate for bank-held loans continues to decline,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “The delinquency rate for loans in CMBS continues to show higher and more sustained aggregate delinquency rates, much of which is driven by the large share of these loans in foreclosure or REO.”
During the second quarter of 2012, the 60-plus day delinquency rate for commercial and multifamily mortgages held in life company portfolios increased 0.01 percentage points to 0.15 percent. The 60-plus day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.08 percentage points to 0.29 percent. The 90-plus day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.34 percentage points to 3.11 percent. The 60-plus day delinquency rate for multifamily loans held or insured by Freddie Mac increased 0.04 percentage points to 0.27 percent. The 30-plus day delinquency rate for loans held in CMBS increased 0.12 percentage points to 8.97 percent.
The second quarter 2012 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.38 percentage points lower than the series high (7.53 percent, reached during the second quarter of 1992). The delinquency rate for multifamily loans held by Freddie Mac was 6.54 percentage points lower than the series high (6.81 percent, reached in the fourth quarter of 1992). The delinquency rate for multifamily loans held by Fannie Mae was 3.33 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991). The rate for commercial and multifamily mortgages held by banks and thrifts was 3.47 percentage points lower than the series high (6.58 percent, reached in the second quarter of 1991). The rate for loans held in CMBS was 0.05 percentage points below the series high (9.02 percent, reached in the second quarter of 2011).
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. The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties.
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.
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the second quarter were as follows:
►Life company portfolios: 0.15 percent (60 or more delinquent);
►Freddie Mac: 0.27 percent (60 or more days delinquent);
►Fannie Mae: 0.29 percent (60 or more days delinquent);
►Banks and thrifts: 3.11 percent (90 or more days delinquent or in non-accrual); and
►CMBS: 8.97 percent (30 or more days delinquent or in REO).
