Delinquency rates for commercial and multifamily mortgage loans declined in the second quarter of 2013, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. During the second quarter of 2013, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.01 percentage points to 0.08 percent. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.07 percentage points to 0.09 percent. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.11 percentage points to 0.28 percent. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.26 percentage points to 2.16 percent. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.74 percentage points to 7.81 percent.
“Commercial and multifamily loan performance continued to improve during the second quarter, with delinquency rates falling for every major investor group,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “The quarterly decline in the delinquency rate of loans held in commercial mortgage-backed securities (CMBS) was the largest on record, and delinquency rates for loans held by life companies and the GSEs remain low and fell lower during the quarter.”
The second quarter 2013 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.45 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 6.72 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 3.34 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 4.42 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 1.21 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.
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.
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: 0.08 percent (60 or more delinquent);
►Freddie Mac: 0.09 percent (60 or more days delinquent);
►Fannie Mae: 0.28 percent (60 or more days delinquent);
►Banks and thrifts: 2.16 percent (90 or more days delinquent or in non-accrual);
►CMBS: 7.81 percent (30 or more days delinquent or in REO).
