Modest Changes in Commercial/Multifamily Mortgage Delinquency Rates During Third Quarter

WASHINGTON, D.C. – December 6, 2011 – (RealEstateRama) — During the third quarter, delinquency rates declined for commercial and multifamily mortgages held by banks and in commercial mortgage backed securities (CMBS). Delinquency rates increased for loans held by life insurance companies and held or insured by Fannie Mae and Freddie Mac but are still at low levels, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.

“There were modest changes in commercial/multifamily delinquency rates during the third quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The delinquency rates for loans held by life insurance companies, Fannie Mae and Freddie Mac each ticked up slightly in the quarter, but remained at relatively low overall levels; delinquency rates for bank-held loans continued to decline from their cycle highs; and delinquency rates for loans held in CMBS fell slightly as loans made during the first half of the year were added to the base.”

Between the second and third quarters of 2011, the 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.19 percent to 3.75 percent. The 60+ day delinquency rate for loans held in life company portfolios increased 0.07 percentage points to 0.19 percent. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae increased 0.11 percentage points to 0.57 percent. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac increased 0.02 percentage points to 0.33 percent. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.10 percentage points to 8.92 percent.

The third quarter 2011 delinquency rate for commercial and multifamily mortgages held by banks and thrifts was 2.83 percentage points lower than the series high (6.58 percent, reached in the second quarter of 1991). The delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.34 percentage points lower than the series high (7.53 percent, reached during the second quarter of 1992); the rate for multifamily loans held by Fannie Mae was 3.05 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991); and the rate for multifamily loans held by Freddie Mac was 6.48 percentage points lower than the series high (6.81 percent, reached in the fourth quarter of 1992). The rate for loans held in CMBS was 0.10 percentage points below the series high (9.02 percent, reached in the second quarter of 2011).

Please note: In March 2011, MBA released a DataNote covering the performance of commercial and multifamily mortgages at commercial banks and thrifts over the entire year 2010. The DataNote found that commercial and multifamily mortgages had the lowest charge-off rates of any major loan type and had delinquency rates lower than the overall book of loans and leases held by banks and thrifts. The DataNote can be found at:  www.mortgagebankers.org/research.

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 of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows:

• CMBS:  8.92 percent (30+ days delinquent or in REO);
• Life company portfolios: 0.19 percent (60+days delinquent);
• Fannie Mae:  0.57 percent (60 or more days delinquent);
• Freddie Mac:  0.33 percent (60 or more days delinquent);
• Banks and thrifts:  3.75 percent (90 or more days delinquent or in non-accrual).

To view the report, please visit the following Web link:
www.mortgagebankers.org/files/Research/CommercialNDR/3Q11CommercialNDR.pdf.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site:  www.mortgagebankers.org.

 

 

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