WASHINGTON, D.C. – March 3, 2011 – (RealEstateRama) — During the fourth quarter of 2010, commercial and multifamily mortgage delinquency rates remained low for life insurance companies, Fannie Mae and Freddie Mac; fell for banks and thrifts for the first time since the 2006 and rose slightly for loans held in commercial mortgage backed securities (CMBS), according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.
The delinquency rate for loans held in CMBS is the highest since the series began in 1997. Delinquency rates for other groups remain below levels seen in the last major real estate downturn during the early 1990’s, some by large margins.
â€The recession’s downward pull on commercial and multifamily mortgage performance has slackened,†said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The delinquency rates for commercial and multifamily mortgages at banks and thrifts appear to have peaked at levels well below those of the last recession, and the performance of loans held by life companies, Fannie Mae and Freddie Mac has been relatively strong throughout the downturn. The CMBS market has continued to see elevated levels of stress – although the rate of increase has moderated and some technical issues make a direct comparison of CMBS to other investor groups tricky.â€
Between the third and fourth quarters of 2010, the 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts decreased 0.22 percentage points to 4.19 percent – the first decrease since the first quarter of 2006. The 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) increased 0.37 percentage points to 8.95 percent. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.03 percentage points to 0.19 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae increased 0.06 percentage points to 0.71 percent. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac decreased 0.04 percentage points to 0.31 percent.
The fourth quarter 2010 delinquency rate for commercial and multifamily mortgages held by banks and thrifts was 2.39 percentage points lower than the series high (of 6.58 percent reached in the second quarter of 1991). The rate for loans held in CMBS was a record high for the series. The delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.18 percentage points lower than the series high (of 7.37 percent reached during the fourth quarter of 1993); the rate for multifamily loans held by Fannie Mae rate was 2.91 percentage points below the series high of 3.62 percent (reached during the fourth quarter of 1991); and the rate for multifamily loans held by Freddie Mac was 6.50 percentage points lower than the series high (of 6.81 percent reached in 1992).
Please note: Today MBA also 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/researchandforecasts
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 banks and thrifts 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 85 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 fourth quarter were as follows:
• CMBS: 8.95 percent (30+ days delinquent or in REO);
• Life company portfolios: 0.19 percent (60+days delinquent);
• Fannie Mae: 0.71 percent (60 or more days delinquent)
• Freddie Mac: 0.31 percent (60 or more days delinquent);
• Banks and thrifts: 4.19 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/4Q10CommercialNDR.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.
