© 2024 Arizent. All rights reserved.

MBA: CMBS Commercial and Multifamily Delinquency Rates Increase Slightly in 4Q10

The Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report showed that in 4Q10, commercial and multifamily mortgage delinquency rates increased slightly for CMBS loans.

Meanwhile, the rates stayed low for life insurance companies, Fannie Mae and Freddie Mac while they fell for banks and thrifts for the first time since 2006.

The delinquency rates for other groups are still below levels experienced in the last major real estate downturn in the early 1990s, some by large margins, the trade group said.

"The recession's downward pull on commercial and multifamily mortgage performance has slackened," said Jamie Woodwell, MBA 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." 

Woodwell added that the CMBS market is still experiencing high stress levels, although the rate of increase has slowed. Additionally, some technical issues make it tricky to compare CMBS to other investor groups.

Between 3Q10 and  4Q10, the MBA said that the 90+ day delinquency rate on loans that are held by Federal Deposit Insurance Corp. (FDIC)-insured banks and thrifts went down 0.22 percentage points to 4.19%. This was the first decrease since 1Q06. The MBA also reported that the CMBS 30+ day delinquency rate rose 0.37 percentage points to 8.9%.  

The 60+ day delinquency rate on loans held in life company portfolios went down 0.03 percentage points to 0.19 percent. The trade group also reported that the 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.06 percentage points to 0.71%. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac was lowered by 0.04 percentage points to 0.31%. 

The 4Q10 delinquency rate for CMBS loans was a record high for the series. The rate for commercial and multifamily mortgages held by banks and thrifts was 2.39 percentage points less than the series high of 6.58% in 2Q91, the MBA reported.

Meanwhile, the delinquency rate for commercial and multifamily mortgages held in life insurance firm portfolios was 7.18 percentage points less than the series high of 7.37% seen in 4Q93 while the rate for multifamily loans held by Fannie Mae rate was 2.91 percentage points below the series high of 3.62% in  4Q91. The MBA also said that the rate for multifamily loans held by Freddie Mac was 6.50 percentage points less than the series high of 6.81% in 1992.

The MBA also published its DataNote that covers 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 less than the overall book of loans and leases held by banks and thrifts. 

Construction and development loans are not part of the numbers that were presented by the MBA, 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 examines commercial/multifamily delinquency rates for five of the largest investor-groups: CMBS, commercial banks and thrifts, life insurance companies, Fannie Mae and Freddie Mac.  Combined these groups hold over 85% 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. Since 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, the MBA said that delinquency rates for each group at the end of 4Q10 were as follows: CMBS:8.95% (30+ days delinquent or in REO); life company portfolios: 0.19% (60+days delinquent); Fannie Mae:0.71% (60 or more days delinquent); Freddie Mac:0.31% (60 or more days delinquent); and banks and thrifts: 4.19% (90 or more days delinquent or in non-accrual).

For reprint and licensing requests for this article, click here.
CMBS
MORE FROM ASSET SECURITIZATION REPORT