The combined effect of lower volumes of underperforming loans and improved workout practices reduced the traffic of delinquent, securitized commercial mortgage loans and out of special servicing, according to Fitch Ratings.

As a result, the number of delinquent CMBS under special servicing dropped in teh fourth quarter to its lowest level in three years.

The latest quarterly index from Fitch shows the volume of specially serviced CMBS fell to $70.6 billion as of Dec. 31, 2012.

After peaking at $91.7 billion in 2010, it represents “the smallest population since the run up” at yearend 2009 when the balance of specially serviced CMBS loans was $74 billion, Fitch said.

Special servicers are continuing to make progress on working out delinquent U.S. CMBS, said Fitch’s managing director Stephanie Petosa. In her view the most encouraging sign is that the volume of CMBS loans going in to special servicing and the CMBS coming out of a workout now are aligned.

In 2012, $49.9 billion in loans were transferred into special servicing compared to $47.1 billion coming out.

“This is a notable contrast from 2009,” when $74.9 billion transferred in with only $8.8 billion transferring out, she said.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.