Commercial/MultiFamily Delinquencies Remain Near Historic Lows

March 10, 2008 No Comments »


The Mortgage Bankers Association said today that fourth quarter delinquency rates on commercial/multifamily loans remained at or near record lows for four of the five biggest holders of commercial mortgage debt.

The group found that based on unpaid principal balance, commercial mortgage-backed securities (CMBS) had a 30+ day or REO delinquency rate of just 0.40 percent, while only 0.01 percent of life insurance company holdings were 60+ days delinquent, a record low.

Fannie Mae had a 60+ day delinquency rate of just 0.08 percent, while brother Freddie Mac reported a rate of just 0.02 percent, rates equal to or lower than 10 of the previous 11 years.

“To put these numbers in context, of 34,937 commercial/multifamily loans in life company portfolios, with a total unpaid principal balance of $245 billion, only 9 loans with an aggregate UPB of less than $19 million were 60+ days delinquent at the end of the quarter,” the report said.

Commercial banks and thrifts were the only real sore spot, reporting a 90+ day delinquency rate of 0.80 percent in the fourth quarter, although the MBA was quick to point out that its year-end result was still lower than five of the previous 11 years and 10 of the previous 16 years.

“Of $1.2 trillion of commercial/multifamily loans at FDIC-insured banks and thrifts, only $9 billion was 90+ days delinquent.”

“This is an important new analysis that helps cut through much of the recent ‘noise’ on commercial real estate finance,” said Steve Graves, Chair of the Mortgage Bankers Association’s Commercial Board of Governors.

“Despite a great deal of attention being paid to economic uncertainty, it is reassuring to know that the performance of commercial and multifamily mortgage loans and bonds has remained so fundamentally sound.”

Commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae, and Freddie Mac hold more than 80 percent of outstanding commercial/multifamily mortgage debt.

The MBA analysis has compared year-end commercial/multifamily delinquency rates for these five investor-groups since 1996.

Clearly residential mortgage lenders are a lot worse off…

(photo: rappensuncle)

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