Commercial Loan Delinquency Rates Shoot to Record Highs

by devteam June 24th, 2010 | Share

Commercial real estate mortgages held inrncommercial mortgage backed securities (CMBS) have skyrocketed in the past yearrnand have reached an all time high according to the Mortgage BankersrnAssociation's (MBA) Commercial/Multifamily Delinquency Report.  Delinquencies in other investor groups, whilernup, are still well below numbers in the early 1990s. </p

Betweenrnthe fourth quarter 2009 and first quarter 2010, the 30+ day delinquency rate onrnloans held in commercial mortgage-backed securities (CMBS)rnrose 1.54 percentage points from 5.70 percent to 7.24 percent.  However, since the first quarter of 2009 thernrate has increased nearly four-fold. Seen on a graph, the delinquency pattern overrnthe last 12 months has a vertical trajectory, rising from 1.86 percent to therncurrent number.   </p

The MBArnreport looks at the commercial and multi-family delinquency rates in the fivernlargest investor groups; commercial banks and thrifts, CMBS, life insurancerncompanies, Freddie Mac, and Fannie Mae. rnMore than 80 percent of all outstanding commercial and multifamilyrnmortgages are held by members of these five groups.  Because each group has a differentrncomposition of loans in its portfolio and tracks delinquencies in its own way,rncomparisons cannot be made from group to group.</p

Since thernfourth quarter of 2009, the 60+ day delinquency rate on loans held in liferncompany portfolios increased 0.12 percentage points to 0.31 percent and the 60+rnday delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.16 percentage points to 0.79 percent.  The 60+ dayrndelinquency rate on multifamily loans held or insured by Freddie Mac increasedrn0.05 percentage points to 0.24 percent.  The 90+ day delinquency rate onrnloans held by FDIC-insured banks and thrifts rose 0.32 percentage points torn4.24 percent. </p

“Weaknessrnin the economy has continued to weigh on commercial properties, which in turnrnweighs on the mortgages they back,” said Jamie Woodwell, MBA's VicernPresident of Commercial Real EstaternResearch.  “Economic growth,rnspecifically in areas of jobs and consumer spending, will be key to stabilizingrnthe commercial property and mortgage markets goingrnforward.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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