Commercial/Multifamily Delinquencies Continue Improvement

by devteam September 13th, 2011 | Share

Four out of five of the major groups that invest inrncommercial/multifamily mortgages saw delinquency rates fall during the secondrnquarter of 2011.  The fifth group, loansrnheld in commercial mortgage backed securities (CMBS) continued to deteriorate,rnbut at a more moderate pace. The delinquency data were reported on Monday byrnthe Mortgage Bankers Association (MBA).</p

Life insurance companies reported that commercial andrnmulti-family loans that were 60+ days delinquent at the end of the quarterrnconstituted 0.12 percent of their portfolios compared to 0.14 percent at thernend of Quarter One and 0.29 percent one year earlier.  FDIC insured banks and thrifts reported a 90+rnday delinquency rate of 3.93 percent, down from 4.18 percent in the firstrnquarter and 4.34 percent at the end of Q2 2010.</p

Both government sponsored enterprises (GSEs), Freddie Macrnand Fannie Mae saw improvements in their portfolios as well.  Fannie Mae’s 60+ day delinquency rate was .46rnpercent at the end of the quarter, down from .64 percent last quarter and 0.80rnpercent one year earlier.  Freddie Mac’rn60+ day rate was 0.31 percent, substantially higher than the 0.22 percent onernyear ago but down from the recent peak of 0.36 percent established in the firstrnquarter of 2011.  </p

Commercial and multifamily mortgages held in CMBS continuernto set records for 30+ day delinquencies, establishing a new high of 9.43rnpercent in Quarter two.  This was anrnincrease of 25 basis points from the 9.18 percent level in Q1.  Prior to the beginning of this year the raternhad risen rapidly each quarter – from 0.39 percent at the end of 2007 to 8.95rnpercent at the end of 2010.</p


Jamie Woodwell, MBAs Vice President of Commercial RealrnEstate Research said that the delinquency rates for banks, life insurancerncompanies and two GSEs remain below levels seen in the last major real estaterndownturn in the early 1990s, some by wide margins.  “The delinquency rate for loans held in CMBSrncontinued to rise during the second quarter and reached the highest level sincernthe series began in 1997, although the rate of increase continues to moderate.”</p

Commercial and multifamily loans as defined by the report dornnot include construction and development loans although the banks and thriftsrndata does include owner-occupied commercial properties.  MBA cautions that, because each investorrngroup tracks delinquencies in its own way, rates are not comparable from onerngroup to another.</p

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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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