Commercial, Multi-family Delinquency Rates Remain Elevated


Delinquency rates for commercial and
multi-family mortgages continued to rise in CMBS portfolios during the second
quarter of 2012 and now stand at 8.97 percent, 12 basis points from the first
quarter rate.  This rate has risen in 12
of the 14 quarters
the Mortgage Bankers Association has tracked them.  In the first quarter of 2009 the rate stood
at 1.86 percent.  Delinquency rates also
increased for mortgages held by life insurance companies and Freddie Mac. 

Mortgages held by life insurance
went up only a slight 0.01 percent to 0.15 percent while loans held
or insured by Freddie Mac increased 0.04 percentage points to 0.27
percent.  Rates held by the other two
investor groups declined; Fannie Mae’s holdings had a rate decrease of 0.08
percentage points to 0.29 percent and the rate for loans held by FDIC-insured
banks and thrifts decreased 0.34
point to 3.11 percent, the fifth consecutive
quarter that rate has dropped.  One
reason for the discrepancies in delinquency rates is the extent of the
delinquency considered “serious” by the investor.  CMBS rates are 30+ delinquencies while 60+ is
the benchmark for mortgages held by life insurance companies, Fannie Mae and
Freddie Mac.  Banks and thrifts regulated
by FDIC consider 90+ days a serious delinquency.

Commercial and
multifamily delinquency rates for life insurance companies, Fannie Mae and
Freddie Mac all remain quite low, and the delinquency rate for bank-held loans
continues to decline,” said Jamie Woodwell, MBA’s Vice President of Commercial
Real Estate Research. “The delinquency rate for loans in CMBS continues to show
higher and more sustained aggregate delinquency rates, much of which is driven
by the large share of these loans in foreclosure or REO.”

Construction and
development loans are not included in the numbers presented here, 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 bank and
thrift held mortgages reported here do include loans backed by owner-occupied
commercial properties.

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