Commercial/Multifamily Delinquency Rates Continue to Climb in Q2

Commercial News » Commercial Real Estate Edition | By Michael Gerrity | September 9, 2009 1:50 PM ET

(News Source:  Mortgage Bankers Association)

(WASHINGTON, D.C.) -- Delinquency rates continued to increase in the second quarter for all commercial/multifamily mortgage investor groups , according to the Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association (MBA).

"The economic fallout of the recession continued to push commercial and multifamily delinquency rates higher during the second quarter," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "Lower levels of employment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties.  That in turn has led to increased stress on the loans those properties support."

Between the first and second quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 2.04 percentage points to 3.89 percent.  The 60+ day delinquency rate on loans held in life company portfolios rose 0.03 percentage points to 0.15 percent.  The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.17 percentage points to 0.51 percent.  The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.02 percentage points to 0.11 percent.  The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.64 percentage points to 2.92 percent.

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac.  Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans.  Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the second quarter were as follows:

  • CMBS:  3.89 percent (30+ days delinquent or in REO);
  • Life company portfolios:  0.15 percent (60+days delinquent);
  • Fannie Mae:  0.51 percent (60 or more days delinquent)
  • Freddie Mac:  0.11 percent (90 or more days delinquent);
  • Banks and thrifts:  2.92 percent (90 or more days delinquent or in non-accrual)

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