Commercial and multifamily mortgage originations up 88%
Commercial and multifamily mortgage originations grew 88% in the fourth quarter of 2010 when compared to 4Q 2009, the Mortgage Bankers Association said in its Fourth Quarter Commercial Real Estate-Multifamily Finance Quarterly Report. An increase in the involvement of insurance companies in the CMBS segment helped drive the growth in the segment, the association said. The latest Fourth Quarter report elaborated on this trend saying, "loans for conduits for CMBS saw a 60-fold increase compared to last year’s fourth quarter. There was also a 170% increase in loans for life insurance companies, a 65 percent increase for Government Sponsored Enterprises (or GSEs – Fannie Mae and Freddie Mac), and loans originated for commercial bank portfolios saw a decrease of 25 percent." "While not large on a dollar basis, perhaps the most symbolic change was a 6,000 percent increase in origination for CMBS," the MBA report said. "After being nearly dormant for the previous two-and-a-half years, more than $6 billion of CMBS was issued in the fourth quarter." At the same time, the amount of mortgage debt outstanding in the fourth quarter fell 2.7 %, or by $67 billion, due to a $50-billion decline in the balance of loans held in CMBS issue. The MBA said that drop occurred because of the number of borrowers paying down underlying loans. Some of the debt also was resolved or retired. “The change in the balance of commercial and multifamily mortgage debt outstanding was driven by a decline in the amount of CMBS loans outstanding,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The $50 billion dollars of CMBS loans that paid- off, paid down or were resolved during the year represented 75 percent of the total decline. Strong originations by FHA, Fannie Mae and Freddie Mac led to an increase in the level of multifamily mortgages outstanding.” Overall, commercial and multifamily loans held by banks and thrifts fell 1.4% in the past year, while the balance of loans held or insured by Fannie Mae, Freddie Mac and the FHA grew 4.8% as the FHA-insured portfolio continued to expand. In terms of mortgage performance, MBA said, "Commercial and multifamily mortgage delinquency rates at banks and thrifts have begun to fall from their recent peak, which was also below the peak seen during the early 1990s. CMBS delinquency rates continued to climb. The rate of growth of CMBS delinquency rates slowed, but the trend continued upward." Write to Kerri Panchuk.