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MBA: Commercial, multifamily mortgage delinquencies remain historically low

Commercial mortgages continue stellar performance

Delinquency rates on commercial and multifamily mortgages stayed nearly historic lows during the third quarter, the Mortgage Bankers Association reported this week.

“Commercial and multifamily mortgage delinquency rates are extremely low right now,” MBA Vice President for Commercial Real Estate Research Jamie Woodwell said.

According to Woodwell, the delinquency rate for loans held on bank balance sheets hit a new series low, while delinquency rates for loans held by life companies or those guaranteed by Fannie Mae and Freddie Mac are all still below 10 basis points.

Broken down by loan type, based on unpaid principal balance of loans, delinquency rates for each group at the end of the third quarter were:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.48%, a decrease of 0.02 percentage points from the second quarter
     
  • Life company portfolios (60 or more days delinquent): 0.04%, an increase of 0.01 percentage point from the second quarter
     
  • Fannie Mae (60 or more days delinquent): 0.07%, a decrease of 0.03 percentage points from the second quarter
     
  • Freddie Mac (60 or more days delinquent): 0.01%, unchanged from the second quarter
     
  • Commercial mortgage-backed securities (30 or more days delinquent or in REO): 3.05%, a decrease of 0.47 percentage points from the second quarter

In the report, Woodwell explained that loans held in CMBS have a higher “headline” delinquency rate due to the way the industry reports on those loans.

“But if one pulls out loans in foreclosure or real estate owned–which are generally excluded from the calculations for the other groups–the CMBS delinquency rate is just 45 basis points, the same level as December 2005,” Woodwell said.

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

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