California Commercial Mortgage Delinquencies Drop in Q110
In California, the delinquency rate of commercial mortgages fell to 0.63% in Q110, a 34-basis point (bp) drop from 0.97% at the end of 2009, according to the California Mortgage Bankers Association (CMBA). On a dollar basis, the delinquent rate reached 0.63%, which translates to a 0.29% delinquent rate on a loan-volume basis. Of the more than 6,400 commercial loans surveyed by the CMBA, 19 loans totaling $344.6m were more than 90 days delinquent. The survey included 16 mortgage banking firms and $54.7bn in commercial and multi-family loans. Fifteen of the delinquent loans, worth $317.6m, were still three or more payments behind while four reached foreclosure. The largest delinquent loan was a $16.1m retail property in Riverside County. Retail was the second worst performing category with $19.4m of loans more than 90 days late. Leading the way were office properties. More than $306m of those loans fell into delinquency, or 3% of the surveyed portfolio. Ten of the 16 participating companies reported no delinquent loans. “It is encouraging to see the delinquency rate fall, and it reinforces the overall strength of the portfolio,” said Peter Ulrich, commercial real estate consultant for the CMBA. “While the commercial/multifamily real estate sector is not out of the woods yet, the fact that over 99% of loans in a $50bn-plus portfolio are still performing well is a sign that the fundamental underwriting and subsequent servicing of these loans is excellent.” While there might be more optimism on the default side of the commercial space, the national Mortgage Bankers Association (MBA) reported worse news on the origination side. The volume of commercial and multifamily mortgages originated in 2009 declined 46% from a year earlier, to $82.3bn of loans, according to the MBA. The state of the commercial market varies from analyst to analyst. According to Cushman & Wakefield, the market is in better shape than many anticipated given the largest employment declines in more than 70 years, but regional markets with the highest job losses, and the related overabundance of commercial properties vacant as businesses fail, will take longer to dig out of the recession. Write to Jon Prior.