The level of outstanding commercial and multifamily mortgage debt decreased $28bn from Q209 to Q309, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. That decline represents only 0.8% of the $3.43trn of outstanding commercial and multifamily mortgage debt the Federal Reserve recorded in Q309. Multifamily mortgage debt outstanding dropped to $912bn, a decrease of $1bn, 0.1%, from Q209. The Federal Reserve Flow of Funds data gauges the holding of loans or, if the loans are securitized, the form of the commercial mortgage-backed securitization (CMBS). As an example, the MBA said, many life insurance companies invest both in whole loans for which they hold the mortgage note (included under Life Insurance Companies in this data) and in CMBS, collateralized debt obligations (CDOs) and other asset backed securities (ABS) for which the security issuers and trustees hold the note. Jamie Woodwell, MBA’s vice president of commercial real estate research, said a decline in construction loans contributed to the decline in loans. “Excluding construction loans, however, banks and thrifts saw a $6bn increase in their holdings of loans backed by commercial and multifamily properties. Coupled with increases in the holdings of multifamily mortgages by Fannie Mae and Freddie Mac, and decreases in the balances backing commercial mortgage-backed securities, the overall amount of mortgage debt outstanding backed by commercial/multifamily properties remained relatively unchanged,” Woodwell said. The association said commercial banks continue to hold the largest share of commercial and multifamily mortgages, $1.53trn, or 45% of the total. CMBS, CDO and other asset-backed securitization (ABS) issuers are the second largest holders of commercial/multifamily mortgages, holding $709bn, or 21% of the total. Life insurance companies hold $310bn, or 9% of the total, and savings institutions hold $190bn, or 6% of the total. The government-sponsored enterprises (GSEs), agency-backed mortgage pools and GSE-backed mortgage pools hold $197bn in multifamily loans that support the MBS they issued and an additional $162bn in "whole" loans in their own portfolios. That represents 10% of all outstanding commercial and multifamily mortgages. Write to Austin Kilgore.