Commercial/Multifamily Mortgage Delinquency Rates Low, Record Decline for CMBS Loans

Ali Ahmad
(202) 557- 2727

WASHINGTON, D.C. (June 7, 2016) - Delinquency rates for commercial and multifamily mortgage loans remained low in the first quarter of 2016, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report.

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.

"Strong fundamentals and strong property prices, as well as still low interest rates, continue to support the performance of commercial and multifamily mortgages," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "A record decline in the volume of CMBS loans in foreclosure and REO brought a record decline in the delinquency rate for loans held in CMBS.  At the same time, delinquency rates remain extremely low for commercial and multifamily mortgages held by life insurance companies, Freddie Mac, Fannie Mae and banks and thrifts."

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

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.73 percent, unchanged from the fourth quarter of 2015;
  • Life company portfolios (60 or more days delinquent): 0.06 percent, an increase of 0.02 from the fourth quarter of 2015;
  • Fannie Mae (60 or more days delinquent): 0.06 percent, a decrease of 0.01 percentage points from the fourth quarter of 2015;
  • Freddie Mac (60 or more days delinquent): 0.04 percent, an increase of 0.02 percentage points from fourth quarter of 2015;
  • CMBS (30 or more days delinquent or in REO): 3.93 percent, a decrease of 0.80 percentage points from the fourth quarter of 2015.

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.

Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of 'commercial real estate' despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers, or other income-producing properties.  The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties.

Differences between the delinquencies measures are detailed in Appendix A. To view the report, please visit the following Web link: