Commercial and Multifamily Mortgage Delinquencies Remain Low in the Fourth Quarter of 2018

CONTACT
Adam DeSanctis
adesanctis@mba.org
(202) 557-2727

WASHINGTON, D.C. (March 7, 2019) - Commercial and multifamily mortgage delinquencies remained at a low rate in the final three months of 2018, according to the Mortgage Bankers Association's (MBA) latest Commercial/Multifamily Delinquency Report.

"It's hard to imagine commercial and multifamily mortgages performing much better than they have recently," said Jamie Woodwell, MBA's Vice President of Research and Economics. "Future performance will be largely driven by changes in the economy and how they affect property incomes, property values and the ability of owners to refinance when their loans come due. Currently, all of those factors are favorable."

MBA's quarterly 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.

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

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.48 percent, unchanged from the third quarter of 2018;
  • Life company portfolios (60 or more days delinquent): 0.05 percent, an increase of 0.01 percentage points from the third quarter of 2018;
  • Fannie Mae (60 or more days delinquent): 0.06 percent, a decrease of 0.01 percentage points from the third quarter of 2018;
  • Freddie Mac (60 or more days delinquent): 0.01 percent, unchanged from the third quarter of 2018; and
  • CMBS (30 or more days delinquent or in REO): 2.77 percent, a decrease of 0.28 percentage points from the third quarter of 2018.

MBA's analysis incorporates the 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 generally 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: https://www.mba.org/Documents/Research/4Q18CMFDelinquency.pdf.