Commercial and Multifamily Mortgage Delinquency Rates Decreased in the Third Quarter of 2021

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Adam DeSanctis
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WASHINGTON, D.C. (December 7, 2021) - Commercial and multifamily mortgage delinquencies declined in the third quarter of 2021, according to the Mortgage Bankers Association's (MBA) latest Commercial/Multifamily Delinquency Report.

"Commercial mortgage delinquency rates for every major capital source have come down since the early months of the pandemic," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "With low numbers of loans becoming newly delinquent, much of the declines are coming from the resolution of loans with later-stage delinquency statuses. Despite successive waves of COVID-19, the economy has shown solid growth, and it is hard to imagine a return to the extraordinary shutdowns in early 2020 that negatively impacted some sectors of commercial real estate."

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, and Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding. 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. As just one example, Fannie Mae reports loans receiving payment forbearance as delinquent, while Freddie Mac excludes those loans if the borrower is in compliance with the forbearance agreement.

Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the third quarter of 2021 were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.69 percent, a decrease of 0.06 percentage points from the second quarter of 2021;
  • Life company portfolios (60 or more days delinquent): 0.04 percent, a decrease of 0.01 from the second quarter;
  • Fannie Mae (60 or more days delinquent): 0.42 percent, a decrease of 0.11 percentage points from the second quarter;
  • Freddie Mac (60 or more days delinquent): 0.12 percent, a decrease of 0.03 from the second quarter; and
  • CMBS (30 or more days delinquent or in REO): 4.86 percent, a decrease of 0.82 percentage points from the second quarter.

Construction and development loans are generally not included in the numbers presented in this report 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 delinquency measures are detailed in Appendix A. To view the report, please visit: https://www.mba.org/Documents/Research/3Q21CMFDelinquency.pdf.  

To better understand the ways the COVID-19 pandemic is affecting commercial mortgage performance, MBA worked with its servicer members to develop the monthly CREF Loan Performance Survey.

For more information on the most recent results and the historical series, visit: https://www.mba.org/store/products/research/general/report/commercial-real-estate-finance-loan-performance-survey.