MBA: 2Q Commercial/Multifamily Delinquencies Remain Low

Ahmad, Ali aahmad@mba.org

September 01, 2016


Delinquency rates for commercial and multifamily mortgage loans remained low in the second quarter, the Mortgage Bankers Association reported this morning in its Commercial/Multifamily Delinquency Report.

MBA said based on unpaid principal balance of loans, delinquency rates for each group at the end of the second quarter were as follows:

--Banks and thrifts (90 or more days delinquent or in non-accrual): 0.66 percent, a decrease of 0.07 from the first quarter;
--Life company portfolios (60 or more days delinquent): 0.11 percent, an increase of 0.05 from the first quarter;
--Fannie Mae (60 or more days delinquent): 0.07 percent, an increase of 0.01 percentage points from the first quarter.
--Freddie Mac (60 or more days delinquent): 0.02 percent, a decrease of 0.02 percentage points from first quarter;
--Commercial mortgage-backed securities (30 or more days delinquent or in REO): 4.04 percent, an increase of 0.17 percentage points from the first quarter.

"For most capital sources, commercial and multifamily mortgage delinquency rates are near the lowest levels seen during the past 20 years," said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. "Strong property fundamentals, rising property values and solid mortgage availability are all supporting these rates."

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, CMBS, life insurance companies, Fannie Mae, and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

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 Federal Deposit Insurance Corp. 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, click the following Web link: https://www.mba.org/Documents/Research/2Q16CMFDelinquency.pdf.

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