Commercial Mortgage Delinquency Rate Continues To Fall

Separate reports from the Mortgage Bankers Association (MBA) and Trepp indicate that delinquency rates for commercial and multifamily mortgage loans continue to decrease.

According to the MBA's Commercial/Multifamily Delinquency Report, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.01 percentage points to 0.08% during the second quarter.

The delinquency rate for multifamily loans held or insured by Freddie Mac decreased 0.07 percentage points to 0.09%, while the delinquency rate for loans held or insured by Fannie Mae decreased 0.11 percentage points to 0.28%.

The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.26 percentage points to 2.16%, according to the report.

The 30+ day delinquency rate for loans held in commercial mortgage-backed securities decreased a dramatic 0.74 percentage points to 7.81%.

‘Commercial and multifamily loan performance continued to improve during the second quarter, with delinquency rates falling for every major investor group,’ says Jamie Woodwell, vice president of commercial real estate research for the MBA, in a release. ‘The quarterly decline in the delinquency rate of loans held in commercial mortgage-backed securities was the largest on record, and delinquency rates for loans held by life companies and the GSEs remain low and fell lower during the quarter.’

The MBA's report does not include construction and development loans.

Meanwhile, Trepp's monthly CMBS Delinquency Report for August shows that the delinquency rate for U.S. commercial real estate loans in CMBS dropped for the third straight month to 8.38%. This represents a 10-basis-point drop since July's reading and a 175-basis-point improvement from a year ago. The August 2013 level is the lowest delinquency rate in three years, as per Trepp's data.

The August delinquencies totaled about $2.5 billion, up from about $2.4 billion in July. Helping to offset these newly delinquent loans were $1.5 billion of loans that cured.

Loan resolutions, although down nearly 50% from July, totaled just over $1 billion, while under half a billion dollars in formerly delinquent loans were paid off in August without a loss, Trepp states in a release.

‘August saw a continuation of the year-long downward trend in the Trepp CMBS delinquency rate, which reached an all-time high of 10.34% just over 12 months ago,’ says Manus Clancy, senior managing director at Trepp. ‘We anticipate this trend will carry forward in the months ahead as a new wave of expected deals will put additional downward pressure on the numbers.’

As of August, there was about $45.5 billion in delinquent CMBS loans, nationwide, excluding loans that are past their balloon date but current on their interest payments, Trepp reports.

Retail CMBS remains the best performer, while industrial remains the worst, despite substantial improvement in August. The lodging delinquency rate saw the best month-over-month improvement, while office loans saw a small increase in the delinquency rate, according to Trepp.

For the MBA report, click here.

For the Trepp report, click here.


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