Commercial/Multifamily Debt Outstanding Static At $3.48 Trillion

vel of commercial/multifamily mortgage debt outstanding remained relatively unchanged in the first quarter, at $3.48 trillion, according to the Mortgage Bankers Association's (MBA) [link=http://www.mortgagebankers.org/files/Research/CommercialServicing/Q109CMFDebtOutstanding.pdf][u]analysis[/u][/link] of the Federal Reserve Board Flow of Funds data. The $3.48 trillion in commercial/multifamily mortgage debt outstanding recorded by the Fed was a decrease of $33 million from the fourth quarter of 2008. Multifamily mortgage debt outstanding grew to $908 billion – an increase of $5 billion, or 0.6% from the fourth quarter. ‘Banks, thrifts, Fannie Mae and Freddie Mac all increased their holdings of commercial and multifamily mortgages during the first quarter, while runoff among [commercial mortgage-backed securities (CMBS)] and life company loans decreased those investors' holdings,’ says Jamie Woodwell, MBA's vice president of commercial real estate research. ‘The relatively long-term nature of commercial real estate finance has meant greater stability in the levels of commercial and multifamily mortgage debt outstanding than is seen among many other types of credit.’ The Federal Reserve Flow of Funds data summarize the holding of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (included under "life insurance companies" in this data) and in CMBS, collateralized debt obligations (CDOs) and other asset-backed securities (ABS) for which the security issuers and trustees hold the note, the MBA says. Commercial banks continue to hold the largest share of commercial/multifamily mortgages: $1.56 trillion, or 45% of the total. Many of the commercial mortgage loans reported by commercial banks however, are actually ‘commercial and industrial’ loans to which a piece of commercial property has been pledged as collateral, the MBA notes. An MBA Research Policy Note found that among the top 10 commercial real estate bank lenders, 48% of their aggregate balance of commercial (i.e., non-multifamily) real estate loans were related to owner-occupied properties. Since the other loans reported here are generally income property loans – meaning that the income primarily comes from rents – the commercial bank numbers are not comparable, the MBA adds. CMBS, CDO and other ABS issuers are the second-largest holders of commercial/multifamily mortgages, holding $736 billion, or 21% of the total. Life insurance companies hold $316 billion (9%), and savings institutions hold $194 billion (6%). The government-sponsored enterprises (GSEs), agency-backed mortgage pools and GSE-backed mortgage pools, including Fannie Mae, Freddie Mac and Ginnie Mae, hold $191 billion in multifamily loans that support the mortgage-backed securities they issued and an additional $154 billion in ‘whole’ loans in their own portfolios. This statistic represents a total share of 10% of outstanding commercial/multifamily mortgages. As noted above, many life insurance companies, banks and the GSEs purchase and hold a large number of CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS category previously referenced. Looking just at multifamily mortgages, the GSEs and Ginnie Mae hold the largest share of multifamily mortgages, with $191 billion in federally related mortgage pools and $154 billion in their own portfolios, or 38% of the total multifamily debt outstanding. They are followed by commercial banks, with $217 billion (24%); CMBS, CDO and other ABS issuers, with $113 billion (13%); state and local governments, with $69 billion (8%); savings institutions, with $66 billion (7%); and life insurance companies, with $51 billion (6%). In the first quarter of 2009, commercial banks saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $7 billion, or 0.4%. The GSEs increased their holdings of commercial/multifamily mortgages by $3 billion (1.7%); agency and GSE-backed mortgage pools increased their holdings of commercial/multifamily mortgages by $2 billion (1%); and the federal government increased its holdings of commercial/multifamily mortgages by $1.4 billion (2%). In percentage terms, the GSEs saw the largest increase in their holdings of commercial/multifamily mortgages – a jump of 1.7%. Nonfinancial corporate business saw their holdings decrease by 21%. SOUR

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