The Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report shows a decline in commercial and multifamily mortgage delinquencies in the first quarter of 2022. Based on the unpaid principal balance (UPB) of loans, the delinquency rate at the end of the first quarter of 2022 for banks and thrifts (90 or more days delinquent or in non-accrual) was 0.56%, a decrease of 0.03 percentage points from the fourth quarter of 2021. For life company portfolios (60 or more days delinquent), it was 0.05%, an increase of 0.01 percentage points from the fourth quarter.
“Commercial and multifamily mortgage delinquency rates that were elevated by the onset of the COVID-19 pandemic continued to come down during the first quarter of 2022,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “Given the strength in market fundamentals and valuations for most property types, delinquency rates are at the lower end of their historical range for most major capital sources.”
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% 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.
Fannie Mae’s (60 or more days delinquent) rate was 0.38%, a decrease of 0.04 percentage points from the fourth quarter, while Freddie Mac (60 or more days delinquent) was 0.08%, unchanged from the fourth quarter.
For CMBS (30 or more days delinquent or in REO), it was 3.36%, a decrease of 0.66 percentage points from the fourth 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.
Read the most recent results here.
Image: Alexander Andrews on Unsplash
