The Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report shows commercial and multifamily mortgage delinquencies declined in the second quarter of 2022. Based on the unpaid principal balance (UPB) of loans, the delinquency rate at the end of the second quarter of 2022 for banks and thrifts (90 or more days delinquent or in non-accrual) was 0.49%, a decrease of 0.07 percentage points from the first quarter of 2022.
For life company portfolios (60 or more days delinquent), it was 0.04%, a decrease of 0.01 percentage points from the first quarter. For Fannie Mae (60 or more days delinquent), it was 0.34%, a decrease of 0.04 percentage points from the first quarter. For Freddie Mac (60 or more days delinquent), it was 0.07%, a decrease of 0.01 percentage points from the first quarter. CMBS’s (30 or more days delinquent or in REO) rate was 2.95%, a decrease of 0.41 percentage points from the first quarter.
“Delinquency rates for commercial and multifamily mortgages fell again during the second quarter of 2022,” states Jamie Woodwell, MBA’s vice president of commercial real estate research. “Many capital sources are seeing delinquency rates at or approaching pre-pandemic levels, which were some of the lowest delinquency rates on record. MBA survey data have shown significant differences by property type as the COVID-19 pandemic’s effects have morphed. These property-type differences, particularly across changing economic conditions, will continue to be a key factor in commercial and multifamily loan performance.”
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.
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 do include loans backed by owner-occupied commercial properties.
Read the full report here.
Image: Étienne Beauregard-Riverin on Unsplash
