• Lowenstein Sandler PC
• USA
• October 25 2010
• 

According to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report, delinquency rates were mixed in the second quarter of 2010 for commercial/multifamily mortgage investor groups. As the delinquency rate for commercial real estate loans in mortgage backed securities (CMBS) reached an all-time high, the delinquency rate for other groups of mortgages, though still elevated, remains below levels seen in the early 1990s, and in some cases by large margins.    

MBA reports that between the first quarter and second quarter of 2010, the 60+ day delinquency rate on loans held in life company portfolios decreased by 0.02 percentage points to 0.29 percent; the 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae increased 0.01 percentage points to 0.80 percent; the 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.03 percentage points to 0.28 percent; and the 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained unchanged at 4.26 percent.

Data assembled by Trepp, an independent provider of CMBS and commercial mortgage information, indicated that the delinquency rate for commercial real estate loans in CMBS has steadily accelerated, finally surpassing 9 percent after three consecutive months of somewhat moderate increases. The rate in September 2010 was up 13 basis points to 9.05 percent after increases of 21 basis points in August 2010; 12 basis points in July 2010; and 17 basis points in June 2010 and represents the highest delinquency rate since the development of the CMBS product line back in 1997.

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However, this data does not tell the full story. While the delinquency rate increased somewhat significantly, an independent rating agency, Fitch Ratings, indicated that the increase was somewhat offset by a record number of loan resolutions. Fitch noted that nearly $2.1 billion of CMBS loans disappeared from its delinquency index in August through a combination of liquidations, repayments upon refinancing, corrections and modifications. It would appear that while delinquent loans are being worked out at an increased rate, the overall volume of new delinquencies continues to grow at a steady level.