MBA: 3Q CMF Delinquencies Remain Low; Bank Delinquencies Match Lowest on Record

Delinquency rates for commercial and multifamily mortgage loans held steady in the third quarter, with delinquency rates for loans held in bank portfolios reaching a 24-year low, the Mortgage Bankers Association reported this morning.

The MBA quarterly Commercial/Multifamily Delinquency Report reported little change between the second and third quarters. Based on the unpaid principal balance of loans, MBA reported delinquency rates for each group at the end of the third quarter as follows:

—Banks and thrifts (90 or more days delinquent or in non-accrual): 0.52 percent, a decrease of 0.02 percentage points from the second quarter;

—Life company portfolios (60 or more days delinquent): 0.02 percent, a decrease of 0.02 percentage points from the second quarter;

—Fannie Mae (60 or more days delinquent): 0.04 percent, a decrease of 0.01 percentage points from the second quarter;

—Freddie Mac (60 or more days delinquent): 0.02 percent, an increase of 0.01 percentage points from the second quarter;

—Commercial mortgage-backed securities (30 or more days delinquent or in REO): 4.61 percent, a decrease of 0.23 percentage points from the second quarter.

“It is hard to imagine commercial and multifamily mortgages performing better than they are today,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “Strong property fundamentals and values and ready credit availability are all helping contribute to this extraordinary performance.”

The MBA 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, Fannie Mae, and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

The 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.

Construction and development loans are not included in the numbers presented in the report, but are included in many regulatory definitions of “commercial real estate” despite that 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 Federal Deposit Insurance Corp. delinquency rates for bank and thrift held mortgages in the report do include loans backed by owner-occupied commercial properties. Differences between the delinquencies measures are detailed in Appendix A.

The report can be downloaded at https://www.mba.org/Documents/Research/3Q17CMFDelinquency.pdf.