MBA: Commercial/Multifamily Delinquencies Remain Low

Commercial and multifamily mortgage delinquency rates generally held steady or improved in the fourth quarter, the Mortgage Bankers Association reported.

“The performance of commercial and multifamily mortgages remains strong, with continued improvement in the delinquency rates of loans held by banks and in commercial mortgage-backed securities,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “Strong property fundamentals and values, coupled with still low interest rates, are likely to continue the positive trend.”

The MBA Commercial/Multifamily Delinquency Report analyzed delinquency rates for the five largest investor groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae and Freddie Mac. These five groups currently hold more than 80 percent of commercial/multifamily mortgage debt outstanding.Delinquency rates based on the unpaid principal balance of loans at the end of the fourth quarter included:

–Banks and thrifts (90 or more days delinquent or in non-accrual): 0.73 percent, a decrease of 0.09 percentage points from the third quarter;

–Life company portfolios (60 or more days delinquent): 0.04 percent, unchanged from the third quarter;

–Fannie Mae (60 or more days delinquent): 0.07 percent, an increase of 0.02 percentage points from the quarter before;

–Freddie Mac (60 or more days delinquent): 0.02 percent, an increase of 0.01 percentage points from third-quarter 2015;

–CMBS (30 or more days delinquent or in REO): 4.73 percent, a decrease of 0.11 percentage points from the third quarter.

Woodwell said the analysis incorporated the same measures each individual investor group uses to track loan performance. But because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

The report did not analyze construction and development loans, but many regulatory definitions of commercial real estate do include C&D loans even though they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties. FDIC delinquency rates for bank- and thrift-held mortgages include loans backed by owner-occupied commercial properties.

The full report is available at Appendix A explains the differences between the delinquency measures by investor group.