MBA: 2Q Commercial/Multifamily Mortgage Delinquency Rates Decline

Commercial and multifamily mortgage delinquencies declined in the second quarter, the Mortgage Bankers Association’s latest Commercial/Multifamily Delinquency Report said.

“Many capital sources are seeing delinquency rates at or approaching pre-pandemic levels, which were some of the lowest delinquency rates on record,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research.

Woodwell noted 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,” he said.

Based on the unpaid principal balance of loans, delinquency rates for each group at the end of the second quarter were:

• Banks and thrifts (90 or more days delinquent or in non-accrual): 0.49 percent, a decrease of 0.07 percentage points from the first quarter;
• Life company portfolios (60 or more days delinquent): 0.04 percent, a decrease of 0.01 percentage points from the first quarter;
• Fannie Mae (60 or more days delinquent): 0.34 percent, a decrease of 0.04 percentage points from the first quarter;
• Freddie Mac (60 or more days delinquent): 0.07 percent, a decrease of 0.01 percentage points from the first quarter; and
• CMBS (30 or more days delinquent or in REO): 2.95 percent, a decrease of 0.41 percentage points from the first 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. Differences between the delinquencies measures are detailed in Appendix A.

MBA’s quarterly analysis looks at commercial and multifamily delinquency rates for five of the largest investor groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies and Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding. MBA 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.

Click here to download the current report.

To better understand the ways the COVID pandemic is and is not affecting commercial mortgage performance, MBA worked with its servicer members to develop the CREF Loan Performance Survey. Click here for more information on the most recent the CREF Loan Performance Survey results and the historical series.