MBA: 4Q Commercial, Multifamily Mortgage Delinquencies Decline

Delinquency rates for mortgages backed by commercial and multifamily properties declined in the final three months of 2021, the Mortgage Bankers Association’s latest CREF Loan Performance Survey reported.

“The fourth quarter saw continued improvement in the performance of commercial and multifamily mortgages, particularly among property types that were the most impacted by the downturn,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research.

Woodwell noted the share of outstanding balances that are delinquent fell for both lodging and retail properties as property owners and lenders and servicers continue to work through troubled deals. “The share of loan balances becoming newly delinquent was the lowest since the onset of the pandemic,” he said.

Key Findings from MBA’s CREF Loan Performance Survey for December:  

The balance of commercial and multifamily mortgages that are not current decreased slightly in December.

• 97.0 percent of outstanding loan balances were current, up from 96.7 percent at the end of the third quarter.
• 1.9 percent were 90-plus days delinquent or in REO, down from 2.2 percent three months earlier.
• 0.2 percent were 60-90 days delinquent, unchanged from three months earlier.
• 0.3 percent were 30-60 days delinquent, unchanged from three months earlier.
• 0.7 percent were less than 30 days delinquent, down from 0.8 percent from three months earlier.

Loans backed by lodging and retail properties continue to see the greatest stress, but also saw improvement during the fourth quarter, MBA reported.

• 10.5 percent of the balance of lodging loans were delinquent, down from 14.0 percent at the end of the third quarter.
  • 7.6 percent of the balance of retail loan balances were delinquent, down from 8.2 percent three months earlier.
  • 2.1 percent of the balances of industrial property loans were non-current, up from 1.8 percent three months earlier.
  • 1.8 percent of the balances of office property loans were non-current, unchanged from three months earlier.
  • 1.4 percent of multifamily balances were non-current, up from 1.3 percent three months earlier.

Because of the concentration of hotel and retail loans, CMBS loan delinquency rates are higher than other capital sources, but also saw improvement during the final three months of 2021.

• 5.7 percent of CMBS loan balances were non-current, down from 7.2 percent in last year’s third quarter.
• Non-current rates for other capital sources were more moderate.
  • 2.2 percent of FHA multifamily and health care loan balances were non-current, up from 2.0 percent three months earlier.
  • 1.6 percent of life company loan balances were non-current, up from 1.2 percent three months earlier.
  • 0.6 percent of GSE loan balances were non-current, unchanged from three months earlier.

MBA’s CREF Loan Performance survey collected information on commercial and multifamily mortgage portfolios as of December 20, 2021. This month’s results build on similar surveys conducted since April 2020. Participants reported on $2.1 trillion of loans in December, representing 50 percent of the total $4 trillion in commercial and multifamily mortgage debt outstanding.

Click here for more information on MBA’s CREF Loan Performance Survey.