In its regular monthly reports, Trepp does not cover loans that might have paid off in the six months prior to maturity, or does it give any sense as to the financial performance of the loans as they approach their balloon dates.
From the data group it analyzed, Trepp found about 72% of the universe of loans paid off. The further breakdown on those loans: 37% paid off in the six months prior to maturity, 19% paid off on the balloon date, 9% paid after the maturity date and 7% paid off with a loss of less than 2% of the loan balance. Trepp considers that last grouping a payoff even though the loans had very modest losses.
In its report, Trepp commented, “One might ask why the 19% that ‘paid off at balloon’ is so different than the monthly numbers we publish?
“There are two reasons. First, the loans that pay off prior to maturity are removed from the monthly number, so the denominator is significantly lower. Second, the monthly number excludes loans that enter the maturity month delinquent. Again, this reduces the denominator and makes the ‘paid off at balloon’ significantly higher.”
According to the most recent data from the company, almost 55% of the loans financed through a commercial mortgage-backed security execution reaching their balloon date in December were paid off. The 12-month moving average of payoffs was 47%.
As for 28% of loans in the data set that did not pay off last year, 18% are now past due, over 5% were modified and extended and the remaining 5% has a loss over 2% of the balance.