Eighth Edition - Covering 2006 Through 2008
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Eighth Edition - Covering 2006 Through 2008 |
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This is the demo version of the eMID. Information contained here is only a sampling of the full array of data available in the paid version. The profiles shown here are samples, showing data of randomly selected companies. Some features, such as file download, have been disabled. What does the paid version offer? Valuable contact information, profiles, and program details of individual companies are only accessible on the paid eMID. To take advantage of the full range of powerful data and features, order the eMID today! If you have further questions or would like to order the product, please call (888) 501-8850. You can also order the eMID online. |
In the fall of 2007 when the subprime market began to crumble in earnest it was feared that the commercial mortgage sector would get hammered as well. After all, the commercial mortgage is hardly a vanilla product and like subprime loans they found their way into securities. But there is one major difference between commercial and subprime residential lenders: the firms originating and underwriting the loans did not throw their underwriting standards out the window during the boom years.
The commercial real estate and mortgage markets have come under pressure, for sure, but the correction occurring in 2008/2009 can hardly be described as an implosion. Empty homes can be rented out for income but when there's a glut the task becomes more difficult. Even in down markets commercial projects (offices, retail, industrial, hotel/motel) can find tenants. Rental rates can suffer but if enough price cutting takes place a tenant will step forward. As the saying goes, "It's all about cash flow."
Here's a reassuring thought: in the first quarter of 2008 commercial and multifamily mortgage delinquencies rose for most major investor groups but remained near record lows, according to the Mortgage Bankers Association. The MBA reported delinquency rates for the five largest investor groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, Fannie Mae, and Freddie Mac.
The 30-plus-day delinquency rate on loans held in CMBS (commercial mortgage-backed securities) rose 0.08 percentage points to 0.48%, while the 60-plus-day delinquency rate on loans held in life company portfolios remained flat at 0.01%. The 60-plus-day delinquency rates on multifamily loans held or insured by Fannie Mae or Freddie Mac rose to 0.09% for Fannie and to 0.04% for Freddie. The 90-plus-day delinquency rate on loans held by banks and thrifts insured by the Federal Deposit Insurance Corp. rose 0.21 percentage points to 1.01%.
Even though the commercial market has held up better than might be expected, that doesn't mean the sector is out of the woods quite yet. Mortgage banking firms (banks, non-banks, S&Ls) have laid off 150,000 workers over the past 18 months. These full-timers work in offices. When they lose their jobs that means less office space is needed. One of the hardest hit markets is Orange County, Calif., once home to such subprime giants as Ameriquest Mortgage and its sister company, Argent, as well as New Century Financial Corp., Encore Credit and many others. All of these firms no longer exist - but the office floors they occupied do.
In the Spring of 2008 Standard & Poor's issued a report noting that all categories of commercial construction - as well as multifamily housing - are likely to weaken in the year ahead. The report noted that new commercial construction "dropped sharply" in the fourth quarter and projects that it should weaken further, but that "the carry-through from buildings that reached groundbreaking in 2007 should keep construction spending above that of 2007."
On an inflation-adjusted basis, S&P is forecasting a 16% drop in commercial starts this year and a 9% decline in 2009. The report, entitled "U.S. Commercial Construction: After the Wave Comes the Trough," says that apartments are in the weakest situation and offices the strongest. "On the positive side, the degree of overbuilding in commercial properties is far less than it was in the late 1980s, where downtown office vacancy rates were 20% even before the start of the recession," S&P said. "At the end of 2007, vacancies were averaging about half that level."
In other words, the commercial market looks somewhat stable. Few economists are talking about a huge commercial bubble. Even though S&P is worried about the multifamily sector, one positive for apartments is this: If consumers are defaulting on their homes they still need somewhere to live, whether it's a garden apartment or a high rise in a major city. The National Association of Home Builders is even forecasting an increase in multifamily stars for 2009.
The origination volumes in this chapter were culled from surveys sent to more than 400 active commercial lenders (depositories and non-depositories alike) in a database built by National Mortgage News. Mortgage lenders (mortgage bankers, banks, thrifts, insurance companies and others) were asked to fill out a three-page survey and return it to us within 45 days. At least two follow-up telephone calls or faxes were sent as well. In some instances residential lenders either refused to send in a survey or filled out a questionnaire but did not answer all the questions.
If you analyze the profiles and rankings in this chapter you might notice that some lenders are missing. If so, it's because they would not cooperate. In certain cases we estimated a firm's loan volume based on previously reported originations. Estimates are derived from two sources: Home Mortgage Disclosure Act (HMDA) data collected by the Federal Reserve (multifamily data), and call report information collected by the Federal Deposit Insurance Corp., and Office of Thrift Supervision. If you happen to work for a firm that is missing from these rankings and would like to provide us with numbers please call (202) 434-0322. Our goal, as always, is to provide accurate results on as many lenders as possible.
- Paul.Muolo@SourceMedia.com
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With comments or questions about the data contact Paul Muolo, paul.muolo@sourcemedia.com For technical support, e-mail Andras Malatinszky, andras.malatinszky@sourcemedia.com For customer service, call (800) 221-1809 © 2008 SourceMedia, Inc. and National Mortgage News. All rights reserved. |
