Commercial and Multifamily Debt Goes Up

Commercial and multifamily mortgage debt outstanding was up 2.8% in the third quarter, or $87.7 billion from the previous three month period, reaching $3.22 trillion, according to the Mortgage Bankers Association.

Multifamily mortgage debt outstanding alone rose to $813 billion, an increase of $23.5 billion or 3% from the second quarter.

And in the third-quarter securitization avenues - outlets for commercial mortgage-backed securities, collateralized debt obligations and asset-backed securities - boosted their holdings of commercial and multifamily mortgage debt the most compared to other funding sources.

"The third quarter included the periods immediately before and immediately after the dramatic adjustments in the capital markets," said Jamie Woodwell, MBA senior director of commercial and multifamily research. "As a result, commercial/multifamily mortgage debt outstanding grew to a new record - $3.2 trillion - but the quarter-over-quarter change in mortgage debt outstanding fell from $107 billion last quarter to $87.7 billion this quarter. Even with the drop, the $87.7 billion increase in Q3 still marked the fourth largest increase on record."

The mortgage bankers trade group gets input for the report from Federal Reserve data. Commercial banks continue to hold the largest share of commercial and multifamily mortgages, at $1.35 trillion, or 42% of the total. However, data for commercial banks include commercial loans, which are backed by income from commercial businesses, besides loans backed by income producing property.

Securitization avenues hold the second largest share, at $760 billion, or 24% of the total. Life insurance companies hold $293 billion, or 9%, of the total. Savings institutions hold $212 billion, or 7% of the debt outstanding, while government-sponsored enterprises (Fannie Mae, Freddie Mac) and agencies (Ginnie Mae) hold $146 billion in multifamily loans backing the mortgage-backed securities they issue, as well as another $126 billion in whole loans on their own portfolios, making for an 8% share of the total. Considering only multifamily mortgages, the GSEs and Ginnie Mae hold the largest share of the debt outstanding, accounting for 34%. Commercial banks are next with $163 billion, or 20%, of the total. Securitization avenues hold account for $123 billion, or 15% of the outstanding multifamily debt. Life insurance companies hold $47 billion of the multifamily debt outstanding. In terms of debt added in the third quarter, securitization avenues boosted their holdings of commercial and multifamily mortgage debt the most, with their holdings going up $50 billion, or 7%, representing 57% of the increase. Commercial banks boosted their holdings by $9 billion, accounting for 10.5% of the net increase in debt outstanding. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/