CRE Overdues Are Rising

Washington-Commercial real estate markets are generally slow or deteriorating, pushing delinquency rates on CRE mortgages higher.

In the third quarter, 3.4% of CRE mortgages held by banks and thrifts were 90 days or more past due, up 51 basis points from the pervious quarter. The delinquency rate on commercial mortgage-backed securities 30 days or more past due topped 4% in the third quarter, the highest ever.

Tracking by Wachovia Capital Markets LLC and Intex Solutions Inc. shows the 30-day-plus delinquency rate on CMBS rose 17 basis points in the third quarter to 4.06%. It was 0.63% back in the 3d quarter of 2008.

"Commercial and multifamily mortgages continue to feel stress in the face of the weakened economy, " said Jamie Woodwell, vice president of CRE research at the Mortgage Bankers Association. MBA compiled a CRE delinquency rate report using various sources, including the Federal Deposit Insurance Corp. and American Council of Life Insurers.

These CRE delinquency rates do not include construction and development loans.

Meanwhile, the Federal Reserve Board's most recent Beige Book found that CRE markets in most of the 12 Federal Reserve Bank districts had deteriorated since October. "Market conditions were reported to have weakened in virtually all districts with rising vacancy rates, downward pressure on rents and little, if any, new development. Expectations for 2010 were also quite low," the Fed's December Beige Book says.

The Book also reported "increasingly tight credit standards" on CRE loans in the FRB districts of New York, Richmond, Chicago, St. Louis, Dallas and San Francisco.

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