Commercial and multifamily mortgage delinquencies are down across all investor types for 4Q12 when compared with the third quarter. However, 30-day late payments for conduit loans are up 17 basis points when compared with yearend 2011, the only category which saw an increase.
Life companies report a 60-day late payment percentage of just eight basis points, the best yearend number since 2008. This is an improvement of four basis points over 3Q12 and nine basis points over 4Q11.
But the best improvement on both a quarter-to-quarter and year-over-year basis was seen in holdings of banks and thrifts. For 4Q12, the 90-day delinquency rate was 2.62%, compared with the 3Q12 rate of 2.94% and 4Q11 rate of 3.58%.
As for loans placed into
Multifamily loans in the portfolios of Fannie Mae had a 4Q12 60-day delinquency rate of 0.24%, an improvement of four basis points from 3Q12 and 35 basis points from 4Q11. For Freddie Mac, the 60-day delinquency rate of 0.19% was an eight basis point improvement from 3Q12 and a three basis point improvement from 4Q11.
MBA vice president of commercial real estate research Jamie Woodwell said, “The continued decline is being driven by improving property fundamentals and a strong finance market.”
MBA uses data gathered by each investor group in its report and because of differing methodologies, the information is not comparable between types of investors.
MBA also found that throughout the credit crunch and recession, commercial and multifamily mortgages had delinquency rates lower than the average delinquency rate for banks’ overall books of loans and leases, and that the charge-off rates these loans were lower than for any other major loan type. The trade group analyzed FDIC data for this determination and
“Commercial and multifamily mortgages were a net positive for banks and thrifts through the credit crunch and recession,” said Woodwell. “The amount of credit extended by banks stayed relatively constant during the recession, the delinquency rates for commercial and multifamily mortgages remained relatively subdued, and banks and thrifts saw far less in charge-offs for their commercial and multifamily mortgages than they did for other loan types.”
The yearend balance of multifamily mortgages held by banks never declined during the recession, and the balance of commercial mortgages fell just 3% between the peak (2009) and trough (2011) before rising again in 2012. By contrast, the balance of construction loans fell 62% between 2007 and 2012, the balance of commercial and industrial loans fell 21% between 2008 and 2010 before rising again in 2011 and 2012, and the balance of single-family loans fell 14% between 2007 and 2012.
Charge-offs of commercial and multifamily mortgages by banks and thrifts also remained far below those of other loan types during the recession. From 2007 through 2012, banks and thrifts charged off a net total of $212 billion of single-family mortgages, $205 billion of credit card loans, $95 billion of commercial and industrial loans, $85 billion of construction loans and $72 billion of other loans to individuals.
By contrast, over the same period, they have had to charge-off only $41 billion in commercial mortgages and $8.5 billion in multifamily mortgages.
