Fitch Predicts Surge in CMBS Overdues

Fitch Ratings says it expects delinquencies on commercial mortgage-backed securities to double or triple this year, after closing 2007 at a low of 0.28%. This sort of rise would put CMBS delinquencies closer to the annual average CMBS default rate of 79 basis points, according to the rating agency. "Additional economic stress to property cash flows, declining defeasance volume, balloon defaults, and the decrease in new origination volume are likely to contribute to the increase in Fitch's loan delinquency index," said Michelle Bayard, a Fitch director. The multifamily sector ended 2007 with $427.8 million more in delinquent loans, with the highest concentrations of delinquencies seen in Texas (49.5%), Michigan (9.9%), and Tennessee (9.9%). The 2006, 2005, and 2004 vintages saw the highest concentration of delinquent multifamily loans, accounting for 55.4% of delinquencies. Moreover, the delinquencies in 2005 and 2006 occurred earlier than expected, Fitch said. The rating agency can be found online at http://www.fitchratings.com.