MBA: Crisis Weighs on CRE Loan Performance

Quarter-to-quarter delinquency rates for all commercial/multifamily mortgage investor groups reviewed by the banking group continued to increase in the first quarter, with securitized loans reaching the highest level since the series began in 1997. The Mortgage Bankers Association Commercial/Multifamily Delinquency Report shows that compared to 4Q09 the 30-plus-day delinquency rate on loans held in commercial mortgage-backed securities rose 1.54 percentage points to 7.24%. Delinquencies for five of the largest investor groups reviewed—commercial banks and thrifts, CMBS, life insurance companies, Fannie Mae and Freddie Mac—"remain below levels seen in the early 1990s, some by large margins," the MBA said. The 60-plus-day delinquency rates increased on loans held in life company portfolios by 0.12 percentage points to 0.31%, on multifamily loans held or insured by Fannie Mae by 0.16 percentage points to 0.79%, and on multifamily loans held or insured by Freddie Mac increased 0.05 percentage points to 0.24%. The 90-plus-day delinquencies on loans held by FDIC-insured banks and thrifts also increased by 0.32 percentage points to 4.24%. These findings are significant since together these groups hold over 80% of commercial/multifamily mortgage debt outstanding—excluding construction and development loans, which are not presented in the report. MBA's Jamie Woodwell attributed the deterioration to economic weakness noting that unless there is growth in jobs and consumer spending, the CRE mortgage market will not be stabilizing any time soon.