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After Strong 2016, Commercial Lenders Prepare for a Slightly Better 2017

Pictured is 2017 MBA Chairman, Rodrigo Lopez, CMB; MBA Chairman-Elect, David Motley, CMB; and Former MBA Chairman, David Kittle, CMB (photo courtesy of MBA Facebook page).

Pictured is 2017 MBA Chairman, Rodrigo Lopez, CMB; MBA Chairman-Elect, David Motley, CMB; and Former MBA Chairman, David Kittle, CMB (photo courtesy of MBA Facebook page).

SAN DIEGO — Commercial mortgage lenders, their correspondent lenders and brokers gathered this week in San Diego at the annual MBA CREF Conference held at the Manchester Grand Hyatt. The Mortgage Bankers Association (MBA) reports 3,200 attendees at this year’s conference, a 10 percent rise in attendance over 2015.

Mortgage bankers are fresh from one of the strongest years in originations in an era that shows few signs of a slow down. While there are some possible speed bumps in 2017, many attendees were upbeat and positive about 2017 and beyond for the commercial real estate lending industry.

MBA reported its results for the industry in a session with its chief economist and senior vice president of research and technology, Michael Fratantoni, and vice president, commercial real estate research, Jamie Woodwell.

Volume was up in commercial mortgage lending in 2016, with a record $502 billion in originations. MBA has forecasted 2017 to have a slightly larger volume of $515 billion.

MBA cites continuing strong commercial real estate fundamentals as the main reason for the predicted increase in 2017, with other factors including a strong job market and relatively low interest rates. MBA’s forecast does not include any possible economic stimulus — such as reduced government regulation or tax policy changes — with the implication that the increase could be greater.

Fratantoni predicted that interest rates will rise in 2017; he estimated several increases throughout the year. Those could put a damper on some lending activity, but strong economic factors, including inflation, should overcome that obstacle. Woodwell, MBA’s vice president of research, reported that 2016 was a strong year for mortgage originations with $502 billion in loans; this volume was just shy of 2015’s $504 billion originated.

Banks and other lenders topped the category of lenders, accounting for more than $200 billion of originations in 2016. Fannie Mae, Freddie Mac and FHA followed that, with more than $100 billion in originations. CMBS lenders and life companies both had north of $50 billion each in originations.

MBA allayed concerns that a wave of maturities of CMBS debt from originations in 2007 would hit the market in 2017.

“The wall of maturities has been whittled down,” said Woodwell. The $176 billion of non-bank maturites that is coming due in 2017 is lower than 2016’s volume, and many respondents to MBA’s survey expected these loans to be paid off, paid down or refinanced.

MBA also released the rankings of the top commercial and multifamily services for 2016. Taking the lead was PNC Real Estate/Midland Loan Services with $517.5 billion in U.S. master and primary servicing of commercial loans. Second was Wells Fargo Bank with $505.2 billion, followed by Berkadia Commercial Mortgage with $221.7 billion and KeyBank with $205.6 billion. CBRE Loan Services rounded out the top five with $112.0 billion.

                                                                    Amount (Ms)   # of loans  Avg. size (Ms)
Primary and Master Servicing Company  
1 PNC Real Estate / Midland Loan Services    $517,522            32,559            $15.9
2 Wells Fargo Bank NA                                     $505,190            31,115            $16.2
3 Berkadia Commercial Mortgage LLC             $221,652            20,051            $11.1
4 KeyBank National Association                       $205,605            21,166            $9.7
5 CBRE Loan Services                                     $112,008             5,271             $21.2
6 Prudential Asset Resources                          $82,453               4,649             $17.7
7 Capital One Financial Corp                           $68,173               4,943             $13.8
8 Walker & Dunlop, LLC                                   $63,087               5,921             $10.7
9 HFF, LP                                                         $54,503               2,667             $20.4
10 Berkeley Point Capital, LLC                        $50,558               2,898             $17.4

CMBS/CDO/ABS loans
1 Wells Fargo Bank NA                                   $321,229             17,837             $18.0
2 PNC Real Estate / Midland Loan Services   $154,226             8,344               $18.5
3 KeyBank National Association                     $86,092                4,829              $17.8
4 Berkadia Commercial Mortgage LLC           $23,126                3,026              $7.6
5 Berkeley Point Capital, LLC                         $18,495                1,025              $18.0

Commercial Bank/Savings Institution loans
1 PNC Real Estate / Midland Loan Services  $56,058                 4,630                $12.1
2 Capital One Financial Corp                         $45,295                 3,355                $13.5
3 KeyBank National Association                    $27,269                 8,979                $3.0
4 Situs                                                            $15,982                  463                  $34.5
5 Trimont Real Estate Advisors                     $14,192                  348                   $40.8

Fannie Mae Servicers
1 PNC Real Estate / Midland Loan Services  $58,108                 4,882               $11.9
2 Wells Fargo Bank NA                                  $38,885                  4,129               $9.4
3 Walker & Dunlop, LLC                                 $27,728                 2,432                $11.4
4 Berkeley Point Capital, LLC                        $17,211                  1,113                $15.5
5 KeyBank National Association                    $16,483                  2,118                $7.8

Freddie Mac Servicers
1 Wells Fargo Bank NA                                  $79,846                  4,574              $17.5
2 PNC Real Estate / Midland Loan Services $68,654                  3,487               $19.7
3 KeyBank National Association                    $65,046                  4,411               $14.7
4 CBRE Loan Services                                  $38,839                  2,263               $17.2
5 Berkadia Commercial Mortgage LLC          $30,380                 1,870                $16.2

Life Company Loan Servicers
1 PNC Real Estate / Midland Loan Services $83,226                 4,947                 $16.8
2 CBRE Loan Services                                  $52,775                1,942                  $27.2
3 Prudential Asset Resources                       $49,073                 2,317                 $21.2
4 MetLife                                                        $40,034                   492                  $81.4
5 Northwestern Mutual                                  $32,537                    720                  $45.2

Source: Mortgage Bankers Association

—Randy Shearin 

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