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Commercial/Multifamily Delinquencies Continue Downward Trend in Second Quarter

WASHINGTON, D.C. — Delinquency rates for commercial and multifamily mortgage loans continued to decline in the second quarter of 2015, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.

“As commercial property incomes and values continue to climb, and financing remains plentiful, loan performance continues to improve as well,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Commercial and multifamily mortgage delinquency rates were down broadly in the second quarter, with highlights including the lowest 90-plus-day delinquency rate on bank-held multifamily loans since the series began in 1993, and 60-plus-day delinquency rates below 0.06 percent for loans held by life companies, Fannie Mae and Freddie Mac.”

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae, and Freddie Mac. Together these groups hold more than 80 percent of outstanding commercial/multifamily mortgage debt.

Delinquency rates for each group at the end of the second quarter based on the unpaid principal balance of loans were:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.9 percent, a decrease of 13 basis points from the first quarter of 2015
  • Life company portfolios (60 or more days delinquent): 0.06 percent, unchanged from first quarter of 2015
  • Fannie Mae (60 or more days delinquent): 0.05 percent, a decrease of four basis points first quarter of 2015
  • Freddie Mac (60 or more days delinquent): 0.01 percent, a decrease of two basis points first quarter of 2015
  • CMBS (30 or more days delinquent or in REO): 5 percent, a decrease of 17 basis points from the first quarter of 2015
2Q15CMFDelinquency-6

Click to enlarge.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another, according to a release.

Construction and development loans are not included in the numbers presented in the report, but are included, the release says, in many regulatory definitions of commercial real estate. This is despite the fact they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties.

The FDIC delinquency rates for bank- and thrift-held mortgages in the report do include loans backed by owner-occupied commercial properties.

To view the report, click here.

— Scott Reid

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