The delinquency rates of most types of commercial and multifamily mortgages fell in the third quarter, with multifamily loan delinquency rates back at prerecession levels, according to Mortgage Bankers Association (MBA) research.
The 30-day delinquency rate for commercial mortgage-backed securities (CMBS) loans was down 0.37 percentage points to 5.47%. The 60-day delinquency rate of commercial and multifamily loans held by life insurance companies fell 0.03 percentage points to 0.05%.
The 60-day delinquency rate for multifamily loans backed by Fannie Mae decreased to 0.09%, while the 60-day rate for Freddie Mac multifamily loans increased 0.01 percentage points to 0.03%.
The post-recession highs for Fannie Mae and Freddie Mac multifamily delinquency rates occurred around 2010. In the fourth quarter of 2010, the 60-plus day delinquency rate for Fannie Mae was 0.71%, and was 0.33% in the third quarter of 2011 for Freddie Mac.
In the fourth quarter of 2006, the Fannie Mae 60-day delinquency rate was 0.08%, and the Freddie Mac rate was 0.05%.
Some delinquency rates were still above recession-era peaks. Approximately 1.28% of loans held by the Federal Deposit Insurance Corp. and banks were delinquent 90 or more days in the third quarter. That delinquency rate peaked between 2010 and 2011 at above 4%, with the low at 0.8% around mid-2006.
CMBS 30-plus and real estate owned (REO) delinquency rates stood at just above 5% in the third quarter. The peak was in 2011 at close to 9%. Between 1997 and 2009, CMBS delinquencies were below 2%.
“Improving property fundamentals and values, as well as a strong finance market, are helping drive delinquency rates down across all investor groups,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell in a press release.
Showing posts with label delinquencies. Show all posts
Showing posts with label delinquencies. Show all posts
Wednesday, December 3, 2014
Friday, November 1, 2013
US CMBS Delinquency Rate Breaks 8% Threshold, More Gains in Store for 2013
The Trepp CMBS delinquency rate continued to race lower
in October, falling below the 8% level for the first time since early 2010. October marks the fifth consecutive month of rate improvement. Over the course of the month, the rate dropped 16 basis points, bringing the delinquency rate for US commercial real estate loans in CMBS to 7.98%.
The Trepp delinquency rate has dropped 236 basis
points since the summer of 2012 when it reached an all-time high of 10.34%. While 2013 is almost over,
there could be more meaningful gains for the rate before year-end. Special servicer CWCapital has noted that it will be looking to sell more than $2.5 billion of distressed assets before the end of the year. Substantial note sales are also expected during this time frame. Assuming the sales close prior to the December remittance cycle, the CMBS delinquency rate could improve even more. Removing over $3 billion of non-performing assets from the delinquent loan bucket would result in a 50-basis-point decrease in the rate. October’s improvement in loan delinquencies can be attributed in part to a modest reduction in newly delinquent loans. New delinquencies totaled $1.7 billion in September, which compares to $1.6 billion in October. These loans pushed the rate up by 29 basis points.
Offsetting these new delinquencies was the
combination of loans that cured and loan resolutions. Loans that cured totaled $1.2 billion in October, which resulted in 22 basis points of downward pressure on the delinquent loan reading. Loan resolutions totaled almost $1 billion in October, which is an increase from the $873 million in resolutions last month. Removing these distressed loans from the pool of delinquent assets resulted in an additional 18 basis points of improvement in October’s rate.
The Numbers:
• The overall US CMBS delinquency rate decreased 16 basis points to 7.98%.
• The percentage of loans 30+ days delinquent or in foreclosure:
Oct ’13: 7.98% Sept ‘13: 8.14% Aug ‘13: 8.38%
• The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO, or
non-performing balloons) is now 7.69%, down 18 basis points for the month.
• If defeased loans were taken out of the equation, the overall 30-day delinquency rate would be
8.28%—down 16 basis points from September.
• There are currently $43.2 billion in delinquent loans. (This number excludes loans that are past
their balloon date but are current on their interest payments.)
• There are $52.0 billion in loans with the special servicer. This represents about 2,900 loans.
Historical Perspective:
• One year ago, the US CMBS delinquency rate was 9.69%.
• Six months ago, the US CMBS delinquency rate was 9.03%.
• One year ago, the rate of loans seriously delinquent was 9.16%.
• Six months ago, the rate of loans seriously delinquent was 8.72%.
All Five Major Property Types Improve
• The industrial delinquency rate decreased 28 basis points to 11.31%, but remains the worst
major property type.
• The lodging delinquency rate fell 21 basis points to 8.94%.
• The multifamily delinquency rate dropped by 11 basis points to 11.02%.
• The office delinquency rate decreased 24 basis points to 9.07%.
• The retail delinquency rate improved by 16 basis points and is now 6.34%. Retail remains the
best performing major property type.
Sunday, October 27, 2013
A couple of facts about small bank failures in the US
Summary: Commercial mortgages were the leading cause of bank failures in the latest financial crisis, which was also small, by bank failures, than the S&L crisis of the late 80s.
New York --(SoberLook.com)
There are still a number of misconceptions with regard to the volume and the causes of most commercial bank failures in the US after the financial crisis. Here are a couple of facts that some may find helpful:
1. Although 2008 saw some spectacular bank failures such as Citi, WaMu, and Wachovia (note that Bear, Lehman, Merrill, and AIG were not banks), the actual number was dwarfed by the Savings and Loan Crisis in the late 80s. Nevertheless there were nearly 500 small and regional banks that failed over the last 5 years.
Number of US bank failures per year
2. Contrary to popular belief, the biggest reason for bank failures was not the losses associated with bad small business loans, derivatives, or even residential mortgages. Just like during the Savings and Loan Crisis, it was the overexposure to commercial real estate loans that brought many banks down. And it was the commercial real estate loans that saw the worst default rates. The chart below shows the delinquency rates by major loan type for smaller and regional banks (ex top 100).
Source: FRB
Some argue that smaller banks did more relationship-driven lending than their larger cousins. True, but that type of lending was exactly what often ended up in an FDIC takeover. Bankers' cozy relationships with local developers were prevalent and often ignored by the regulators.
New York --(SoberLook.com)
There are still a number of misconceptions with regard to the volume and the causes of most commercial bank failures in the US after the financial crisis. Here are a couple of facts that some may find helpful:
1. Although 2008 saw some spectacular bank failures such as Citi, WaMu, and Wachovia (note that Bear, Lehman, Merrill, and AIG were not banks), the actual number was dwarfed by the Savings and Loan Crisis in the late 80s. Nevertheless there were nearly 500 small and regional banks that failed over the last 5 years.
Number of US bank failures per year
2. Contrary to popular belief, the biggest reason for bank failures was not the losses associated with bad small business loans, derivatives, or even residential mortgages. Just like during the Savings and Loan Crisis, it was the overexposure to commercial real estate loans that brought many banks down. And it was the commercial real estate loans that saw the worst default rates. The chart below shows the delinquency rates by major loan type for smaller and regional banks (ex top 100).
Source: FRB
Some argue that smaller banks did more relationship-driven lending than their larger cousins. True, but that type of lending was exactly what often ended up in an FDIC takeover. Bankers' cozy relationships with local developers were prevalent and often ignored by the regulators.
Friday, October 11, 2013
Fitch: Sizeable REO Dispositions Drive U.S. CMBS Delinquencies Lower
Summary: CMBS delinquencies fell in Industrial, Hotel, Office, Multifamily, and Retail sectors according to Fitch, driven by large REO dispositions.
NEW YORK--(BUSINESS WIRE)--
The U.S. CMBS delinquency rate continued its steady improvement last month driven by large REO dispositions, according to the latest index results from Fitch Ratings.
CMBS late-pays fell 11 basis points (bps) in September to 6.57% from 6.68% a month earlier. The drop was led by the sale of the Granite Run Mall, while the sale of another large troubled asset appears imminent. The Granite Run Mall was previously the fourth largest loan in COMM 2006-C7 and represented 5.5% of the deal. Meanwhile, Fitch awaits the sale of another troubled mall: Gwinnett Place in Duluth, GA. The asset represents the fifth largest in MLMT 2007-C1, comprising roughly 4% of the deal.
CMBS delinquencies will continue to move lower as assets become REO and are disposed of. In fact, the percentage of REO assets in Fitch's delinquency index exceeded 50% for the first time in the index's history last month. This compares to 37% one year ago.
Current and previous delinquency rates are as follows:
--Industrial: 9.57% (from 9.41% in August);
--Hotel: 7.52% (from 7.68%);
--Office: 7.41% (from 7.56%);
--Multifamily: 6.95% (from 7.30%);
--Retail: 6.11% (from 6.23%).
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