Commercial lenders see best performance from multifamily loans

Loan charge offs declined, according to the Mortgage Bankers Association.

In what may be good news for commercial real estate companies seeking financing, a recent report from the Mortgage Bankers Association found that commercial lenders saw better loan performance last year, particularly with multifamily loans.

The charge off rate for multifamily mortgages originated by banks and other financial institutions was 0.74 percent during 2011, significantly lower than 2010's figure of 1.24 percent. In addition, commercial real estate loans as a whole witnessed a charge off rate of 0.89 percent during 2011, while one-four family residential loans witnessed a rate of 1.43 percent and construction loans fell through 3.33 percent of the time.

"[C]ounter to what many have predicted, commercial mortgages have proved to be neither 'the next shoe to drop' nor a 'ticking time bomb' for the banking sector or the economy as a whole," said Jamie Woodwell, vice president of commercial real estate research for MBA.

Woodwell added that these types of loans have fared better during the recession than most other types of loans, according to the report. As the economy strengthens, these loans will likely show even better performance, allowing lenders even more flexibility.

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