Commercial mortgage delinquencies fall in Q2

Mortgage delinquencies declined during the second quarter.

The Mortgage Bankers Association reported that the rates for commercial and multifamily mortgage delinquencies declined during the second quarter, likely making property management companies feel more positive about recovery progress.

Overall, life insurance company portfolios had the most improved rates, the association's Commercial/Multifamily Delinquency Report showed. Government-sponsored enterprises experienced the second- and third-best delinquency levels, while banks and thrifts struggled a few percentage points behind. The worst situation was from commercial mortgage-backed securities, which was well behind the next-worst rate.

GSEs, life insurance portfolios experience low delinquency rates

The report explained that commercial life insurance portfolio mortgage delinquency rates of 60 or more days was nearly flat, while Fannie Mae delinquencies of the same length dropped slightly and is now below 0.3 percent. Freddie Mac's delinquency level rose to 0.27 percent, but the increase was minimal.

Multifamily delinquencies for life insurance portfolios dropped more than 7 percentage points lower than the high point in 1992, the report said. Freddie Mac's multifamily loan delinquency rate declined more than 6.5 percentage points. Fannie Mae's rate dropped 3.33 percentage points, as well.

"Commercial and multifamily delinquency rates for life companies, Fannie Mae and Freddie Mac all remain quite low, and the delinquency rate for bank-held loans continues to decline," said Jamie Woodwell, vice president of commercial real estate research for MBA.

CMBS levels show mixed picture

The delinquency rate for commercial mortgage-backed securities loans rose to 8.97 percent from the previous quarter's 8.85 percent, the association noted. In addition, multifamily loan delinquencies for CMBS-backed items dropped 0.05 percent from the high-point, which occurred during the second quarter last year.

"The delinquency rate for loans in CMBS continues to show higher and more sustained aggregate delinquency rates, much of which is driven by the large share of these loans in foreclosure or REO," Woodwell added.

MBA also noted that the 90 or more day delinquency rate for commercial loans insured by the Federal Deposit Insurance Corporation dropped more than 0.3 percentage points to the second quarter's level of 0.27 percent.

The report added that the figures in the report make up four-fifths of the total level of the country's total commercial and multifamily mortgage debt.

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