Commercial Mortgage Delinquencies Inch Up
- Dec 10, 2008
Commercial mortgage delinquencies are up, but still historically low, according to the latest numbers from the Mortgage Bankers Association. The 30-plus day delinquency rate on loans held in commercial mortgage-backed securities rose 10 basis points, to 0.63 percent, in 3Q08, compared with the previous quarter, notes the organization’s third-quarter Commercial/Multifamily National Delinquency Report. Over the past 10 years, year-end CMBS delinquency rates have averaged 0.97 percent. The 60-plus day delinquency rate on loans held in life insurance company portfolios increased to 0.06 percent, or three basis points, and the 60-plus day delinquency rate on multi-family loans held or insured by Fannie Mae rose to 0.16 percent, a gain of five basis points. The 60-plus day delinquency rate on multi-family loans held or insured by Freddie Mac, however, actually dropped two basis points, to 0.01 percent.”Commercial/multifamily mortgages have not seen the same kind of deterioration in performance witnessed among other real estate loans, and at the end of the third quarter, delinquency rates for every investor group remain at the lower end of their historic ranges,” said Jamie Woodwell, vice president of commercial real estate research for the Mortgage Bankers Association, in a statement released by the organization. Despite these reasonably optimistic numbers, not everyone is impressed by commercial real estate’s prospects, at least not the publicly held landlords. Fitch has downgraded its outlook for REITs from “stable” to “negative,” citing a confluence of bad news. REITs “are situated at the nexus of a recessionary economy, weakening property fundamentals, near-frozen debt capital markets, and stock prices that are, on average, approximately 60 percent below their peak level,” wrote Fitch analyst Steven Marks.On the residential side of the business, after a surge of mortgage applications when interest rates went down just before Thanksgiving, mortgage applications have tapered off, according to the MBA. The MBA index of applications to purchase or refinance fell 7.1 percent to 796.8 at the end of last week, down from the an eight-month high of 857.7 the week before. Much of the decline was because a drop of 17 percent in applications to buy houses. Refinance slipped only 0.9 percent from the previous week.Is today the day for the US House of Representatives to pass the automaker bridge loan, government Big Three stock acquisition, do-or-die restructuring timetable and car czar package hammered out at the negotiating table in the last few days? Of course, the House could surprise everyone–as it did the first time around for the $700 billion Wall Street bailout.AIG seems more and more like that deadbeat relative who keeps coming back for just a little more money till things turn around, promising on his mother’s grave to repay you, with interest. The Wall Street Journal has reported that “a little” more money in this case is another $10 billion AIG owes to other financial service firms for ill-advised trades. GMAC, the main lender to GM dealerships, looks to be lacking about $30 billion in its effort to become a regular bank, reports Bloomberg. Being a bank means access to federal rescue money for banks, but GMAC and its Residential Capital L.L.C. mortgage unit’s efforts to raise enough scratch for bank status through a $38 billion debt exchange have fallen short.