Commercial Mortgages Performing Relatively Well

Washington, DC, March 13, 2009--The weakening economy and continued credit crunch contributed to increases in commercial/multifamily mortgage delinquencies during the fourth quarter of 2008, according to the Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association (MBA).

“As expected, the weakening economy continues to take a toll on the performance of commercial and multifamily mortgages,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.

“But counter to the popular urban myth, commercial and multifamily mortgages are actually performing better than just about every other type of loan. Of more than 35,000 commercial/multifamily mortgages held by life insurance companies, only 33 loans were delinquent at the end of 2008, and commercial/multifamily mortgages ended 2008 as some of the best performing loans held by commercial banks and thrifts.”

In addition to the Commercial/Multifamily Delinquency Report, the MBA  released a Research Data Note reviewing the performance of commercial/multifamily mortgages held by banks and thrifts.

The Data Note finds that commercial mortgages and multifamily mortgages are the best performing loans – ranking lowest among bank loans in terms of charge-off rates, second and third lowest in terms of 30+ day delinquency rates and second and third lowest in terms in of increases in delinquency rates between the third and fourth quarter.

Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the fourth quarter were as follows:

• CMBS: 1.17 percent (30+ days delinquent or in REO);
• Life company portfolios: 0.07 percent (60+days delinquent);
• Fannie Mae: 0.30 percent (60 or more days delinquent)
• Freddie Mac: 0.01 percent (90 or more days delinquent);
• Banks and thrifts: 1.62 percent (90 or more days delinquent or in non-accrual).