Fannie Bucks Trend as Multifamily Delinquencies Decline

by devteam June 5th, 2013 | Share

Delinquency rates for commercial andrnmultifamily mortgages generally declined during the first quarter ofrnthe year except for a notable increase in Fannie Mae’s portfolio. The Mortgage Bankers Association’s Commercial/Multifamily DelinquencyrnReport said delinquency rates for loans held by five major investorrngroups showed moderate to significant declines in three, an increasernof one basis point (to 0.09 percent) in the life insurance sector,rnand a 15 basis point uptick for Fannie Mae.</p

In addition to life insurance companiesrnand Fannie Mae, MBA tracks delinquencies in portfolios held byrncommercial banks and thrifts, commercial mortgage-backed securitiesrn(CMBS), and Freddie Mac. Together these groups hold more than 80rnpercent of outstanding commercial/multifamily mortgage debt.</p

Fannie Mae’s delinquencies increasedrnfrom 0.24 percent at the end of the fourth quarter of 2012 to 0.39rnpercent at the end of the first quarter following four straightrnquarters where the rate declined. Fannie Mae’s delinquencies duringrnthe current crisis peaked at 0.71 percent at the end of the firstrnquarter of 2010.</p


Rates at commercial banks and thrifts</bwere down 19 basis points to 2.43 percent and Freddie Mac's rate dropped from 0.19 percent to 0.16 percent, about half the rate of itsrnrecent peak of 0.31 percent in Q4 of 2010.</p


Delinquencies in CMBS were at 8.55rnpercent at the end of the quarter compared to 8.72 percent at the endrnof the previous quarter. Those delinquencies set a series recordrnhigh of 9.02 percent in the second quarter of 2011. </p


With the exception of CMBS, even thernrecent (2010-2011) peaks in the various portfolios are a fraction ofrnthe delinquencies experienced in the early 1990s when, for example<blife insurance portfolios experienced a peak delinquency of 7.53rnpercent and Freddie Mac’s multifamily loan delinquencies were atrn6.81 percent. </p


Jamie Woodwell, MBA’s Vice President ofrnCommercial Real Estate research said “Commercial and multifamilyrnmortgage performance continues to improve. The improving economy andrnproperty fundamentals are supporting loan payments and fewer loansrnare maturing this year than did last year or the year before. Withrninterest rates still low, property incomes improving and propertyrnvalues on the rise, those loans that are maturing are facing anrneasier environment in which to refinance.”</p

MBS cautions that, because eachrninvestor groups tracks delinquencies in its own way the rates are notrncomparable from one group to another.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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