Commercial and Multifamily Delinquency rates continue to climb

Dens Norman

By: Dennis Norman

While residential real estate investors have been living with a sluggish (to put it nicely) market for almost 2 years now, many of the investors I know in the commercial and multifamily world have been doing pretty good until lately.  It now looks like the downturn in the residential market is spilling over into commercial and multifamily.  Some investors, like my friend “Joe” I wrote about yesterday, are doing OK and moving forward but clearly many are struggling.

Today, the Mortgage Bankers Association (MBA) released their Commercial/Multifamily Delinquency Report for the second quarter of 2009 showing the delinquency rates are continuing to climb.  The report showed:

• 30+ day delinquency rates on loans held in commercial mortgage-backed securities (CMBS) rose 2.04 percentage points to 3.89 percent. 
• 60+ day delinquency rates on loans held in life company portfolios rose 0.03 percentage points to 0.15 percent. 
• 60+ day delinquency rates on multifamily loans held or insured by Fannie Mae rose 0.17 percentage points to 0.51 percent. 
• 90+ day delinquency rates on multifamily loans held or insured by Freddie Mac rose 0.02 percentage points to 0.11 percent. 
• 90+ day delinquency rats on loans held by FDIC-Insured banks and thrifts rose 0.64 percentage points to 2.92 percent.

“The economic fallout of the recession continued to push commercial and multifamily delinquency rates higher during the second quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “Higher levels of unemployment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties.  That in turn has led to increased stress on the loans those properties support.”

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