Credit Markets, Economy Add Pressure to Multifamily Mortgage Performance, Says MBA

By Anuradha Kher, Online News EditorWashington, D.C.–Delinquency rates continued to tick up in the third quarter for most multifamily mortgage investor groups, but remained at the lower end of their historical averages, according to the third quarter Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association (MBA). “The frozen credit markets and deteriorating economic conditions are placing increased pressure on the performance of commercial and multifamily mortgages,” says Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research.  “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 remained at the lower end of their historical ranges. That being said, delinquency rates for nearly every investor group did see increases during the third quarter, and economic and credit market stress is likely to continue that trend.” Between the first and second quarters, the 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.05 percentage points to 0.16 percent. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac fell 0.02 percentage points to 0.01 percent. Based on the unpaid principal balance of loans (UPB), delinquency rates for Fannie Mae and Freddie Mac (the two main sources of finance for multifamily loans), at the end of the second quarter were as follows:Fannie Mae: 0.16 percent (60 or more days delinquent)Freddie Mac: 0.01 percent (60 or more days delinquent)Of 35,135 commercial/multifamily loans in life company portfolios, with a total unpaid principal balance of $253 billion, only 36 loans with an aggregate UPB of less than $144 million were 60+ days delinquent at the end of the quarter. Of $1.2 trillion of commercial/multifamily mortgages at FDIC-insured banks and thrifts, only $18 billion was 90+ days delinquent.