Multifamily Mortgage Delinquency Rates Rise in First Quarter ‘09

By Anuradha Kher, Online News EditorWashington, D.C.–The weakening economy and continued credit crunch led to increases in multifamily mortgage delinquencies during the first quarter of 2009, according to the Commercial/Multifamily Delinquency Report, released by the Mortgage Bankers Association (MBA). “Multifamily mortgage delinquency rates continued to rise in the first quarter,” Jamie Woodwell, vice president of Commercial Real Estate Research at the MBA, tells MHN. “Numbers don’t explicitly break out for multifamily, but the sector is taking the pinch much like other sectors. In fact, multifamily properties have been more rapidly affected than say office, because the leases are short—one year or so. For offices, they tend to be longer and therefore softens the blow a little bit.”Delinquency rates on commercial and multifamily mortgages held by banks and thrifts, by Fannie Mae and in commercial mortgage-backed securities (CMBS) are all now at levels higher than at any time since the 2001 recession but lower than the downturn in the late 80s-early 90s. Between the fourth quarter of 2008 and first quarter of 2009, the 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.04 percentage points to 0.34 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.08 percentage points to 0.09 percent.  In June 2008, Freddie Mac began reporting multifamily delinquencies as those loans 90+ days delinquent. Prior to that time the reported numbers are for loans 60+ days delinquent. The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.66 percentage points to 2.28 percent.“There’s no direct impact of delinquency rates on financing but some of the factors influencing originations also have an impact on delinquencies,” says Woodwell. “When loans are maturing however, the un-availability of financing will result in a delinquency.”The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.  Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the first quarter were as follows:  CMBS: 1.85 percent (30+ days delinquent or in REO);Life company portfolios: 0.12 percent (60+days delinquent);Fannie Mae: 0.34 percent (60 or more days delinquent)Freddie Mac: 0.09 percent (90 or more days delinquent);Banks and thrifts: 2.28 percent (90 or more days delinquent or in non-accrual)Given the depth of the recession, Woodwell says, delinquencies are likely to keep seeing an upward pressure.