Multifamily Mortgages Relatively Strong: MBA
2 min read
The Mortgage Bankers Association has published a study (a "Data Note," the organization calls it) of the relative strength of loans held by U.S. banks and thrifts, finding that commercial and multifamily mortgages remain--despite gloomy press stating the contrary--relatively strong.
Dees Stribling, Contributing Editor
Washington, D.C.–The Mortgage Bankers Association has published a study (a “Data Note,” the organization calls it) of the relative strength of loans held by U.S. banks and thrifts, finding that commercial and multifamily mortgages remain–despite gloomy press stating the contrary–relatively strong. As of the end of 2009, fewer such mortgages were delinquent and fewer had been charged off by banks and thrifts than most other kinds of loan.
All together, notes the MBA, multifamily mortgages account for about 3 percent of all bank-held loans, totaling $211.4 billion at the end of the fourth quarter of 2009. Interestingly, that total actually represents a small increase in volume from the last quarter of 2008, when it stood at $205.5 billion.
As of 4Q09, according to the Data Note, mortgages associated with multifamily properties had a delinquency rate (30 or more days behind) of 5.64 percent. That compares to commercial mortgage delinquencies of 5.06 percent; single-family mortgage delinquencies of 12.49 percent; and construction loan delinquencies of 18.56 percent. Credit card loans saw delinquencies of 6.28 percent, while home equity loans recorded delinquencies of only 3.15 percent.
Over all of 2009, a year universally acknowledged as a difficult time for lenders, banks and thrifts were obliged to charge off 1.1 percent of their multifamily mortgages, compared with 0.4 percent of multifamily mortgages in 2008. By contrast, lenders charged off 5.4 percent of their construction loans and 9.1 percent of their credit card loans in 2009, up from 2.6 percent and 5.4 percent in 2008, respectively.
In dollar terms, the charge-offs of multifamily mortgages were $3 billion and $11 billion for commercial mortgages, compared with more than $105.5 billion in charge-offs for loans to individuals, $83 billion for resident mortgages, and $47 billion for construction loans. The MBA estimates that had banks and thrifts not lent on commercial and multifamily mortgages, “and instead lent that money through other loan types, they would have seen roughly $36 billion in charge-offs and losses in 2008 and 2009 that they have not seen.”
Past performance, however is no guarantee for future performance, and regarding the direction of multifamily mortgages in 2010, the report is mute. “The Data Note is a description of the state of banks’ books at the end of 2009, and doesn’t say anything one way or another about what might happen in 2010 or beyond,” Jamie Woodwell, MBA’s vice president of commercial/multifamily research, who wrote the report, tells MHN.