SPECIAL REPORT: MBA Says Large Amounts of Multifamily Loans Will Mature in 2011 and After

By Keat Foong, Executive EditorSan Diego—The Mortgage Bankers Association (MBA) reported that $171 billion of multifamily and commercial mortgages—or one-tenth of the outstanding balance—held by non-bank lenders and investors will mature in 2009. The report was released at MBA’s multifamily and commercial real estate convention held here this week. “Substantial concerns have been raised about the volume of mortgages maturing in the face of the credit crunch,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. Woodwell suggested that not all types of financing are coming due at the same rate. According to MBA, short-term CMBS floating-rate mortgages, as well as mortgages held by credit companies warehouse facilities and other investors, are more likely to mature in 2009 and 2010. Fannie Mae, Freddie Mac or FHA-guaranteed financing, mortgages held by life insurance companies, and fixed-rate CMBS mortgages, are less likely to come due during this two-year period. Woodwell noted that the mass maturities of these types of financing are pushed farther out.  In terms of multifamily loans coming due, Woodwell said at a panel during the conference that large volumes of multifamily loans will be maturing in the “out years” after 2009 and 2010. There will be about $29 billion coming due in 2009 and $26 billion in 2010. The volumes of maturing multifamily loans will increase as five- and 10-year loans become due in 2011 and 2012, and in 2015 and 2016, he said. Woodwell said that the pressure for refinancing will be felt more on shorter-term loans. He noted that longer-term fixed-rate loans that are maturing may more easily find refinancing compared to the huge volume of maturing short-term loans. That’s because such long-term loans have gone through a longer period of price appreciation and amortization and were likely made in the early 2000s—before the height of the market. According to the MBA study, of the total non-bank holdings maturing in 2009, 52.8 percent is in CMBS, CDOs or other ABS, and 33.6 percent is held by credit companies, warehouse facilities or other investors. Only 9.8 percent of the non-bank mortgages maturing in 2009 are held by life insurance companies and 3.8 percent are held or guaranteed by Fannie Mae, Freddie Mac or FHA.  MBA said most investor groups have “considerable discretion in how they deal with loans that may not be able to immediately refinance at maturity.” And according to RBS Greenwich Capital, floating rate loans tend to have extension options built into them.