Investment reports

MBA reports low default rates for commercial and multi-family mortgages in Q4 2021

Delinquencies on commercial and multi-family mortgages declined in the fourth quarter of 2021, according to the latest Commercial and Multi-Family Delinquencies Report from the Mortgage Bankers Association (MBA).

“Commercial and multi-family mortgage lending performance continues to normalize, with delinquency rates declining or stable for all major investor groups,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Defaults in certain sectors seem to remain high for one of two reasons. For some, lenders and servicers are continuing to adjust loans that have been hit hard by the pandemic. For others, the reporting method may categorize forborne or other delinquent loans, even when they are back on track. Delinquency rates have returned to or near pre-pandemic levels in other sectors. »

MBA’s quarterly analysis examines commercial/multifamily delinquency rates for five of the largest investor groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), insurance companies- life and Fannie Mae and Freddie Mac. Together, these groups hold over 80% of outstanding commercial/multifamily mortgage debt.

MBA’s analysis incorporates the metrics used by each group of investors to track the performance of their loans. Because each group of investors tracks delinquency in its own way, delinquency rates are not comparable across groups. For example, Fannie Mae reports loans with forbearance as delinquent, while Freddie Mac excludes such loans if the borrower honors the forbearance agreement.

Based on the outstanding principal balance (UPB) of loans, the delinquency rate at the end of the fourth quarter of 2021 for banks and savings banks (90 days or more past due or in default) was 0 .59%, a decrease of 0.10 percentage points from the third quarter of 2021. For life company portfolios (delinquents of 60 days or more), it was 0.04%, unchanged from the third quarter .

Fannie Mae (60 days or more delinquent) was 0.42% (unchanged from Q3) while Freddie Mac (60 days or more delinquent) was 0.08%, down 0.04 % compared to the third quarter. The CMBS (30 days or more delinquent or in REO) was 4.02%, down 0.84 percentage points from the third quarter.

Construction and development loans are generally not included in the figures presented in this report, but are included in many regulatory definitions of “commercial real estate”, despite the fact that they are often backed by construction projects. single-family residential development rather than office buildings, apartment buildings, shopping centers or other income-generating properties. The FDIC delinquency rates for bank and savings mortgages reported here include loans secured by owner-occupied commercial properties.

Read the report here.