Commercial Mortgage-Backed Security Loan Delinquency Reaches a New High
Eliot Brown from the Wall Street Journal Online reports that the March delinquency rate for mortgage-backed commercial loans has reached a new high of 9.42% delinquency in March.
Loans tied to commercial mortgage-backed securities hit a record delinquency rate in March, with 9.42% of all such loans having missed payments, loan research-service firm Trepp LLC said.
The rate has been on an upward climb since the real-estate market began to turn in late 2007. Facing significantly lower values than when loans were taken out during the peak years of 2005-2007, a number of landlords have been unable to pay off loans as they come due.
The worst-performing sector is multifamily, with 16.2% of loans delinquent.
Still, the pace of the increase in the delinquency rate has slowed in recent months, and the rate for March was up from 9.39% in February. Meanwhile, the commercial mortgage-backed securities sector is making new loans once again, on pace to issue about $40 billion in securities for the year.
Robert Canter’s analysis at the Gerson Lehrman Group strongly criticizes the optimistic reporting being done by the Fed and other securities agencies:
CMBS delinquencies have not decreased rather they continue to increase. Banks are as fragile as ever, despite words to contrary by the Feds.
“Commercial mortgage-backed securities are showing signs of recovery, but investors remain concerned about the quality of the securities. Many of the bonds are backed by shopping malls and office buildings, and the lack of diversity worries some investors. That’s a concentration people may be concerned about because there has been no turnaround in this sector,” said Darrell Wheeler, senior managing director of strategy at Amherst Securities.
And further reported [in mid-March]…
Moody’s: CMBS Loan Delinquencies Rise to 9.18%; “The delinquency rate on loans included in commercial mortgage-backed securities (CMBS) conduit and fusion transactions increased 17 basis points in February to 9.18 percent, according to Moody’s Investors Service. Moody’s noted that while still rising, increases in CMBS delinquencies have been moderating since June 2010.”
Gee that flies in the face of all the optimistic reporting going on!
Tagged in: commercial loans, commercial mortgage backed securities, market trends
