COMMERCIAL, MULTIFAMILY MORTGAGE DELINQUENCIES DIP IN THE U.S.

By Monsef Rachid | February 4, 2022

According to the Mortgage Bankers Association’s latest CREF Loan Performance Survey, delinquency rates for mortgages backed by commercial and multifamily properties declined during the final three months of 2021.

“The fourth quarter saw continued improvement in the performance of commercial and multifamily mortgages, particularly among property types that were the most impacted by the downturn,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The share of outstanding balances that are delinquent fell for both lodging and retail properties, as property owners and lenders and servicers continue to work through troubled deals. The share of loan balances becoming newly delinquent was the lowest since the onset of the pandemic.”

Key Market Findings for December 2021:

The balance of commercial and multifamily mortgages that are not current decreased slightly in December 2021.

• 97.0% of outstanding loan balances were current, up from 96.7% at the end of the third quarter of 2021.
• 1.9% were 90+ days delinquent or in REO, down from 2.2% three months earlier.
• 0.2% were 60-90 days delinquent, unchanged from three months earlier.
• 0.3% were 30-60 days delinquent, unchanged from three months earlier.
• 0.7% were less than 30 days delinquent, down from 0.8% from three months earlier.

Loans backed by lodging and retail properties continue to see the greatest stress, but also saw improvement during the fourth quarter of 2021.

• 10.5% of the balance of lodging loans were delinquent, down from 14.0% at the end of the third quarter of 2021.
• 7.6% of the balance of retail loan balances were delinquent, down from 8.2% three months earlier.
• 2.1% of the balances of industrial property loans were non-current, up from 1.8% three months earlier.
• 1.8% of the balances of office property loans were non-current, unchanged from three months earlier.
• 1.4% of multifamily balances were non-current, up from 1.3% three months earlier.

Because of the concentration of hotel and retail loans, CMBS loan delinquency rates are higher than other capital sources, but also saw improvement during the final three months of 2021.

• 5.7% of CMBS loan balances were non-current, down from 7.2% in last year’s third quarter.
• Non-current rates for other capital sources were more moderate.
• 2.2% of FHA multifamily and health care loan balances were non-current, up from 2.0% three months earlier.
• 1.6% of life company loan balances were non-current, up from 1.2% three months earlier.
• 0.6% of GSE loan balances were non-current, unchanged from three months earlier.