Commercial and multifamily mortgage delinquencies remained low in the second quarter of 2019, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report. What kept mortgage delinquencies low again for the second quarter of 2019? According to MBA analysts, the strong economy, low interest rates, and liquid finance markets are all contributing to delinquency rates that are at or near record lows for commercial and multifamily mortgage loans. The report also added, “Despite uncertainty on many economic fronts, it is hard to identify factors that would dramatically change the delinquency rate picture in the near term.”
MBA’s quarterly analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the second quarter were as follows:
Banks and thrifts (90 or more days delinquent or in non-accrual were at 0.46 percent, a decrease of 0.02 percentage points from the first quarter. Life company portfolios (60 or more days delinquent) were at 0.04 percent, which remained unchanged from the first quarter. Fannie Mae (60 or more days delinquent) came in at 0.05 percent, which amounted to a decrease of 0.02 percentage points from the first quarter. Freddie Mac (60 or more days delinquent) remained unchanged from the first quarter at 0.03 percent. Commercial mortgage-backed securities (30 or more days delinquent or in REO) dropped 2.46 percent, a decrease of 0.15 percentage points from the first quarter.
A delinquent mortgage occurs when the borrower has failed to make the promised payments as required in the home loan documents. Failure to make the required payments gives the lender the right to foreclose the mortgage and report delinquency to the credit bureaus.