Commercial, Multifamily Delinquencies Remain Low in Q3

By Christine Serlin

Commercial and multifamily mortgage delinquency rates stayed low in the third quarter, according to the Mortgage Bankers Association’s (MBA’s) recent Commercial/Multifamily Delinquency Report.

“The delinquency rate for mortgages backed by commercial and multifamily properties remained low at the end of the third quarter,” said Jamie Woodwell, head of commercial real estate research at the MBA. “For example, the share of bank-held commercial real estate loan balances that were delinquent has only been lower once—just before the onset of the COVID-19 pandemic—in the series’ 30-year history.”

However, Woodwell noted that the conditions that pushed delinquency rates to the near-record lows have been shifting.

“We expect to see some stress work its way back into some loans,” he said. “Very slight increases during the third quarter in the delinquency rates of life company and Freddie Mac loans may signal the beginning of these trends.”

The quarterly report from the MBA analyzes commercial and multifamily delinquency rates for five of the largest investor groups: commercial banks and thrifts; commercial mortgage-backed securities (CMBS); life insurance companies; and government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. These groups comprise over 80% of outstanding commercial and multifamily mortgage debt. With each investor group tracking delinquencies in their own ways, rates are not comparable from one group to another. For example, according to the MBA, Fannie Mae reports loans receiving payment forbearance as delinquent, while Freddie Mac excludes those loans if the borrower is in compliance with the forbearance agreement.

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