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 June 11, 2020  

Disruption 2020: MBA Mortgage Performance Survey

The Mortgage Bankers Association recently surveyed mortgage performance between April 20 and May 20, querying participants who held 51% — $1.9 trillion — of outstanding U.S. commercial and multifamily mortgage debt. That debt was 80% or more of the holdings of life companies, CMBS and Fannie and Freddie Mac, and 62% of FHA loans. Conversely, just 7% of bank loans were represented. Principal balances averaged $14.2 million. Some valuable takeaways:
  • Distress is concentrated in hospitality and retail.

  • Performing mortgage balances dropped from 95.1% to 93.9%. Hospitality was the weakest, at 73%, seven percentage points weaker than the month prior. Retail deteriorated four percentage points, to 86%.

  • Other property types showed little movement. Multifamily declined 0.4 percentage points, to 98% performing; office 0.1 percentage points, to 97.7%; and industrial improved 0.4 percentage points, to 98.8%. These property types are performing just fine.

  • Due to retail and hospitality CMBS saw the highest delinquencies, moving up 3.3 percentage points to 12.6%.

  • Delinquencies barely moved for other capital sources. FHA loans improved 0.1 percentage points, to 96.8%; life companies declined 0.5 percentage points, to 97.8%; and GSE multifamily also declined 0.5 percentage points, to 98.5%.

  • COVID-19-related inquiries dropped dramatically, from 12.8% of loan balances in the month prior to 4.6% in May. Multifamily inquiries across the board were substantially below average, while industrial (1.5%) and office (2.6%) were below average as well. Retail, at 14.7%, was the clear outlier, followed by hospitality, 9.1%, and healthcare, 5.4%.

  • Formal change requests dropped from 7% to 3.1%.

  • Modifications, forbearance, or other actions — 2% of loan balances and up 0.9 percentage points — are driven by hospitality and retail. CMBS inquiries represented 10% of the unpaid balance. Trepp announced the largest monthly increase in CMBS delinquency rates ever in May.

CM_Disruption_MBA Survey table_for visual



Aaron Jodka
Managing Director, Research & Client Services
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