Commercial mortgage delinquencies rise for second straight month

After the housing market collapse nearly six years ago, a wave of mortgage defaults swept the country, as a number of households and commercial investors alike were unable to meet payments.

After the housing market collapse nearly six years ago, a wave of mortgage defaults swept the country, as a number of households and commercial investors alike were unable to meet payments. While conditions appear to be improving in the residential loan sector, a recent report from Fitch Ratings indicates that real estate-owned properties accounted for nearly one-third of all commercial-mortgage backed securities delinquencies at the end of April.

This is the second consecutive month that the overall rate of commercial loan delinquencies has increased, the report said. In April, late payments rose 10-basis points to 8.53 percent of all CMBS mortgages. Mortgage records indicate that this increase could be a result of many commercial loans originated five years ago in 2007 starting to become due. 

"Over $4 billion in loans from 2007 have defaulted on either their balloon or regular payments since the start of this year," Fitch managing director Mary MacNeill said. "While real-estate owned assets typically experience higher loss severities, liquidating these assets will eventually help bring down the CMBS delinquency rate."

Specifically, the multifamily sector had the largest share of mortgage delinquencies, as an estimated 11.64 percent of loans for this type of property were late at the end of April. While multifamily commercial loans still accounts for the highest share of late payments, it was an improvement from the previous month when the share stood at 12.61 percent.



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