Market Overview

The Lending Circle Examines a New Mortgage Bankers Association Report on Decreasing Commercial/Multifamily Mortgage Debt


The Mortgage Bankers Association (MBA) has released details of its report on commercial/multifamily mortgage debt. The report shows an overall drop in the combined debt, but an increase in the multifamily mortgage debt portion of the data.

San Francisco, CA (PRWEB) October 24, 2012

The Mortgage Bankers Association (MBA) has released a recent report that shows commercial/multifamily mortgage debt outstanding decreased by $10.4 billion in the 2nd quarter of 2012.

This represents 0.4 percent of outstanding mortgages and the decline was led by declines in the balance of loans in collateralized debt obligations (CDO), asset backed securities (ABS), and commercial mortgage-backed securities (CMBS) issues.
Even with the decline, there is still $2.37 trillion in outstanding commercial/multifamily mortgage debt. The decline in mortgage debt came specifically from commercial mortgages, as multifamily mortgage debt actually increased by $5.4 billion from the 1st quarter of 2012.

In fact, CMBS loans paid-off, paid-down and were liquidated at a far faster pace than new CMBS loans were originated during the quarter, said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. He indicates the drop in CMBS balances more than offset the increases in holdings by Fannie Mae, Freddie Mac and FHA, banks and life insurance companies.

The MBA analysis summarizes both loan holdings and securitized loans. Reporting of commercial and multifamily mortgage debt has been recently improved by the MBA. It now excludes some categories of loans that were previously included in the data. Specifically, loans collateralized by owner-occupied commercial properties and loans for acquisition, development and construction are no longer included in the MBA reporting. The exclusion of these loan types allows the MBA to more accurately report the balance of loans outstanding for income-producing properties such as apartment building, retail centers, and office buildings.

The largest number of commercial/multifamily mortgages continue to be held by commercial banks who hold $815 billion or 34% of all commercial/multifamily mortgages. A further $555 or 23% are held by ABS, CDO, and CMBS issues. An additional $360 billion, or 15% are held in GSE portfolios and MBS, while life insurance companies hold $320 billion or 14% of the total.

Regarding the holding of commercial/multifamily mortgage debt, the 2nd quarter of 2012 saw ABS, CDO, and CMBS issues reduce their holdings by $19.8 billion or 3.4% of the total. This was the largest decrease of any sector. Finance companies decreased their holdings by an additional $5.1 billion or 8.4%. On the flip side, MBS and GSE portfolios increased their holdings by $7.1 billion or 2.0%.

The Lending Circle, a division of Sunovis Financial, assists borrowers today with the best terms and loans, and keeps a close eye on these trends. Borrowers can have difficulty finding a loan or refinancing a property when approaching banks that are decreasing holdings in commercial real estate. Yet, there are lenders who are growing and stabilized as well as alternative lenders.

About the Lending Circle
The Lending Circle, a division of Sunovis Financial, helps borrowers find financing nationwide. The company motto is: “The Lending Circle - The New Way to Get Loans Done Today.”

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