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Life Insurers Outperform Third-Party CRE Servicers

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Delinquency on securitized commercial mortgages shot up to a new high, while commercial real estate loans owned by life insurers saw fewer defaults. Agency multifamily performance was mixed, and late payments on financial institutions’ CRE holdings held steady.

The 30-day delinquency rate on loans held in commercial mortgage-backed securities was 9.18 percent in the first quarter, the Mortgage Bankers Association said in its Commercial/Multifamily Delinquency Report.

It was the highest level on record for CRE issuances based on MBA’s data going back to 1997.

CMBS lates deteriorated from 8.95 percent in the fourth-quarter 2010. During the first quarter of last year, securitized CRE assets had a rate of just 6.83 percent.

CMBS loans are serviced by third-party servicers, and the increase in CMBS delinquency doesn’t bode well for a quick return to new CMBS issuances.

Also faring worse were multifamily mortgages managed by Freddie Mac. The 60-day rate at the secondary lender climbed to 0.36 percent as of March 31 from the fourth quarter’s 0.26 percent.

Freddie’s multifamily delinquency has continued to worsen, rising to 0.40 percent in April.

Apartment delinquency at Freddie was 0.22 percent in the first-quarter 2010.

Multifamily performance, however, was better at Freddie’s government-controlled cousin.

Fannie Mae’s 60-day rate fell to 0.64 percent from the prior period’s 0.71 percent and was also lower than 0.79 percent a year prior.

Life insurance companies also reined in CRE delinquency, with the 60-day rate in the sector improving to 0.14 percent from the fourth quarter’s 0.19 percent. Defaults stood at 0.31 percent during the first three months of 2010.

The fifth source of CRE funding tracked by MBA, banks and thrifts, saw no change in commercial mortgage delinquency at 4.18 percent. But the rate was better than 4.27 percent a year earlier.

The findings excluded construction-and-development loans.

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