Commercial and multifamily delinquency rates declined during the third quarter according to the Mortgage Bankers Association (MBA) Commercial/Multifamily Delinquency Report except for loans held by Freddie Mac which remained unchanged.  Delinquency rates for all investor groups improved year-over-year.

Each of the five investor groups tracked by the use a different schedule with Commercial/Multifamily Mortgage-Backed Securities (CMBS) reporting as of 30+ days past due; Banks and Thrifts use a 90+ benchmark and Fannie Mae and Freddie Mac along with Life Insurance Companies report 60+ day delinquencies. 

Loans held in CMBS reported a delinquency rate of 8.86 percent compared to 8.97 percent in the second quarter and 8.92 percent in the third quarter of 2011.  The current delinquency rate is 0.16 percentage points below the series high (9.02 percent) reached in the second quarter of 2011.

The delinquency rate for loans held by Banks and Thrifts was 2.93 percent, down from 3.11 in the second quarter and 3.76 percent one year earlier.  The series high of 6.58 percent was reached in the second quarter of 1991 however the recent high was 4.41 percent in the third quarter of 2010.

Fannie Mae's rate was down one basis point from the previous quarter to 0.28 percent and 29 basis points lower than in the third quarter of 2011.  Freddie Mac's rate was unchanged at 0.27 percent but was down 6 basis points from the third quarter of 2011 when it reached the highest rate during the current crisis of 0.31 percent.   Fannie Mae's rate was 3.34 percent below the series high of 3.62 percent in the fourth quarter of 1991.  Its portfolio peaked in the current crisis at 0.80 percent in the second quarter of 2010.  Freddie Mac reached a series high of 6.81 percent in the fourth quarter of 1992.

The lowest delinquency rate is among loans held by life insurance companies at 0.12 percent.  This is 3 basis points lower than the second quarter rate and down 7 basis points from the third quarter of 2011.  The series high was in the second quarter of 1992 (7.53 percent).  Delinquencies in these portfolios reached 0.29 percent in the second quarter of 2010.

"Commercial and multifamily mortgage delinquency rates for loans held by life companies, Fannie Mae and Freddie Mac all remain extremely low," Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research said.  "The delinquency rate on bank-held loans is at its lowest level since the beginning of 2009 and the delinquency rate for loans held in CMBS - while still elevated - continues to stabilize.  If one removes the CMBS loans that are in foreclosure or REO, that delinquency rate is at its lowest since late 2009."