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Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.Commercial/Multifamily Mortgage Debt Declines in Third Quarter
Commercial/multifamily mortgage debt, declined slightly
during the third quarter according to data released on Thursday by the Mortgage
Bankers Association (MBA). The
conclusion was based on MBA's analysis of the Federal Reserve Board Flow of Funds
data.
During the third quarter the amount of commercial/multifamily debt outstanding
declined by $28 billion or 0.8 percent to
a total of $3.43 trillion. The
multifamily mortgage debt portion of the total declined $1 billion or 0.1 percent to $912
billion.
The bulk of the commercial/multifamily debt is held by
commercial banks, which have a 45 percent share or $1.53 billion on their books. The MBA notes, however, that among the holdings
of the top 10 commercial real estate bank lenders 48 percent of these mortgages
are actually real estate secured loans related to owner-occupied properties. In these loans it is the business' income rather than rents that provide the
source of mortgage payments. This
structure is the force that drove the underwriting, pricing, and performance of
the loans.
CMBS, CDO, and other ABS issuers are the second largest
holders of commercial/multifamily debt with $709 billion of the total, a 21
percent share. Life insurance companies
are third with $310 billion or 9 percent and savings institutions hold 6
percent of $190 billion.
Commercial banks
saw the largest decrease in dollar terms in their holdings of
commercial/multifamily mortgage debt during the third quarter, a decrease of
$15 billion or 1 percent. CMBS, CDO, and other ABS issues decreased their
holdings of these mortgages by $10 billion or 1.3 percent. Savings
institutions holdings decreased by $5 billion or 2.3 percent and REITs
decreased their holdings of commercial/multifamily mortgages by $4 billion or
12 percent.
The Federal Reserve Flow of Funds data summarizes the
holding of loans and/or the form of the security. For example, many
life insurance companies invest both in whole loans for which they hold the
mortgage note (included under Life Insurance Companies in this data) and in
CMBS, collateralized debt obligations (CDOs) and other asset backed securities
(ABS) for which the security issuers and trustees hold the note.
The largest share
of multifamily loans is held by a government sponsored enterprises (GSEs) or in
agency- or GSE-backed mortgage pools.
The total in the first category was $197 billion or 21.7 percent, a
slight change from the second quarter when the total was $194 billion (21.3
percent). In addition, agency-backed and
GSE-backed mortgage pools accounted for another $162 billion or 17.8 percent,
up from $160 billion or 17.5 percent in the second quarter. These two
categories represent a total share of 10 percent of outstanding
commercial/multifamily mortgages.
Commercial banks held the second largest share of multifamily debt which
remained virtually constant from the second quarter to the third at $217 billion.
Savings
institutions contributed the largest amount to the decrease in multifamily
mortgage debt. Their holdings fell $2
billion, or 4 percent. REITS decreased their holdings of multifamily
mortgage debt by $1 billion, or 41 percent. Nonfarm noncorporate business
decreased by $465 million, or 3 percent. Government-sponsored enterprises
saw the biggest increase in their holdings of multifamily mortgage debt by $3
billion or 2 percent.
"Given its longer-term nature, the amount of
commercial and multifamily mortgages outstanding has remained relatively stable
through the credit crunch and recession," said Jamie Woodwell, MBA's Vice
President of Commercial Real Estate Research. "The top line numbers from
the Fed show a 0.8 percent decline in commercial and multifamily mortgage debt
outstanding during the third quarter, led by a $20 billion drop in the holdings
of banks and thrifts. Excluding construction loans, however, banks and
thrifts saw a $6 billion increase in their holdings of loans backed by
commercial and multifamily properties. Coupled with increases in the
holdings of multifamily mortgages by Fannie Mae and Freddie Mac, and decreases
in the balances backing commercial mortgage-backed securities, the overall
amount of mortgage debt outstanding backed by commercial/multifamily properties
remained relatively unchanged."
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YOUR MESSAGE HERE
Commercial/Multifamily Mortgage Debt Declines in Third Quarter
Commercial/multifamily mortgage debt, declined slightly
during the third quarter according to data released on Thursday by the Mortgage
Bankers Association (MBA). The
conclusion was based on MBA's analysis of the Federal Reserve Board Flow of Funds
data.
During the third quarter the amount of commercial/multifamily debt outstanding
declined by $28 billion or 0.8 percent to
a total of $3.43 trillion. The
multifamily mortgage debt portion of the total declined $1 billion or 0.1 percent to $912
billion.
The bulk of the commercial/multifamily debt is held by
commercial banks, which have a 45 percent share or $1.53 billion on their books. The MBA notes, however, that among the holdings
of the top 10 commercial real estate bank lenders 48 percent of these mortgages
are actually real estate secured loans related to owner-occupied properties. In these loans it is the business' income rather than rents that provide the
source of mortgage payments. This
structure is the force that drove the underwriting, pricing, and performance of
the loans.
CMBS, CDO, and other ABS issuers are the second largest
holders of commercial/multifamily debt with $709 billion of the total, a 21
percent share. Life insurance companies
are third with $310 billion or 9 percent and savings institutions hold 6
percent of $190 billion.
Commercial banks
saw the largest decrease in dollar terms in their holdings of
commercial/multifamily mortgage debt during the third quarter, a decrease of
$15 billion or 1 percent. CMBS, CDO, and other ABS issues decreased their
holdings of these mortgages by $10 billion or 1.3 percent. Savings
institutions holdings decreased by $5 billion or 2.3 percent and REITs
decreased their holdings of commercial/multifamily mortgages by $4 billion or
12 percent.
The Federal Reserve Flow of Funds data summarizes the
holding of loans and/or the form of the security. For example, many
life insurance companies invest both in whole loans for which they hold the
mortgage note (included under Life Insurance Companies in this data) and in
CMBS, collateralized debt obligations (CDOs) and other asset backed securities
(ABS) for which the security issuers and trustees hold the note.
The largest share
of multifamily loans is held by a government sponsored enterprises (GSEs) or in
agency- or GSE-backed mortgage pools.
The total in the first category was $197 billion or 21.7 percent, a
slight change from the second quarter when the total was $194 billion (21.3
percent). In addition, agency-backed and
GSE-backed mortgage pools accounted for another $162 billion or 17.8 percent,
up from $160 billion or 17.5 percent in the second quarter. These two
categories represent a total share of 10 percent of outstanding
commercial/multifamily mortgages.
Commercial banks held the second largest share of multifamily debt which
remained virtually constant from the second quarter to the third at $217 billion.
Savings
institutions contributed the largest amount to the decrease in multifamily
mortgage debt. Their holdings fell $2
billion, or 4 percent. REITS decreased their holdings of multifamily
mortgage debt by $1 billion, or 41 percent. Nonfarm noncorporate business
decreased by $465 million, or 3 percent. Government-sponsored enterprises
saw the biggest increase in their holdings of multifamily mortgage debt by $3
billion or 2 percent.
"Given its longer-term nature, the amount of
commercial and multifamily mortgages outstanding has remained relatively stable
through the credit crunch and recession," said Jamie Woodwell, MBA's Vice
President of Commercial Real Estate Research. "The top line numbers from
the Fed show a 0.8 percent decline in commercial and multifamily mortgage debt
outstanding during the third quarter, led by a $20 billion drop in the holdings
of banks and thrifts. Excluding construction loans, however, banks and
thrifts saw a $6 billion increase in their holdings of loans backed by
commercial and multifamily properties. Coupled with increases in the
holdings of multifamily mortgages by Fannie Mae and Freddie Mac, and decreases
in the balances backing commercial mortgage-backed securities, the overall
amount of mortgage debt outstanding backed by commercial/multifamily properties
remained relatively unchanged."
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