WSJ – Delinquency rates hit record 9.42% for mortgage-backed commercial loans

by LJ Miehe on April 6, 2011

Editor’s Note: Many of the commercial loan deals that were made during the housing bubble only made sense when valuations were at those frenzied levels.  Now that we are having a meaningful correction in the real estate market, these loans will need to either be restructured or defaults.  It is my belief that once oil gets over $120 dollars a barrel, it will only be a matter of time before that pricing seeps into the market and brings another recession.

WSJ – Loans tied to commercial mortgage-backed securities hit a record delinquency rate in March, with 9.42% of all such loans having missed payments, loan research-service firm Trepp LLC said.

The rate has been on an upward climb since the real-estate market began to turn in late 2007. Facing significantly lower values than when loans were taken out during the peak years of 2005-2007, a number of landlords have been unable to pay off loans as they come due.

The worst-performing sector is multifamily, with 16.2% of loans delinquent.

Still, the pace of the increase in the delinquency rate has slowed in recent months, and the rate for March was up from 9.39% in February. Meanwhile, the commercial mortgage-backed securities sector is making new loans once again, on pace to issue about $40 billion in securities for the year.


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