Industry analysts forecast that delinquency rates on commercial backed mortgage securities (CBMS) could reach as high as double digits by the end of 2010. With CBMS delinquency rates rising, analysts believe that bank failure rates could also increase. See the following article from HousingWire for more on this.
Delinquencies in commercial mortgage-backed securities (CMBS) in the US reached 7.2% in May from 6.9% in April, and more than triple the rate a year ago, according to the analytics firm Realpoint.
Realpoint tracks delinquency data on nearly $800bn of CMBS pools for the monthly reports. In May, the total delinquent unpaid balance for these loans reached $57.3bn, a $2.9bn increase from the previous month.
The overall delinquency rate of 7.2% is more than three times the 2.2% reported a year ago, in May 2009 and more than 25 times more than the lowest point recorded by Realpoint, the 0.2% delinquency rate in June 2007.
By the end of 2010, the total amount of unpaid principal balance could grow between $80bn and $90bn, Realpoint forecasted, and the delinquency rate could reach as high as 12%.
At the end of June, the US District Court awarded CW Capital, a special servicer for Bank of America, a $3.6bn foreclosure on the collection of the Peter Cooper Village-Stuyvesant Town development. According to Realpoint, only an $800m portion was reported as 60-days delinquent for the May report, while the other four parts of the financing remained current.
The analytics firm Trepp reported earlier in June, that commercial real estate problems were at the center of the closing of five banks at a cost of $317m to the government. Non performing CRE loans made up 80% of all of its problematic loans.
Earlier in the year, Trepp reported that these spiking delinquencies could cause bank failures to increase as much as 30% in 2010.
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