CMBS Delinquencies Rise and Approach 8%

S and P 500 REIT IYR up 18% Year To Date

while CMBS delinquencies continue rising.

NEW YORK--(BUSINESS WIRE)--The reprieve in delinquency increases was short-lived as U.S. CMBS late-pays resumed their climb this past month, according to the latest delinquency index results from Fitch Ratings. The full results are featured in this week's U.S. CMBS newsletter.

Delinquencies rose 18 basis points (bps) to finish November at 7.96%. Driving the increase was $1.6 billion of new defaults on office-and retail-backed loans.

'Office and retail properties fared well during the recession due to generally longer-term lease agreements, but they are now most vulnerable to asset-specific performance declines for the same reason,' said Managing Director Mary MacNeill. 'As office leases originated at the peak of the market come up for renewal, they will be marked down to lower market rents, pressuring operating income.'

Current delinquency rates by property type are as follows:

• Multifamily: to 14.75% (from 14.57%);
• Hotel: to 14.27% (from 14.14%);
• Retail: to 6.55% (from 6.25%);
• Industrial: to 6.01% (from 5.83%);
• Office: to 5.63% (from 5.38%).

Additional information is available at Fitch Ratings

December 1, 2010 CMBS Delinquency Data Recapped

on Housing Wire

The delinquency rate on loans backing commercial mortgage-backed securities jumped to the second highest rate on record in November, up 35 basis points to 8.93%, according to a monthly report released by Trepp analytics firm.

A total of $60.3 billion in CMBS loans are delinquent. Of the nearly 9% that are delinquent, most (2.92%) are more than 90 days past due.

November's CMBS delinquency rate is second only to September's rate of 9.05%. The delinquency rate in November 2009 was 5.65%. The rate in October dipped down to 8.58% boosting analysts' anticipations delinquencies would continue to fall. Now they are not so confident.

"We frequently pointed out that as servicers became more adept at processing troubled loans, the delinquency rate would continue to see downward pressure," the Trepp report said. "The November numbers throw cold water on the enthusiasm that's built up over the last six months."

Delinquencies for loans on multifamily properties spiked in November, making it the worst performing sector for the first time in more than a year. The delinquency rate now stands at 15.8%, up from 14.6% in October and up from 8.8% one year ago.

The lodging sector of CMBS fell to 14.6% from 14.9% in October, but still maintains the second highest rate, followed by the retail sector (7.6%), the office sector (7%) and the industrial sector (6.6%). Housing Wire Site for More Real Estate Information

Fitch Places Bank of America's IDRs on Rating Watch Negative

Fitch Places Bank of America's IDRs

on Rating Watch Negative

10/22/10
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has placed the long-term and short-term Issuer Default Ratings (IDRs) as well as the Support and Support Floor ratings of Bank of America Corporation (BAC) on Rating Watch Negative following initial interpretation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its implications for systemically important financial institutions. Business Wire Press Release

Fitch: US CMBS continue to default at a record pace (10.6% In 3Q ) "Trick or REIT"

"Trick or Treat REIT

'Loans continue to default at a record

pace, with large loans driving the trend,'

said Fitch Managing Director Mary MacNeill.

'Hotel and office properties were the largest

contributors to defaults this past quarter.'

(Q3 2010 default rate up 61% since Q4 2009)

By Matt Jarzemsky (Dow Jones Newswires)

The Wall Street Journal
10/22/10
The default rate for loans in U.S. commercial mortgage-backed securities increased to 10.6% in the third quarter as debt continued to sour, Fitch Ratings said Friday.

The rate at the end of the third quarter was up from the second quarter's 9.48% and 6.59% at the end of last year, the rating agency said.

Commercial real estate has been pummelled as occupancy rates and rents languish, pressuring property owners. The sharp drop in property values has left landlords often reluctant or unable to sell their properties to repay loans.

So far this year, $21.66 billion in such loans have defaulted, up from $17.75 billion for all of 2009, the rating agency said Friday. The number of loan defaults, 1,452, was nearly equal to last year's 1,464.

Loans originated in 2000 and 2005 each saw third-quarter default rates increase more than 1 percentage point from the spring--commercial property debt often has a five- or 10-year term--as did loans made in 2007, the height of the market's frenzy.

Hotel and office properties had the biggest increases in defaults, rising 2.86 and 1.15 percentage points, respectively.

Fitch currently has $26.9 billion of its fixed-rate commercial mortgage-backed securities on watch for downgrade and has a negative outlook on an additional $42 billion.

Commercial Real Estate Delinquencies Continue to Rise (Fitch)

Nathan Becker
Dow Jones Newswires
10/15/10

Delinquencies of U.S. commercial real-estate loans bundled into collateralized debt obligations rose again in September, Fitch Ratings said Friday.

Commercial real estate has suffered mightily the past two years, with falling rents and occupancy rates. But there have been signs of stabilization in some quarters.

Loan delinquencies in CDOs for September were 12.9%, up from 12.1% in August. Fitch director Stacey McGovern said 70% of all new delinquencies last month were loans secured by office and multifamily properties.

Commercial real estate CDO asset managers reported more than $70 million in realized losses from the disposal of distressed assets in September, up from $68 million in August. Total losses in the commercial real-estate CDO universe have exceeded $1.7 billion.

Overall CMBS delinquency rate rose to 8.66% in Spetember from 8.48% in August

Steep drop in property values has rendered many landlords

unable to sell their buildings for enough money to repy

the debt they borrowed to buy them.

RESULT: REITS move higher

By Matt Jarzemsky
Dow Jones Newswires
10/8/10

Delinquencies of loans underlying U.S. commercial mortgage-backed securities continued their climb in September amid poor performance in economically challenged states such as Nevada and Hawaii, according to Fitch Ratings.

CMBS delinquencies have continued to rise this year after spiking in 2009 as commercial property owners increasingly fell behind on loan payments because falling occupancy rates and rents crimped cash flow. The steep drop in property values has rendered many landlords unable to sell their buildings for enough money to repy the debt they borrowed to buy them.

Fitch said the overall CMBS delinquency rate rose to 8.66% from 8.48% a month earlier.

Among property types, hotel continued to see the worst performance, with a rate of 21.3%, up from 20.8% in August. Office buildings had the lowest rate at 5.48%, up from 5.06% a month earlier.

Delinquencies on CMBS loans in Nevada were 25.9%, followed by Hawaii at 18% and Michigan at 15.7%. Ten states had a rate of at least 10%.

U.S. Gov't thinks banks should share in the garbage they sold to Fannie and Freddie, price tag: $17+ Billion

September 15, 2010 and the U.S. Government believes our countries largest banks should pay for some of the cost of Fannie and Freddie given the fact that these same banks peddled garbage to Fannie and Freddie. WHAT A CONCEPT however do not hold your breath!

Our fine banking institutions will simply state they sold mortgages that met Fannie and Freddie standards at the time albeit who really "fogged the mirror" when the applications were completed?

Even "Representative" Paul Kanjorski gets mention, "We found a way to pay for the savings and loan crisis, and we can survey find a way to recover the costs associated with this crisis." Mr. Kanjorski is the very same "representative" of the banking industry that put the screws to FASB to change accounting valuations from mark-to-market (a.k.a. real valuations) to mark-to-model.

No America, banks will not be paying their fair share of the financial burden paced on our children and grandchildren. Our large financial institutions are deemed "special" and integral to the survival and growth of Main Street so say our elected "representatives" in D.C. Both groups continue to pillage and place our children and grandchildren in financial harms way however they sleep well.

Our "leadership" has already placed a $43,000+ debt burden on our children and grandchildren (excluding unfunded liabilities and Fannie and Freddie) so each and every one of us needs to raise a voice on their behalf and force the career politicians to commence reducing their burden. It is really simple....it is not fair!

WASHINGTON (AP) -- The nation's largest banks have an obligation to pay some of the cost for bailing out mortgage buyers Fannie Mae and Freddie Mac because they sold them bad mortgages, a government regulator said Wednesday.

Edward DeMarco, the acting director for the Federal Housing Finance Agency, said the banks this summer have refused to take back $11 billion in bad loans sold to the two government-controlled companies, in written testimony submitted for a House subcommittee hearing Wednesday. A third of those requests have been outstanding for at least three months.

DeMarco said the banks have a legal obligation to buy back the loans and called the delays "a significant concern." He said the government may take new steps to force those buybacks if "discussions do not yield reasonable outcomes soon."

In an interview with reporters after the hearing, DeMarco declined to give further details on what the government might do next. He said only that "we're looking for contractual obligations to be fulfilled."

Fannie and Freddie buy mortgages and package them into securities with a guarantee against default.

The two mortgage giants nearly collapsed two years ago when the housing market went bust. The government stepped in to rescue them and it has cost taxpayers about $148 billion so far. The rescue is on track to be the most expensive piece of stabilizing the financial system.

Fannie and Freddie have a legal right to return bad loans, especially if they later discover fraudulent statements on applications. Any money they recover offsets their losses.

The amount in question is a small fraction of the total government rescue, said Ed Mills, financial policy analyst at FBR Capital Markets.

Still, lenders say Fannie and Freddie are trying to return too many loans. And in some cases, they are pushing back loans where it's not clear fraud was committed, the lenders say.

Mortgage industry consultant Brian Chappelle said the requests often apply to loans that met the mortgage buyers' guidelines at the time.

"The industry believes that the pendulum has swung far beyond what is reasonable," he said. As a result, he said, lenders are being extremely cautious about making new loans.

Wall Street has worried that the costs of bailing out Fannie and Freddie could get pushed back on big banks. Fitch Ratings said in a report last month that the four largest U.S. banks could book losses of up to $42 billion if Fannie Mae and Freddie Mac force them to take back troubled mortgages they made. It also estimated that JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. could record $17 billion in losses if they repurchase a quarter of the mortgage giants' seriously delinquent loans.

The leading Democrat on the panel, a House Financial Services subcommittee, indicated the banks bear some responsibility.

"We must begin to think about approaches for recouping taxpayers' money in the long run," said Rep. Paul Kanjorski. "We found a way to pay for the savings and loan crisis, and we can survey find a way to recover the costs associated with this crisis."

A bigger headache for lawmakers is figuring out what to do with Fannie and Freddie in the future.

The Obama administration is working on a plan to restructure the mortgage market and make sure home loans are affordable. Officials don't plan to release details until next year. But Michael Barr, an assistant Treasury secretary, told the panel Wednesday that Fannie and Freddie "will not exist in the same form as they did in the past."

Sorting out the future of housing finance has been a divisive issue on Capitol Hill. And it could grow even more contentious if Republicans take control of one or both houses of Congress.

Republicans have seized on the administration's management of Fannie and Freddie to illustrate Democrats' push for broadening the reach of the federal government. They say loans acquired by Fannie and Freddie since the September 2008 takeover have put taxpayers at risk.

"It's time for the government to get out of that business," said Rep. Spencer Bachus, the top Republican on the House Financial Services Committee.

But Democrats and regulators say the loans acquired by Fannie and Freddie before their takeover represent the overwhelming majority of the companies' losses. New loans acquired since then have been performing well, they note.

"There is no urgency," to reform the two companies, said Rep. Barney Frank, the committee's chairman. "The pattern of abuse they had engaged in has been changed...Fannie and Freddie are behaving differently and are causing far less problems."

1 in 5 hotel mortgage loans is delinquent, In the words of Tom Bodett, "We will leave the light on for you"

20.8% of hotel mortgage backed securities is delinquent while 14.18% of multi-family mortgage backed securities are delinquent and REITS continue their lofty climb. Welcome to the New Order of the U.S. Equity Market. We have gone well beyond insanity.

NEW YORK--(BUSINESS WIRE)--While the pace of defaults remains elevated, a record number of loan resolutions in August again tempered the effect of $3.1 billion of new delinquencies, according to the latest U.S. CMBS delinquency index results from Fitch Ratings. The full results are in the agency's weekly U.S. CMBS newsletter.

Recent defaults on five loans greater than $100 million contributed to a 23-basis point (bp) net increase in the U.S. CMBS delinquency rate to 8.48%. Meanwhile, $2.1 billion of loans were resolved or liquidated last month.

'Though special servicers are working out loans at an increased rate, the volume of new delinquencies has not yet subsided,' said Senior Director Adam Fox. 'Highly levered loans originated at the market's peak continue to default as borrowers seek modifications or hand back the keys to underperforming assets.'

In August, three Fitch-rated loans in excess of $100 million became newly delinquent due to performance issues, including:

--$825.4 million Innkeepers Portfolio;
--$140 million Hyatt Regency - Bethesda; and
--$129.5 million Lynnewood Gardens.

Current delinquency rates by property type are as follows:
--Hotel: 20.80% (from 18.64%);
--Multifamily: 14.18% (from 13.87%);
--Retail: 6.11% (from 6.35%);
--Industrial: 5.55% (from 5.20%);
--Office: 5.06% (from 5.08%).

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends'. The link below enables market participants to sign up to receive future issues of the E-newsletter

Bank of America trades at 52 week low so Fitch gallops in on the white horse with a ratings upgrade

Bank of America's common stock printed a 52 week low today ($12.75) and closed at $12.87. Two weeks ago, Bank of America closed at $13.96 and just over a month ago (July 14th), this fine institution closed at $15.67. After a $2.80 (18%) drop in just over a month Fitch came to the rescue after today's close.

By Sue Chang
SAN FRANCISCO (MarketWatch)
Fitch Ratings on Friday upgraded Bank of America Corp.'s preferred stock rating to investment grade of BBB- from BB- and its individual stock rating to C from C/D. "The upgrades reflect BAC's efforts to boost common equity and liquidity combined with stable to improving asset quality trends in various portfolio categories," said Fitch in a statement. It also affirmed Bank of America's issuer default rating of A+. The outlook is stable.

With his faithful Indian companion, Fitch, the daring and

resourceful masked ratings agency of the plains led the fight for

 law and order in early Charlotte, NC. Return with us now to those

thrilling days of yesteryear. The Lone Ratings Agency rides again!

Fitch: CMBC volume of July delinquencies fall while late pays increase

NEW YORK - (Business Wire) The volume of new CMBS (Commercial Backed Mortgage Securities) delinquencies fell for the fourth straight month, according to Fitch Ratings in its latest U.S. CMBS newsletter.

CMBS late-pays increased 11 basis points (bps) to 8.25%, with new delinquencies totaling less than $2 billion for the first time since August 2009.

'Despite the slowdown in volume, loan defaults have not yet peaked,' said Managing Director Mary MacNeill. 'Further weakness in loan performance is likely, particularly among later vintages.'

The 2007 vintage is still contributing disproportionately to the index. Loans from the 2007 vintage comprise some 35% of the Fitch-rated universe but account for approximately 47% of all current delinquencies.

Current delinquency rates by property type are as follows:
--Hotel: 18.64%;
--Multifamily: 13.87%;
--Retail: 6.35%;
--Industrial: 5.20%;
--Office: 5.08%.  

Additional information is available in Fitch's U.S. CMBS newsletter.
Additional information is available at http://www.fitchratings.com/

Serious delinquencies of U.S. prime-rated residential mortgages rose in June

-By Tess Stynes, Dow Jones Newswires

Serious delinquencies of U.S. prime-rated residential mortgages rose in June from May, the 37th-straight month of sequential gains, though subprime and Alt-A loans extended a recent trend of declines, according to Fitch Ratings.

While noting the continued drops are "noteworthy," the portion of borrowers who had been current in the prior month but fell behind--or roll rate--remains elevated.

"The persistently high roll rates indicate that the delinquency declines are more a reflection of increased property liquidation and ongoing loan-modification activity than of widespread improvement in mortgage-payment performance," said Fitch's Vincent Barberio.

Mortgage delinquencies have shown signs of plateau in recent months, with a number of measures showing their first declines since 2007, when the housing bubble began to lose air.

Delinquencies of 60 days or more on prime-rated jumbo mortgages, or those of at least $417,000, rose to 10.4% in June from 6.4% a year earlier and 10.3% in May. Such loans saw the biggest increase in delinquencies last year among home borrowings, though the overall rate remains far below those of other mortgage types. Roll rates remained above 1% after dipping below that level in April, but were lower than their 1.4% peak in March.

The prime-rated jumbo loans make up the vast majority of the prime-rated mortgages in Fitch's readings.

Serious delinquencies for Alt-A loans--typically given to prime-rated borrowers who did not document assets and/or income, declined to 33.7% in June from 33.9% in May, but were up from 29.1% a year earlier. Roll rates rose on month to 3.4% from 3.1%. Prior to a sharp April drop, roll rates haven't fallen below 3% since June 2008.

Subprime delinquencies dropped to 43.7% from 44.8% in May but were above the prior year's 41.2% The June roll rate fell to 4.2% from 4.3% sequentially but was well below the 12-month average of 5.3%.

Grandpa: The U.S. Equity market will continue to blast into a state of euphoria as Alcoa beat the street. Who cares about delinquencies when an aluminum company beats reduced earnings expectations.

Moody's: CMBS Delinquencies Rise In May, Outlook Deteriorates (WSJ)

Moody's: CMBS Delinquencies Rise In May, Outlook Deteriorates

DOW JONES NEWSWIRES Moody's Investors Service said delinquencies on loans in U.S. commercial mortgage backed securities increased further in May as the agency also boosted its year-end estimate of where the rate will be.

Last month's half-point jump--to 7.5% from 7%--follows two months of abating rates of growth.

Meanwhile, Moody's now projects the Commercial Mortgage Backed Securities (CMBS) delinquency rate will range from 9% to 11% at the end of 2010, compared with its previous outlook of 8% to 9%. Sustained joblessness in the U.S. and possible fallout from sovereign-debt problems in Europe spurred Moody's to take the more-negative view.

Analyst Nick Levidy said that while some commercial real-estate sectors like multifamily housing and hotels are starting to show signs of improvement alongside the broader economy, others like office and retail real estate have lagged and are likely to have more struggles ahead. Commercial real estate has been pummeled for more than a year as occupancy rates and rent decline, putting pressure on property owners.

In May, hotels again had the highest delinquency rate with multifamily a close second; both were at 13%. But office properties posted the sharpest rate of increase, jumping a percentage point from April to 5.6% and pushing above the industrial sector, which now has the lowest rate.

By region, the U.S. West had the steepest growth in delinquencies for the second straight month, and the South has the highest rate overall. The East has both the lowest rate and May's smallest monthly increase.

Last week, Fitch Ratings also reported an increase in CMBS delinquencies last month, mostly owing to an $1 billion increase in overdue office loans. Nevada remains the most delinquency-plagued state, with a rate of 23%.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com

Fitch: Delinquent commercial loans rose in May
June 4, 2010
Bloomberg/Businessweek
Delinquencies among U.S. commercial loans backed by securities surged in May, largely due to a $1 billion net increase in office loans falling behind in payments, Fitch Ratings said Friday.

Fitch's commercial mortgage-backed securities index tracks loans on office, retail, apartment, industrial and hotel properties with mortgage payments at least 60 days overdue.

The May reading shows delinquencies jumped to nearly 8 percent. The credit rating agency said the main culprit behind the increase was office delinquencies.

"As expected, office loan delinquencies have begun to increase and will continue to rise into next year," said Mary MacNeill, managing director.

The latest and largest property to enter the index is the $380 million Columbia Center tower in Seattle.

Commercial-mortgage backed securities are pools of commercial real estate loans that are packaged and sold to investors. Loans packaged into securities only account for about one-quarter of all commercial loans outstanding.

By property type, hotels had the highest delinquency rate in May at 18.6 percent, while apartment properties had a 13.7 percent rate, Fitch said.

The delinquency rate for retail properties was 6 percent, while the rate for industrial properties stood at 5.1 percent.

The rate for office properties was 4.6 percent.

Grandpa: Surely this delinquency trend has a negative impact on Real Estate Investment Trusts (REIT) as delinquent payments negatively impact commercial property investment returns. Well, not exactly as REIT "investors" believe a HUGE positive turn in commercial real estate is just around the corner.

IYR (Real Estate ETF) closed up $2.01 yesterday to $50.05. On June 10, 2009, IYR closed at $34.38. While  the delinquency trend is not your friend, this ETF is up 45.6% in one year??? Welcome to the U.S. equity market where reading basic economic data is not required. Wall Street loves Americans that simply send in their hard earned cash and do not ask questions.

Fitch: Five-Year Loans Drive U.S. CMBS Delinquencies Higher NEW RECORD!

NEW YORK--(BUSINESS WIRE)--Upcoming maturities from U.S. CMBS (Commercial Mortgage Backed Securities) deals originated in 2005 contributed to a 29 basis-point (bp) increase in delinquencies to 6.29% at the end of February, according to the latest U.S. CMBS delinquency index results from Fitch Ratings. 6.29% is a new record.

Approximately 30% of the newly delinquent loans were from 2005 transactions. In fact, the four largest newly delinquent loans (ranging in size from $65 million to $112 million) are from this vintage. Three of these four loans are past their 2010 maturity dates and are, therefore, categorized as non-performing matured loans.

'Five-year loans originated in 2005 will continue to have difficulty refinancing this year as liquidity remains limited,' according to Managing Director Mary MacNeill. 'In many cases, sponsors will have to either contribute additional equity in order to refinance their loans or look to the servicers for extensions and modifications.'

For the first time, office properties saw a greater than overall average increase in the index, with a 45 bp movement month over month in comparison to the overall index of 29 bps as three of the top four newly delinquent loans are office properties. Multifamily and industrial also exceeded the overall index change at 64 and 43 bps respectively. When the Peter Cooper Village/Stuyvesant Town loan hits 60 days delinquent, the overall index will increase 60 bps and multifamily will increase by over 400 bps.

Current delinquency rates by property type are as follows:
--Office: 3.50%;
--Hotel: 16.61%;
--Retail: 5.09%;
--Multifamily: 8.97%;
--Industrial: 4.16%.

Fitch's delinquency index includes 2,505 loans totaling $28.5 billion of the Fitch rated universe of approximately 42,000 loans comprising $452.6 billion that are at least 60 days delinquent or in foreclosure. The Index excludes Fitch-rated loans that are 30 to 59 days delinquent, which currently total $3.2 billion.

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends'

CNBC, Larry Summers, Christina Romer and Tim Geithner (Fab Four) will require a few hours to digest this new record prior to spinning it into a positive economic sign. It is challenging for the Fab Four to “seasonally adjust” delinquency figures.

The equity market and specifically the REITS will likely move higher as all "new records" automatically kick in the Quant Fund buy programs.