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Trepp Estimates Declines in Delinquency Rates

""Trepp, LLC"":http://www.trepp.com/main.cgi estimates decreases in all types of bank loan delinquencies in the second quarter of 2011. Delinquencies are expected to decline among residential mortgages, commercial mortgages, construction loans, and commercial and industrial loans, according to Trepp's estimates.

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""Our detailed research through earnings reports and call report filings from smaller banks indicates that the recovery that began in mid-2010 has resumed, after stalling in the first quarter,"" said Matt Anderson, Managing Director, Trepp.

""These results suggest that banks have stepped up efforts to shed problem commercial real estate loans,"" he said.

Trepp estimates that residential mortgage delinquencies in the second quarter were 12.6 percent, slightly lower

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than the previous quarter's 12.8 percent and lower than the previous year's rate of 13.3 percent.

Serious delinquencies in the residential mortgage sector also decreased, falling to 4.6 percent, mirroring the third quarter of 2009.

Total commercial mortgage delinquencies declined from 5.4 percent in the first quarter of 2011 to 5 percent in the second quarter, Trepp estimates. Nonaccrual commercial delinquencies fell to 3.6 percent for the quarter.

Trepp estimates the decline in commercial delinquencies will be the greatest decline since mid-2010 when the market began to recover.

While banks are improving their methods of disposing of delinquent loans, property owners still face obstacles due to decreased operating incomes and values, according to Trepp.

Total construction loan delinquencies are expected to show a decrease to 17.1 percent for the second quarter of 2011, while nonaccrual delinquencies are expected to fall by 1.1 percent from the previous quarter to 12.7 percent.

The estimated decrease in construction loan delinquencies is the largest drop since mid-2010 when the rate began declining.

The total construction and commercial loan delinquency rate, which has been falling since the fourth quarter of 2009 and is expected to fall to 2.3 percent for the quarter. This is down from 2.6 percent in the previous quarter.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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