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The rate at which distressed loans held in U.S. commercial mortgage-backed securities (CMBS) are being transferred to special servicers continues to decline, according to ""Fitch Ratings"":http://www.fitchratings.com.
The New York-based ratings agency reports that approximately $85.7 billion in loans were being worked out by special servicers as of the first quarter of 2011.
[IMAGE] [COLUMN_BREAK]Specially serviced CMBS loans reached a peak in the second quarter of 2010 at $91.2 billion. But Fitch has noticed a declining trend ever since and the agency expects it to continue. The low point was in 2007 when special servicing volume was below $5 billion.
""Improving market conditions continue to impact both the velocity of loans transferring into special servicing and the ability of servicers to move loans out of special servicing,"" said Stephanie Petosa, a Fitch managing director.
According to the ratings agency's study, the vast majority (71% or $57.6 billion) of loans moved out of special servicing since 2009 have been modified and returned to master servicing.
Fitch says it is tracking the progress of these modifications over time and whether they re-enter special servicing.
Although 37 entities hold special servicer ratings by Fitch Ratings, the agency says the majority of loan workouts (78%) are being handled by four special servicers: LNR Partners, CWCapital Asset Management, C-III Asset Management, and Midland Loan Services.
