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Driven by drops in commercial mortgage-backed securities (CMBS) and construction loans held by banks and thrifts, the level of commercial/multifamily mortgage debt outstanding in the fourth quarter of 2009 decreased on both a quarter-to-quarter and year-over-year basis, according to the ""Mortgage Bankers Association's"":http://www.mbaa.org/(MBA) analysis of the Federal Reserve Board Flow of Funds data.
[IMAGE]From the third quarter to fourth quarter of last year, the level of mortgage debt outstanding in the commercial and multifamily sector declined to $3.4 trillion, falling 1.7 percent or $58 billion. Multifamily debt itself dropped down to $897 billion, a decrease of 1.2 percent or $11 billion.
Due in part to this quarterly reduction, the amount of mortgage debt outstanding at the end of 2009 was $99 billion lower than at the end of 2008, marking a year-over-year decline of 2.8 percent. This was the largest nominal dollar decrease recorded so far in the series.
""Payoffs and pay-downs of outstanding mortgages are exceeding new originations,"" said Jamie Woodwell, MBA's VP of commercial real estate research. ""Driving the
[COLUMN_BREAK]decline was the CMBS market, with essentially no new mortgages coming in, and banks and thrifts, with declines in their construction-related holdings.""
With $1.51 trillion or 45 percent of the total, commercial banks continued to hold the largest share of commercial/multifamily mortgages. However, MBA said it is important to note that many of the commercial mortgage loans reported by commercial banks were actually ""commercial and industrial"" loans to which a piece of commercial property had been pledged as collateral.
CMBS, collateralized debt obligation, and other asset-backed security issues were the second largest holder of commercial/multifamily mortgages, holding $690 billion or 20 percent of the total. Life insurance companies held $307 billion or 9 percent of the total, and savings institutions held $184 billion or 5 percent of the total.
In addition, government-sponsored enterprises (GSEs), agency-backed mortgage pools, and GSE-backed mortgage pools, including Fannie Mae, Freddie Mac, and Ginnie Mae, held $198 billion in multifamily loans that support the mortgage-backed securities they issued and an additional $165 billion in ""whole"" loans in their own portfolios. This represents a total share of 11 percent of outstanding commercial/multifamily mortgages.
Looking just at multifamily mortgages, the GSEs and Ginnie Mae held the largest share, with 40 percent of the total multifamily debt outstanding. The next largest holder of multifamily debt was commercial banks, with 23 percent of the total. CMBS, CDO, and other ABS issuers held 12 percent of the total, and state and local governments held 7 percent. Savings institutions also held 7 percent of the total, and life insurance companies held 6 percent.
