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Tag Archives: Fitch Ratings

Cumulative CMBS Defaults Up But Slowed by New Issuances

The cumulative default rate for commercial mortgage-backed securities (CMBS) in the U.S. rose over the third quarter, largely due to an increase in defaults among office loans, according to the latest data from Fitch Ratings. The rate rose from 13.2 percent in the second quarter of this year to 13.5 percent in the third quarter, according to Fitch. The total amount in CMBS loans that defaulted in the third quarter was $2.2 billion. The total number of newly defaulted loans during the quarter is 119.

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Fitch Forecasts Continued Improvements for Housing

Fitch Ratings is predicting a continued recovery into 2012, according to a recent report titled U.S. Homebuilding and Construction: The Chalk Line. A slowly growing economy combined with ""somewhat diminished distressed home sales competition, less competitive rental cost alternatives, and new home inventories at historically low levels"" led the ratings agency to predict growth for housing starts and home sales into 2012, with further moderate improvements into 2013.

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CMBS Delinquency Rate Falls for Fourth Straight Month: Fitch

Although the improvement was slight, the drop in the delinquency rate for commercial mortgage-backed securities (CMBS) in September was still an improvement, and the decline marks the fourth straight monthly drop, Fitch Ratings reported Friday. The CMBS delinquency rate fell to 8.37 percent from August's 8.39 percent.

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More CMBS Loans Exit Special Servicing: Fitch Ratings

The population of CMBS loans handled by special servicers is declining, which could signal a turning point for the commercial real estate sector, Fitch Ratings said in a report Friday. As of June 30 of this year, the balance for CMBS loans shrunk to $80.5 billion, down from $85.5 billion in June 2011 and a significant drop from $92 billion in June 2010.

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FHFA’s New Guidelines Should Aid Recovery’s Momentum

The housing market is seeing signs of recovery, and this recovery may be bolstered by the new representation and warranty framework the Federal Housing Finance Agency (FHFA) announced Tuesday, according to Fitch. Relying on signing offers and home tours as a future indicator of home sales, Redfin, a technology-driven real estate broker, predicts the market improvement seen this summer will continue into the fall.

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Fitch: Challenges Ahead for Previously Strong Vintages

Adverse selection is leading to rating downgrades for one of the strongest U.S. residential mortgage vintages, the pre-2005 vintage, according to Fitch Ratings. Residential mortgage-backed securities formed before 2005 have historically performed well, according to Fitch. While this may be true, Grant Bailey, managing director at Fitch, explained, ""Many high-quality mortgage borrowers are refinancing to take advantage of record-low interest rates, leaving the remaining mortgage pools increasingly concentrated with borrowers unable to refinance.""

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CMBS Special Servicer Volume Falls Despite Slowing Workouts

The slowing pace of workouts hasn't stopped CMBS special servicer volume from falling, Fitch Ratings reported. According to Fitch's weekly U.S. CMBS Market Trends newsletter, the balance of loans in special servicing as of June 30 was $80.5 billion, a drop from $83.1 billion at the end of 2011 and $85.6 billion in June 2011. This news comes despite a slowdown in resolutions in the year's first half, with 1,242 loans resolved in that time (compared to 1,556 in the first half of 2011).

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Short Sale Guidelines Could Cause Short-Term Losses to Lenders: Fitch

Earlier this week, FHFA, Fannie Mae, and Freddie Mac revealed new short sale guidelines to take effect November 1 of this year. The new guidelines are expected to make short sales easier to process and will open up the foreclosure alternative to borrowers not in default if they have certain hardships. While Fitch Ratings views these new rules as a plus for the housing market in the long term, the ratings agency said, ""in the short term, the new guidelines could increase losses on some existing bank home equity or second lien portfolios.""

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Fitch: Mods Bring Down CMBS Delinquency Rate in July

An increase in loan modifications led to fewer delinquencies for commercial mortgage-backed securities (CMBS) in July, according to Fitch Ratings. The decrease in CMBS delinquencies is the second consecutive month of declines as CMBS delinquencies fell to 8.48 percent in July, a drop of 14 basis points (bps) from June's 8.62 percent. According to the ratings agency, two large loan mods helped bring down the past due rate - the $305 million Schron Industrial Portfolio and the $210 million Savoy Park.

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