Tag Archives: Fitch Ratings

Delinquencies and losses on commercial real estate loan collateralized debt obligations (CREL CDOs) increased notably in April, according to the latest U.S. CREL CDO index results from Fitch Ratings. Asset managers reported approximately $164 million in realized losses from the disposal of defaulted and credit-impaired assets, which is substantially higher than March's total of $73 million. The agency says many of the realized losses stemmed from foreclosure or deed-in-lieu actions that wiped out subordinate positions.

The climb towards an expected 10 percent delinquency rate for loans held in commercial mortgage-backed securities (CMBS) has slowed, according to the latest index results from Fitch Ratings. The agency reports that late-pays retreated two basis points to end March at 8.74 percent, with delinquencies falling for four of the five major property types. At the same time, Trepp says loss severity is the lowest it's been since the company began reporting, with the majority of loans liquidated in March having losses of less than 2 percent.

Recent improvements in the job market are translating into falling subprime delinquency rates. At the same time, prices on subprime credit-default swaps (CDS) have risen for five straight months. Multiple reports on the secondary market signal growing investor appetite for subprime mortgage bonds and finance instruments like CDS, which transfer the risk of default from the bond holder to the seller of the swap. According to Fitch, subprime delinquencies are dropping sharply with cured loans up by as much as 50 percent for some vintages.

Fitch Ratings has reviewed all U.S. subprime mortgage securitizations rated by the agency and found little change in expected losses for the bond investors as default risk improved slightly. However, the agency says loss severities have increased due to longer foreclosure timelines and still-declining home prices. Fitch says the average time to liquidate a distressed loan has increased by roughly six months from a year ago and now exceeds 20 months. Timelines are expected to increase further in 2011 as foreclosures continue to face procedural challenges.

Delinquencies on loans held in commercial mortgage-backed securities (CMBS) climbed to a new record high this past month, according to the latest index results from Fitch Ratings. But the company's analysts say the rising influx of new issuance bonds may help to stem future late-pay increases. The agency reports that late-pays rose 17 basis points to close out February at 8.76 percent. That surpasses the previous high-water mark reported by Fitch in September 2010 when the agency recorded a CMBS delinquency rate of 8.66 percent.

With loan modifications on a steady decline, the analysts at Fitch Ratings say the common thread running through the industry has become when will the servicer foreclose as opposed to how can a distressed borrower stay in their home. Fitch's analysis of loan mod trends shows little improvement in success rates. While alternatives like short sales are modestly improving loss severities, the agency says servicers report borrowers are electing to remain in their property longer by staying on through the extended foreclosure process.

Fitch Ratings says approximately 2,000 commercial mortgage loans are due to mature over the next 12 months, representing an outstanding balance of $22.5 billion. According to a new report released Friday by the ratings agency, the maturing loans were originated between 1996 and 2007 and are predominantly secured by retail, office, and multifamily properties. Fitch says 30 percent are not expected to pass its refinancing test.

A report from Fitch Ratings paints a negative picture for the Title Insurance Industry in 2011. According to the report, the title insurance market is severely affected by the current state of the economy, most notably the sharp decline in real estate and mortgage activity. According to the report, the title insurance market is severely affected by the current state of the economy, most notably the sharp decline in real estate and mortgage activity.

Moody's rating service and Fitch Ratings both reported increases in defaulted commercial mortgage-backed securities (CMBS) last month, of 24 and 18 basis points, respectively. Both companies show the office sector with the greatest increases in delinquencies across the five core property types in November.

Reports from three different agencies paint distinct pictures of the rate at which loans held in commercial mortgage-backed securities (CMBS) are going bad. Two tracked declines in the CMBS delinquency rate for during October - one says it's the first drop in over a year, the other says it's the first in nearly three years - and the third claims delinquencies are still rising on commercial mortgages. Hotels and multifamily complexes claim the highest delinquency rate among property types in all three reports.