Tag Archives: Moody’s

Prices on U.S. commercial real estate fell 4.2 percent in March, according to a national index released by Moody's Investors Service this week. The latest drop brings the index down to its lowest level since its peak in October 2007. A high volume of distressed transactions are weighing on price performance, Moody's says. However, the agency's analysts note that they've seen a pick-up recently in the number of deals trading hands overall, which they see as a positive sign for the commercial real estate market as it sets the stage for recovery.

Fannie Mae and Freddie Mac recently announced they will be issuing new guidelines this summer that will align their procedures for handling past due mortgages and implement a new incentive and penalty structure based on individual servicers' performance. Moody's Investors Service says this new directive - in particular the monetary motivation involved - will likely shift servicers' focus to loans backing the GSEs' mortgage bonds and away from loans in private-label residential mortgage-backed securities (RMBS).

Loans backing commercial mortgage-backed securities (CMBS) that were liquidated at a loss in the first quarter carried an average loss severity of 38 percent, according to Moody's Investors Service. That figure represents a decline from 40 percent for the previous quarter and was the first reduction in the severity of losses since the fourth quarter of 2008. During the month of April, CMBS loans totaling $2.9 billion became newly delinquent, while previously delinquent loans for $3.0 billion became current, worked out, or were liquidated.

Industry analysts, economists, even lawmakers generally concede that the pooling of risky subprime mortgages into secondary market securities fueled the economic collapse that almost brought the nation's financial system to its knees. But New York Attorney General Eric Schneiderman is looking for proof that major financial institutions were hocking these dicey mortgage-backed securities during the days leading up to the collapse of the housing market, knowing that these transactions would result in billions of dollars in mortgage losses.

Fiserv, Inc. on Monday released an analysis of home price trends in more than 375 U.S. markets. While residential property values are continuing to fall on a year-over-year-basis in three-quarters of the metros, Fiserv sees signs of stabilization on the horizon. The company contends that the slide in prices has greatly improved home affordability. This dynamic, combined with growing economic strength, has prompted Fiserv's projection that average U.S. home prices will stabilize in the third quarter of this year.

After two years of no issuance, the credit quality of commercial-mortgage backed securities (CMBS) issued post recession has been strong, according to a new report from Moody's Investors Service. Since issuance resumed in 2010, Moody's has rated eight ""new generation"" or CMBS 2.0 conduit deals, and the company says contrary to some market reports, current underwriting is vastly improved compared to four years ago. As the credit cycle continues, however, the ratings agency expects the leverage of the loans in transactions to increase.

Prices on commercial real estate have slipped for three consecutive months and are now dangerously close to double-dip territory due to the large share of distressed transactions recently, according to Moody's Investors Service. The agency reported Wednesday that its index of commercial property prices fell another 3.3 percent in February. The index is down 4.9 percent from 12 months earlier and only 0.8 percent above its post-peak low set in August 2010. Approximately 29 percent of the transactions tracked in February were distressed.

The delinquency rate on loans included in U.S. commercial mortgage-backed securities (CMBS) conduit/fusion transactions inched down 2 basis points in March to 9.16 percent, Moody's Investors Service reported Thursday. More significantly, the agency says the total dollar balance of delinquent loans declined in March, slipping to $56.5 billion from $56.8 billion the month before. It's the first monthly decline in the balance since October 2007.

Performance of commercial real estate in the United States is bifurcated, according to Moody's Investors Service, with larger properties in major markets recovering value while distressed properties remain well off the peak. New research released by the credit ratings agency shows that prices on a sub-set of non-distressed properties, which have traded for more than $10 million, are down 19 percent from October 2007. Prices of distressed properties, on the other hand, have tumbled 54 percent since October 2007.

The delinquency rate on loans included in commercial mortgage-backed securities (CMBS) conduit and fusion transactions increased 17 basis points in February to 9.18 percent, according to Moody's Investors Service. Moody's noted that while still rising, increases in CMBS delinquencies have been moderating since June 2010. During February loans totaling $4.1 billion became newly delinquent, while previously delinquent loans totaling $3.0 billion became current, worked out, or liquidated.