Refinances Surge

May 6, 2011 By MortgageDaily.com staff

Declining rates this week helped spark lots of new refinance activity, though a healthy increase was also recorded for purchase business. Meanwhile, the spread between jumbo mortgages and conforming loans tumbled. The U.S. Mortgage Market Index from Mortech Inc. and MortgageDaily.com for the week ended Friday rose to 227 from the previous week's 203. But the index still sits below its 239 level of a year ago. Driving the increase was a 15 percent jump in refinance inquiries. Refinance share rose to 47 percent from 45 percent. This week's share reflected a 34 percent rate-term share and a 13 percent cashout share. Purchase inquiries were also stronger -- up 9 percent from last week. Conventional lenders reaped the rewards of the latest boost in business, with the Conventional MMI climbing 13 percent. The FHA MMI was only 3 percent higher. The share of shoppers who opted for an adjustable-rate mortgage fell to 10.45 percent from last week's 10.79 percent. Still, overall ARM inquiries were up 10 percent. The average 30-year fixed-rate conforming mortgage was priced at 4.843 percent this week, falling from 4.940 percent last week and 5.065 percent 12 months earlier. Compared to the conforming 30-year mortgage, the jumbo 30-year was priced more attractively this week. The jumbo-conforming spread dropped to 53 BPS from last week's 60 BPS. The 15-year also gained in appeal, with the spread between the 15-year and 30-year mortgage inching up to 80 BPS from 79 BPS seven days prior.

Commercial Real Estate: Big Trouble, Small Bailout??

Commercial Real Estate: Big Troubles, Small Bailout
Maurna Desmond, 09.04.09, 12:19 PM ET

High-flying financiers are sweating a coming wave of mortgage defaults tied to office and apartments buildings. Unfortunately for them, too big to fail doesn't apply to the $6.5 trillion U.S. commercial real estate market.

Unlike the multitrillion-dollar government intervention launched to keep the American housing market from cratering, Washington has done little to ease a looming crunch on the commercial side. "Housing probably gets more attention because it's a big part of household wealth and, at its peak, it was a much bigger portion of the economy than [commercial] real estate," says Abiel Reinhart, an economist at JP Morgan.

"It's one thing to bailout mom and pops on Main Street but another to bailout these big boys with big paychecks," said Peter Slatin of Real Capital Analytics, referring to the government's multi-pronged effort to help struggling homeowners. "People were trading buildings like trading cards."

The commercial real estate debt market, half mortgage-backed securities and half whole loans, has been virtually frozen since markets seized up in the summer of 2007. The situation will get worse as loans come due and values continue to deteriorate. "This is a drip, drip, drip transfer of ownership, not a flood of properties hitting the market," said Slatin.

California billionaire and Colony Capital Chief Executive Tom Barrack talked with Forbes in July about the struggle for survival in a downturn. "The object of the drill for everyone in commercial real estate--and this is everyone in the world--is just get to the other side of Death Valley. If you can make it to the other side of Death Valley, there's hope." (See "Commercial Real Estate: From Bad To Worse.")

The Federal Deposit Insurance Corp.'s Public Private Investment Program (PPIP) was a program supposed to help the sale of illiquid assets by combining private capital with government leverage. But it's not yet off of the ground. The only government lending program now in place is the New York Federal Bank's Term Asset-backed Lending Facility (TALF). This program recently expanded to include bonds backed by commercial mortgage-backed securities, allowing holders of CMBS to refinance their loans into lower interest bonds.

So far, just $2.1 billion has been issued through this program. Larger firms like Vornado, Westfield, DDR and Simon Properties are positioned to complete TALF transactions, according to Stephen Blank, senior fellow at the Urban Land Institute. "I don't think people expect TALF will save the entire industry, but it will jump start the first round of securitizations," says Blank.

Unlike the broad sweep of turmoil caused by the collapse of housing, most of the pain related to commercial real estate will be absorbed by investors and the firms that loaned them money, especially regional banks. Life insurance companies and pension funds like TIAA-CREF, CALPERS and CALSTERS, will also feel the pinch. Private equity funds of all sizes, from the Broadway Partners and Tishman Spier to the Carlyle Group, bought big using leverage, intensifying pain as the rout continues.

Most Americans will feel the impact through diminished municipal tax revenue, hurting funding for schools and other government-funded enterprises. Swaths of empty office buildings also have the potential to blight central business districts.

Industry advocates understand that there is limited sympathy for commercial real estate players and are tailoring their appeals accordingly. "We've been careful not to be painted as an industry looking for a bailout," says Chip Rodgers of the Real Estate Roundtable, a trade group. "TALF is a collateralized loan program. It's not a giveaway."

Others warn that helping stakeholders too much could slow a recovery, risking an American version of Japan's lost decade. "Part of the process is letting lenders and borrowers duke it out," said Tony Thompson, chief executive of Thompson National Properties and former board chairman of Grubb & Ellis. "Some people are gonna die and some are gonna reinvent themselves and some are gonna integrate themselves into the government fabric."

Tough love isn't the only solution. The Real Estate Roundtable estimates some $1 trillion in new capital is needed to restructure the $300 billion to $500 billion loans that need to be refinanced each year for the next eight years. "There is a need for the government to step in and develop a mechanism to bridge the gap. Everybody is still in a holding pattern," said Rodgers.

Of course it's not all bad news. For investors with cash, there will be plenty of opportunities for predatory plays. "There already has been a lot of carnage and there's likely to be a lot more," said Rodgers.

If you are about to be foreclosed on a commercial property or know someone who is and can't get a refinance, we can help!!   Call UCS

Delinquencies Up in latest report

Washington, DC (September 2, 2010) –


Delinquency rates were mixed in the second quarter for commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.


The delinquency rate for loans held in commercial mortgage-backed securities (CMBS) is the highest since the series began in 1997.  Delinquency rates for other groups remain below levels seen in the early 1990’s, some by large margins.


Between the first quarter and second quarter 2010, the 30+ day delinquency rate on loans held in CMBS rose 1.39 percentage points to 8.22 percent.  The 60+ day delinquency rate on loans held in life company portfolios decreased 0.02 percentage points to 0.29 percent.  The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.01 percentage points to 0.80 percent.  The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.03 percentage points to 0.28 percent.  The 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained unchanged at 4.26 percent.


“Different investor groups lend in different ways and on different types of properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “Those differences are becoming more evident as the economy continues to struggle to work its way out of the recession.  Life insurance companies, Fannie Mae and Freddie Mac continue to see relatively low delinquency rates on their commercial and multifamily mortgages, the delinquency rate on banks’ commercial and multifamily mortgages appears to have reached a plateau, and the delinquency rate for loans in CMBS continued to climb during the period.  Performance across all investor groups will continue to depend on economic growth and its ability to generate demand for commercial real estate space.”


Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact that they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties.
The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, CMBS, life insurance companies, Fannie Mae and Freddie Mac.  Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.


The analysis incorporates the same measures used by each individual investor group to track the performance of their loans.  Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.
Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the second quarter were as follows:


• CMBS:  8.22 percent (30+ days delinquent or in REO);
• Life company portfolios: 0.29 percent (60+days delinquent);
• Fannie Mae:  0.80 percent (60 or more days delinquent)
• Freddie Mac:  0.28 percent (60 or more days delinquent);
• Banks and thrifts:  4.26 percent (90 or more days delinquent or in non-accrual).

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.