The total volume of distressed multifamily assets at the nation’s banks dropped by $2.23 Billion. The biggest gains were made in the non-accrual column where US banks shed 32% of their troubles. REO and 90+Day Late Loan (and still accruing) totals were both reduced by over 10%.
Loans at the beginning of the default cycle (30-89 days late) increased by 6.2% but with 4.2% fewer institutions reporting the problem.
The coming quarters will tell whether or not this is the beginning of a significant turnaround in the multifamily space. Certainly if you’re watching multifamily CMBS delinquencies you’re aware that this quarter saw a record rate of 17.4%. These conflicting indicators could be the result of a couple of factors. One is, as was the case with commercial real estate report there were surely some multifamily assets that were removed from the reporting cycle after being assumed by the FDIC. We’ll aim to get a handle on just how much over the course of the upcoming quarter.
Something else to consider is the fact that the loan sizes in the CMBS market can be so large that a single delinquency (for example the $2.8B delinquency cited in the above referenced article) throws the curve.