Thursday, August 19, 2010

Realpoint LLC CMBS July 2010 Snapshot: Not Out of the Woods

"In July 2010, the delinquent unpaid balance for CMBS increased by only $387.9 million, up to $60.84 billion from $60.45 billion a month prior. This small growth in delinquency followed a six-month average growth of $3.136 billion per month from January through June of 2010 and a similar three-month average growth of $3.135 billion per month from April through June of 2010. Outside of a substantial $3.82 billion decrease in the 30-day category, the remaining four delinquency categories increased, fueled by further delinquency degradation and credit deterioration. The distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 31st straight month – up by $4.05 billion (9%) from the previous month and $32.6 billion (198%) in the past year (up from only $16.49 billion in July 2009). Overall, the delinquent unpaid balance is up 137% from one-year ago (when $25.68 billion of delinquent unpaid balance for July 2009), and is now over 27 times the low point of $2.21 billion in March 2007.

The total unpaid balance for CMBS pools available for review for the July 2010 remittance was $780.97 billion, down from $784.86 billion in June 2010. Both the delinquent unpaid balance and delinquency percentage over the trailing twelve months are...clearly trending upward. The resultant delinquency ratio for July 2010 of 7.79% (up from the 7.7% reported one month prior) is over two times the 3.135% reported one-year prior in July 2009 and over 27 times the Realpoint recorded low point of 0.283% from June 2007. The increase in both delinquent unpaid balance and percentage reflects a steady increase from historic lows in mid-2007; however, such gauges of delinquency are now being impacted by the rapid growth in liquidations on a monthly basis and a potential slow-down in the reporting of new delinquency for the remainder of 2010."