Fitch: Robust CRE Performance Evident in Declining U.S. CMBS Delinquencies.CHICAGO -- Fitch Ratings' U.S. CMBS CMBS See: Commercial Mortgage Backed Securities loan delinquency index continues to fall which is consistent with the robust performance of most U.S. commercial real estate (CRE CRE Commercial Real Estate CRE Corporate Real Estate CRE Commission for Racial Equality (Scotland) CRE CCD (Charge Coupled Device) and Readout Electronics CRE Camp Response Element ) markets in 2005. CMBS delinquencies have been steadily trending downward since hitting their peak at the end of 2003. Although most markets are performing well today, a lingering legacy may remain from the recent real estate downturn (2001-2003). The delinquency index is heavily weighted toward loans in foreclosure foreclosure Legal proceeding by which a borrower's rights to a mortgaged property may be extinguished if the borrower fails to live up to the obligations agreed to in the loan contract. and REO reo Noun NZ a language [Maori] properties (61.2% by balance) when stratified stratified /strat·i·fied/ (strat´i-fid) formed or arranged in layers. strat·i·fied adj. Arranged in the form of layers or strata. by loan status. 'The majority of loans in foreclosure and REO properties (88%) were secured in older vintage deals issued between 1997 and 2001,' according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Fitch Senior Director Patty Bach. The largest dollar concentration of foreclosures and REOs are located in Texas (23%) and Michigan (13%), both power-of-sale states that allow quicker loan transitions from foreclosure to REO. Property performance in some Texas markets has benefited from the relocation of displaced residents and businesses as a result of last year's gulf hurricanes. Interestingly, there is a much higher concentration of REO properties (93%) than loans in foreclosure (7%) in Texas, which may indicate credit problems in Texas are falling. In contrast, Michigan has slightly more loans in foreclosures than REO properties, 53% and 47%, respectively, which according to Bach, 'indicating large automaker layoffs may start to affect CMBS performance with exposure to the area.' Overall, Fitch's U.S. CMBS loan delinquency index dropped three basis points (bps) this month to 0.68%. The decline is attributable to loans becoming less than 60-days delinquent, being paid off, defeased, or liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. and therefore dropping out of the delinquent universe. One new deal was added to the index, but it was not large enough to dilute the delinquency percentage. Katrina-related delinquencies dropped 7% by balance on the month and now stand at $187.3 million. REO properties rose to 20.7% of Katrina-related delinquencies up 260bps from last month. 'Katrina delinquencies are declining overall, but chronic delinquencies (90-day delinquencies and REO properties) now total $180.9 million (96.6% of all Katrina delinquencies), 6% ($9.8 million) higher than last month.' stated Bach. The seasoned delinquency index, which omits transactions with less than one year of seasoning, dropped eight basis points this month to 0.92%. The seasoned index is also impacted by the addition of new deals as they age; this month newly seasoned deals accounted for five basis points of the eight basis points decline. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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