A Decade of Mortgage Delinquency Rates and Default Rates

According to data released by the Federal Reserve Board, the levels for Delinquency Rates and Charge-off Rates for mortgages related to single family homes and commercial properties have reached decade-level highs.In Q3-2008, Delinquency rates for mortgages on single family homes and Commercial Real Estate both were ~5%, and the charge-off rate for these loans were 1.1% for Commercial loans and 1.45% for single family home mortgages.

Commercial Loan defaults could Triple

Commercial Loan Defaults May Triple as Rental Income Declines

By Hui-yong Yu

Dec. 22 (Bloomberg) -- U.S. commercial properties at risk of default could triple if rental income from office, retail and apartment buildings drops by even 5 percent, a likely possibility given the recession, according to research by New York-based real estate analysts at Reis Inc.

Lenders that used optimistic rent estimates to grant mortgages beginning in 2005 stand to lose as much as $23.1 billion, or 7.02 percent, of total unpaid balances if landlords lose 5 percent of net operating income, according to Reis. Analysts examined data on 22,890 properties that together may account for unpaid loans of about $329 billion in 2009, said Victor Calanog, director of research.

Banks are at risk as office vacancies are forecast to rise to 15.6 percent next year from an estimated 14.6 percent at the end of 2008. Lenders who sold commercial mortgage-backed securities to pension funds, investment banks and foreign governments have been hit by more than $1 trillion in losses and asset writedowns connected to bad residential loans.

Read the rest of the Bloomberg story here