WASHINGTON (MNI) – The following was issued Thursday morning by the
Mortgage Bankers Association:

Commercial/Multifamily Mortgage Debt Outstanding
Increased For First Time Since 2009

The level of commercial/multifamily mortgage debt outstanding
increased by 0.1 percent in the second quarter of 2011, the first
quarterly increase since the third quarter of 2009, according to the
Mortgage Bankers Association.

The $2.4 trillion in commercial/multifamily mortgage debt
outstanding was $3.5 billion higher than the first quarter 2011 figure.
Multifamily mortgage debt outstanding rose to $802 billion, an increase
of $3.9 billion or 0.5 percent from the first quarter.

“For the first time in a year-and-a-half, new commercial and
multifamily mortgage originations outpaced the paying off and paying
down of existing loans,” said Jamie Woodwell, MBA’s Vice President of
Commercial Real Estate Research. “Increases in the balance of mortgages
held and insured by life insurance companies, Fannie Mae, Freddie Mac
and FHA outpaced declines among banks and thrifts and CMBS issues.”

The analysis summarizes the holdings of loans or, if the loans are
securitized, the form of the security. For example, many life insurance
companies invest both in whole loans for which they hold the mortgage
note (and which appear in this data under “life insurance companies”)
and in commercial mortgage-backed securities (CMBS), collateralized debt
obligations (CDOs) and other asset backed securities (ABS) for which the
security issues and trustees hold the note (and which appear here under
CMBS, CDO and other ABS issues).

MBA recently improved its reporting of commercial and multifamily
mortgage debt outstanding. The new reporting excludes two categories of
loans that had formerly been included – loans for acquisition,
development and construction and loans collateralized by owner-occupied
commercial properties. By excluding these loan types, the analysis here
more accurately reflects the balance of loans supported by office
buildings, retail centers, apartment buildings and other
income-producing properties that rely on rents and leases to make their
payments.

Commercial banks continue to hold the largest share of
commercial/multifamily mortgages, $792 billion, or 33 percent of the
total.

CMBS, CDO and other ABS issues are the second largest holders of
commercial/multifamily mortgages, holding $617 billion, or 26 percent of
the total. Agency and GSE portfolios and MBS hold $332 billion, or 14
percent of the total, and life insurance companies hold $304 billion, or
13 percent of the total. Many life insurance companies, banks and the
GSEs purchase and hold CMBS, CDO and other ABS issues. These loans
appear in the CMBS, CDO and other ABS categories.

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

Looking solely at multifamily mortgages, agency and GSE portfolios
and MBS hold the largest share, with $332 billion or 41 percent of the
total multifamily debt outstanding. They are followed by banks and
thrifts with $216 billion, or 27 percent of the total. CMBS, CDO and
other ABS issues hold $96 billion, or 12 percent of the total; state and
local governments hold $73 billion, or 9 percent of the total; life
insurance companies hold $48 billion, or 6 percent of the total; and the
federal government holds $14 billion, or 2 percent of the total.

CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING

In the second quarter of 2011, life insurance companies saw the
largest increase in dollar terms in their holdings of
commercial/multifamily mortgage debt – an increase of $4 billion or 1.5
percent. Agency and GSE portfolios and MBS increased their holdings of
commercial/multifamily mortgages by $4 billion or one percent.
Commercial banks, CMBS, CDO and other ABS issues, finance companies, the
household sector and nonfinancial corporate business all decreased their
holdings.

In percentage terms, REITs saw the largest increase in their
holdings of commercial/multifamily mortgages, an increase of 8 percent.
The household sector saw their holdings decrease 7 percent.

CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING

The $4 billion increase in multifamily mortgage debt outstanding
between the first quarter and second quarter of 2011 represents a 0.5
percent increase. In dollar terms, agency and GSE portfolios and MBS saw
the largest increase in their holdings of multifamily mortgage debt, an
increase of $4 billion, or 1 percent. Commercial banks increased their
holdings of multifamily mortgage debt by $1 billion, or 0.6 percent.
Life insurance companies increased by $701 million, or 1.5 percent.
CMBS, CDO, and other ABS issues saw the biggest decrease in their
holdings of multifamily mortgage debt, by $1.6 billion, or 1.6 percent.

In percentage terms, life insurance companies recorded the largest
increase in holdings of multifamily mortgages, at 1.5 percent.
Nonfinancial corporate business saw the biggest decrease, at 59 percent.

MBA’s analysis is based on data from the Federal Reserve Board’s
Flow of Funds Account of the United States and the Federal Deposit
Insurance Corporation’s Quarterly Banking Profile.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$$AG$,MAUDS$,M$U$$$]