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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 62 April 2024 J O U R N A L OUTSTANDING Q4 COMMERCIAL, MULTIFAMILY MORTGAGE DEBT INCREASED BY BILLIONS A ccording to a report from the Mortgage Bankers Association (MBA), the level of commercial and multifamily mortgage debt that was outstanding during the fourth quarter of 2023 increased $130 billion, or 2.8%, year over year. In total, the MBA's report stated that total mortgage debt rose by 0.9%, or $41.8 billion, to a total of $4.69 trillion. Multifamily mortgage debt grew by $25 billion, or 1.2%, during the fourth quarter alone and by $88.5 billion, or 4.4%, year over year. "The amount of commercial mortgage debt outstanding grew in the final quarter of 2023 and for the year as a whole," said Jamie Woodwell, MBA's Head of Commercial Real Estate Research. "However, the increase was among the slowest paces since the mid-2010s. Every major capital source in- creased its mortgage holdings during the year. Mortgage originations were down by roughly 50% in 2023 compared to 2022, but that meant that few loans were paying off, helping maintain portfolio sizes even in the face of lower inflows." The four major investor groups are bank and thrift; commercial mort- gage-backed securities (CMBS), collater- alized debt obligation (CDO), and other asset-backed securities (ABS) issues; federal agency and government-spon- sored enterprise (GSE) portfolios and mortgage-backed securities (MBS); and life insurance companies. MBA's 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 CMBS, CDOs, and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO, and other ABS issues). According to the MBA, commer- cial banks continue to hold the largest share (38%) of commercial/multifamily mortgages at $1.8 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifami- ly mortgages at $1.0 trillion (21% of the to- tal). Life insurance companies hold $733 billion (16%), and CMBS, CDO, and other ABS issues hold $593 billion (13%). Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $1.0 trillion (48% of the total), followed by commercial banks with $612 billion (29%), life insurance companies with $235 billion (11%), state and local governments with $116 billion (6%), and CMBS, CDO, and other ABS issues with $67 billion (3%). Changes in Commercial & Multi- family Outstanding Mortgage Debt In the fourth quarter of 2023, Agency and GSE portfolios and MBS saw the largest rise in dollar terms in their holdings of commercial/multi- family mortgage debt, with an increase of $15.5 billion (1.6%). Commercial banks increased their holdings by $14.8 billion (0.8%), life insurance companies increased their holdings by $9.9 billion (1.4%), and nonfinancial corporate business increased their holdings by $1.3 billion (1.1%). Finance companies saw the largest decline (5.0%) at $1.9 billion. In percentage terms, agency and GSE portfolios and MBS saw the largest increase—1.6%—in their holdings of commercial/multifamily mortgages. The $25.0 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2023 repre- sented a 1.2% increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $15.5 billion (1.6%), in their holdings of multifamily mort- gage debt. Commercial banks increased their holdings of multifamily mortgage debt by $5.3 billion (0.9%), and life insurance companies increased holdings by $5.2 billion (2.2%). Finance companies saw the largest decline (8.9%) in their holdings of $1.2 billion. In percentage terms, life insurance companies recorded the largest increase in holdings of multifamily mortgages (2.2%), and finance companies saw the biggest decrease (8.9%). GAUGING THE STATE OF FORBEARANCES NATIONWIDE T he Mortgage Bankers Associa- tion (MBA) reports in its Loan Monitoring Survey that the total number of loans now in forbearance remained unchanged month over month at 0.22% as of February 29, 2024. The MBA estimates that 110,000 U.S. homeowners are currently in forbearance plans and that mortgage servicers have pro- vided forbearance plans to approximately 8.1 million borrowers since March 2020. In February, the share of Fannie Mae and Freddie Mac (GSE) loans in forbearance declined just one basis point from 0.13% to 0.12%, while Ginnie Mae loans in forbearance increased by one basis point from 0.39% to 0.40%, and the forbearance share for portfolio loans and private-label securities (PLS) increased just one basis point from 0.28% to 0.29%. Total loans serviced that were current (not delinquent or in foreclosure) as a percent of servicing portfolio volume (#) increased to 95.73% (on a nonseasonally adjusted basis) in February 2024, up six basis points from 95.67% in January 2024 and down from 95.76% one year ago. Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/partial claims, loan modifica- tions) that were current as a percent of total completed workouts were 75.68% in February 2024, up from 74.88% the prior month and down from 76% one year ago. The Reach of Unemployment on Forbearances The Bureau of Labor Statistics (BLS) reported that total nonfarm payroll