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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 52 July 2025 J O U R N A L cies rose across all major capital sources in the first quarter of 2025, reflecting growing pressure on certain property sectors and loan types," said Reggie Booker, MBA's Associate VP of Com- mercial Real Estate Research. "While delinquency rates remain relatively low for most investor groups, the uptick in CMBS delinquencies signals heightened stress in parts of the market that lack re- financing options or other challenges." The top five capital sources—com- mercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac—are examined in MBA's quarterly research of commercial default rates. Collectively, these investors own about 80% of the outstanding debt from commercial mortgages. Each capital source's metrics for monitoring loan performance are included in MBA's analysis. Delinquency rates are not directly compared between groups since each tracks delinquency differently. For instance, Freddie Mac does not include loans that are in payment forbearance provided the borrower is adhering to the forbearance arrangement, but Fannie Mae classifies such loans as delinquent. Based on the unpaid principal bal- ance (UPB) of loans, delinquency rates for each group at the end of Q1 2025 were as follows: • Banks and thrifts (90 or more days delinquent or in non-accrual): 1.28%, an increase of 0.02 percentage points from Q4 2024; • Life company portfolios (60 or more days delinquent): 0.47%, an increase of 0.04 percentage points from Q4 2024; • Fannie Mae (60 or more days delin- quent): 0.63%, an increase of 0.06 percentage points from Q4 2024; • Freddie Mac (60 or more days de- linquent): 0.46%, an increase of 0.06 percentage points from Q4 2024; and • CMBS (30 or more days delinquent or in REO): 6.42%, an increase of 0.64 percentage points from Q4 2024. Although they are frequently backed by single-family residential development projects rather than income-producing properties, con- struction and development loans are included in many regulatory definitions of "commercial real estate" even though they are typically not included in the numbers presented in this report. Loans secured by owner-occupied commercial properties are included in the FDIC de- linquency rates for bank and thrift-held mortgages that are presented here. FHA CLARIFIES SERVICING RULES TO PRESERVE BORROWER PROTECTIONS T he Federal Housing Administra- tion (FHA) has issued Mortgagee Letter (ML 2025-14), which clar- ifies and streamlines servicing require- ments for FHA-insured loans—reducing burdens on servicers while maintaining strong borrower protections. The updated guidance provided in Mortgagee Letter 2025-14 (Updates to Modernization of Engagement with Borrowers in Default and Loss Mitiga- tion) expands borrower contact require- ments in a way that makes it easier to reach more borrowers in a timely and effective manner. FHA also provided clarity in Reg X requirements and issued technical corrections to recent loss miti- gation policies. Released in December 2024, Mort- gagee Letter 2024-24 (Modernization of Engagement with Borrowers in Default), was issued to expand ways for borrow- ers to meet with lenders following the success of remote meetings throughout the pandemic. After review of this pol- icy, originally planned to go into effect July 1, the U.S. Department of Housing & Urban Development (HUD) felt that the provisions in the prior guidance required changes. "The Community Home Lend- ers of America commends FHA for thoughtfully eliminating unnecessarily burdensome servicing rules while pre- serving the critical duty of servicers to work with distressed borrowers to avoid foreclosure," said Scott Olson, Execu- tive Director of the Community Home Lenders of America (CHLA), a national non-profit association focused on small and mid-sized community-based mort- gage lenders. "This is a meaningful step toward aligning compliance with prac- tical servicing realities—particularly for independent mortgage banks that are » Listing REOs for over 14 years » Woman Owned Brokerage (WOSB Certified) » Full service including CFKs, quick BPOs, contractors for field services and repairs available. » Funds available to cover expenses for repairs and utilities » Sufficient staff to best service our REO assignments YOUR FLORIDA REO Karuna Singhvi SFR, ABR, AWHD, CIPS, MRP, EPRO, PSA, RSPS, SRS (407) 760-3297 karunasellsflorida@gmail.com www.karuna.realtor Servicing Orange, Seminole, Volusia, Lake and Osceola Counties