Hhhmmmm......

Go figure, commercial lenders, that give loans that make financial sense, are still in good shape. Maybe residential lenders should learn how to price a loan correctly and make sure that the borrower can actually afford the payment. But hey, what the heck do I know.

Daily Real Estate News | April 18, 2008

Commercial Mortgages Still in Good Shape

Delinquencies in U.S. commercial mortgages have risen slightly this year, according to the Commercial Mortgage Securities Association (CMSA). But for the most part, the market is in good shape.

The current delinquency rate is about 0.4 percent, up from 0.25 percent during the final quarter of 2007. The trade group says delinquencies could reach 1.5 percent to 2 percent before the end of the year.

That’s still low compared with residential mortgages, and compared with commercial mortgages historically. The worst delinquency rate was in 1992, when it averaged 7.53 percent. Fitch ratings on Tuesday said that situation is unlikely to be repeated.

"The commercial real estate markets are not facing the same significant oversupply that plagued the markets in the late eighties and early nineties, plus tax treatment of commercial real estate projects has been relatively steady," Fitch Managing Director Bob Vrchota said in a statement.

CMSA President Lee Cotton, complained that investors misunderstand the situation and consider securities connected to commercial lending tainted by the same problems facing residential mortgages.

"We are saying, stop. We've got 40 basis points of delinquencies. We've got in-balance markets. We've got sophisticated borrowers. We are not the same business," he said.

Source: Reuters News, Lisa Lambert and Avesha Rascoe (04/15/2008)