A wave of opportunity exists for apartment buyers who are preparing for the wave of foreclosures and REO’s coming to the market over the next two-three years. According to the recent report from the Mortgages Bankers Association, the delinquency rate for mortgages on one- to four-unit properties rose to a seasonally adjusted 9.24% of all mortgage loans outstanding in the second quarter, up from 9.12% in the first quarter. Mortgages somewhere in the foreclosure process reached 4.3% of all mortgages, up from 3.85% in the first quarter. For apartment units 5 units or more the damage is no as bad as the 1-4 unit rate.
There is approximately $205 billion multi-family loans currently held by institutions and servicing companies. To help put this into perspective, if 5% of all the existing apartment loans go soar (including the 1-4 units), then we could see approximately 18,000 apartment loans underwater with bad loans equaling $10 billion. Significant numbers, which is cause for concern.
Loans held by commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac are doing much better. However, the rate of delinquency is climbing at a rapid pace. See http://www.cpexecutive.com/cpn/finance/Low-but-Still-Rising-1369.shtml
After the first quarter 2009 the 30 day delinquency rate for CMBS loans totaled 1.85% and a rate of 2.28% for banks and thrifts. Life companies and Fannie/Freddie were under the 1% mark.
There is coming the day where there will be good opportunities for investors who have the cash to purchase either the notes or the properties where delinquencies exist. Banks do not want these toxic loans on their books.
By Michael Duhs, Managing Broker of East West Commercial at (949) 939-8352, a Commercial REO and Apartment REO specialist based in southern California. Contact http://www.EastWestCommercial.com, http://www.CommercialREOs.tv, or http://www.REOapartments.tv for your source for properties available or coming to market. East West Commercial specializes in the counties of Los Angeles, Orange County, San Diego, Riverside and San Bernardino.
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