CMBS Delinquency Rates Accelerate
The latest from our friends over at Realpont (nothing good):
In September 2009, the delinquent unpaid balance for CMBS increased to $31.73 billion from $28.16 billion a month prior. Such delinquent unpaid balance is up an astounding 583% from one-year ago (when only $4.64 billion of delinquent balance was reported for September 2008), and is now over 1 14 times the low point of $2.21 billion in March 2007. An increase in four of five delinquent loan categories was noted in September, with a slight decline experienced in the REO bucket (reflected in the increased liquidations for September). Despite such decline, the distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 22nd straight month – up by $1.48 billion (8%) from the previous month and over $16.65 billion (547%) in the past year (up from only $3.044 billion in September 2008).
And here is what a recoveryless, and soon to be crashful recovery looks like:
The resultant delinquency ratio for September 2009 of 3.94% (up from the 3.347% reported one month prior) is now over seven times the 0.54% reported one-year prior in September 2008 and almost 14 times the Realpoint recorded low point of 0.283% from June 2007. The increase in both delinquent unpaid balance and ratio over this time horizon reflects a steady increase from historic lows in mid-2007.
And visually:
Much more in the original research report from Realpoint.
(4 votes)
on Mon, 11/02/2009 - 15:52
#117536
ZeroHedge,
Is there a possibility that the inside dope that you bring to retail investors/traders, that usually has an apocalyptic tone, has led to a level of bearish positioning in the market that has added some more fuel for the light volume drive higher in risk assets?
on Mon, 11/02/2009 - 16:08
#117549
To paraphrase Stephen Colbert from another context: Maybe it's just that the economic facts have a well-known apocalyptic bias.
on Mon, 11/02/2009 - 16:40
#117582
Well played, Anon. +1
on Mon, 11/02/2009 - 17:08
#117607
Anon,
I am not saying data is being misrepresented here. But the depth and breadth of data presented here usually is not made so available. In the past one would need a hunch and need to dig around for this type of info. In addition the data, without zero's color, would probably not be properly interpreted. So data is presented and interpreted for the reader.
So we are left with amateurs being influenced by information that they usually wouldn't be exposed to. This may cause them to go out and perpetual try to short the market, ignoring the factors such as a flood of liquidity and performance chasing by PM's.
Obviously, risk assets are being challenged here. My question is backwards looking.
on Mon, 11/02/2009 - 22:13
#117925
Interesting question.
I don't think the amateurs (like me) are affecting the market much. I do think we'll learn from any mistakes we make, as a group.
I put this to you: surely having more individuals in the market, with better access to information (and interpretation) makes it more of a real market over time?
on Tue, 11/03/2009 - 17:31
#119003
"So we are left with amateurs being influenced by information that they usually wouldn't be exposed to."
you're kidding, right? god forbid "amateurs" are given information that they can act upon as they so choose. time to turn the internet off so the serfs can't form an opinion based on research, right congressman rockefeller? save me from myself! please! sheesh.
on Tue, 11/03/2009 - 19:18
#119123
So you're saying your a bar chart virgin or a pie chart virgin? Come on fess up. Which is it?
on Mon, 11/02/2009 - 17:17
#117616
Anon, don't be a stooge. If ZeroHedge had any effect on the markets whatsoever we never would have seen the massive run-up since March 6.
We are ants compared to the hedge funds and the Goldman prop trading desk.
on Mon, 11/02/2009 - 20:43
#117838
but Link
that run since March hasn't had as much irrational exuberance precisely because of the existence of entities just like ZH, and ZH in particular
just because one can't point to a full point here or there decline in any measure as being due to the influence of 'some' agent of influence doesn't discount the affect of that agent on influencing whatever measure is relevant
and if you agree that ZH has found itself with a massive (if mostly unseen) audience, then you would also have to agree that the girth and breadth of detailed information available here has directly played a part in the conscious thought processes of not only retail punters, but those seasoned professional who eat the more esoteric data available here during their casual morning jogs
quite simply - from little things big things grow - be happy to be sitting on the shoulders of an emerging giant - I am
good luck
on Mon, 11/02/2009 - 17:04
#117602
I remember regretting get my 401k out of stock market in early Sept of '07 because I saw the cracks starting with subprime blowing up in July '07, indicating to me the progressive failure was starting...I was kicking myself in Oct and Nov 07 when market topped out, I was a little annoyed when even as late as Spring 2008 knowing I could have gotten out then at much the same level as Sept 07 even thought he fundementals were, in my mind much more obviously worse with Bear Sterns even waking up the most Ostriched trader...however, the crash I, and many others saw coming, finally did come and getting out at 13k may me pretty calm and secure during the ensuing mess.
This time I know, even if market surprises and hits 11k, I know it will crash again as fundementals now way worse, even with QE/Stim of '08 and '09 and now with not much left ammo left in QE/Stim armory.... and while I may not have picked the absolute bottom to get back in (7500) and probably did not pick the top to get out,(9800), I can now calmly sit on sidelines.
Being bearish after a 60 percent rally seems a pretty safe bet, not very apocalyptic.
on Mon, 11/02/2009 - 17:09
#117609
rather be doped than a shooter :-)
It's been one heck of a nine crazy years indeed.
Feels like almost gone Deer Hunting.
Hope We'll avoid the aforementioned big bang in any likelihood, but a slow "anemic!" grind is what I fear the most.
on Mon, 11/02/2009 - 17:31
#117629
Commercial Real Estate Debt Spreads Rise as Fed Rejects Bonds
2009-11-02 18:11:29.95 GMT
By Sarah Mulholland
Nov. 2 (Bloomberg) -- Yields on bonds backed by hotel, shopping-center and skyscraper loans rose relative to benchmarks amid concern that a U.S. program to spur lending may see a slowdown in demand after Federal Reserve rejected five securities, according to Barclays Capital.
The gap, or spread, on top-ranked commercial-mortgage backed securities increased 0.15 percentage point to 6.10 percentage points more than benchmark swap rates for the week ended Oct. 29, Barclays data show.
Investors pulled away from commercial mortgage-backed securities after the Federal Reserve said last week that it threw out five bonds that were pledged as collateral for taxpayer loans to purchase the debt. The rejections came as a surprise, and may limit future demand under the program, according to Barclays analysts led by Aaron Bryson in New York.
“The Fed/collateral monitor is more concerned with credit risk than many expected,” the analysts wrote. “TALF investors need to carry out additional credit work before submitting bonds.”
The Fed opened its Term Asset-Backed Securities Loan Facility, or TALF, to so-called legacy commercial-mortgage bonds in July as part of its effort to cleanse bank balance sheets and encourage new lending. The TALF attracts buyers with Fed loans to boost returns. Bonds deemed too risky are rejected by the Fed.
In September, all bonds submitted for purchase with TALF loans were accepted, while October’s rejection rate was the highest since the program started. Loan applications are submitted once a month.
“There does not appear to be one trigger that is used for the determination of acceptable collateral,” Bank of America analysts wrote in an Oct. 28 report.
The Fed may be limiting its exposure to deals from which bonds have been accepted in previous rounds, the Bank of America analysts led by Roger Lehman in New York.
on Mon, 11/02/2009 - 19:08
#117735
what's interesting is that the CMBS product was spawned by the RTC in the early nineties in part by a KC lawyer dude named Atterbury (KC not NYC), its sibling MBS followed soon thereafter though there is some dispute about the identity of its parents - what is interesting is how long it took the chickens of the S&L crisis to come home to roost
on Mon, 11/02/2009 - 19:15
#117745
Earlier this afternoon I got an email from Trepp with October numbers (not September). Delinquencies were even higher. Something close to 5%. Looks like the worst is still to come.
on Mon, 11/02/2009 - 19:30
#117754
That red bar is a green shoot!
Who is actually still paying their rent, lease or mortgage in this country?
on Mon, 11/02/2009 - 19:34
#117757
If you print those charts out in very very tiny print on very tiny small pieces of paper and then eat them the deliquencies stop happening. That's how magical technology really is.
on Mon, 11/02/2009 - 20:20
#117815
Is the FEDs decision not to back CRE with a TARPopotamus QE push, increasing "moral hazard" in a Paulsonian kind of way? Any CRE derived paper is tied to the rail-road tracks of the on-coming market sentiment train, and no hopalong Ben to cut the ropes. Ugly.
To see the CRE mess coming, and not be proactive in Washington, is a testament to "systemic risk" inaction.
Is it just me, do others see problems here?
Perhaps the real facts are just too unpopular for the recovery rhetoric.
Mark Beck
on Mon, 11/02/2009 - 20:44
#117839
Once you run out of fingers to plug in the dike holes, the flood comes.
They know their days are numbered before the big burst.
Guess they will get to test out the underground bunkers...pitchforks hurt.
on Mon, 11/02/2009 - 21:47
#117902
CMBS outlook seems better than ever
http://nreionline.com/mag/real_estate_cmbs_outlook_seems/
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