Headlines – Week of June 6, 2010
June 15, 2010
Nonperforming Loans Jump at Florida Banks in First Quarter
According to an article published in the South Florida Business Journal, the ratio of late or unpaid loans on the books of Florida banks rose to 7.74% in the first quarter from 6.59% for the same three-month period in 2009 and 2.66% in 2008.
Between January and March, 8.71% of all real estate loans held by Florida banks were noncurrent, up from 7.37% during the same period a year earlier and 2.99% in 2008, according to the report based on the latest FDIC data.
Traditionally, regulators regard noncurrent ratios higher than 1% as an indication of problems that could lead to high numbers of loan charge-offs and other problems.
While the residential real estate sector has stabilized, lenders have yet to deal with an expected wave of commercial problems. Many of the problems for the Florida banks are loans associated with construction and land development. Nonperforming loans in this category jumped to 21.67% in the first quarter of 2010 compared to 16.6% in the same period in 2009 and 6.02% in 2008, according to the FDIC’s quarterly data.
The Business Journalhas reported on the wave of troubled South Florida properties tied to commercial mortgage-backed securities that defaulted in the first quarter, including the Royal Palm Hotel, The Shore Club, Sagamore Hotel and the Carlton Hotel – all in Miami Beach.
According to data from New York-based Trepp LLC, South Florida had $1.44 billion in delinquent CMBS loans as of March 31, representing 9.2% of all the securitized commercial loans in South Florida. That’s worse than the national rate of 7.6% and up from 8.5% delinquency on Dec. 31. (see article below)
As would be expected, Florida is generally faring worse than the rest of the country.
The noncurrent ratio for all loans at the nation’s 7,932 banks was 5.46% as of March 31 – more than 2% lower than the quarter’s ratio for Florida-based banks.
Nationwide, including Florida-based banks, the nonperforming loan ratio was 5.38% in the fourth quarter and 3.77% in the first quarter of 2009. For real estate loans, the noncurrent ratios were 8.71% for Florida-based banks and 7.55% for the country’s banks at the end of the first quarter
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Hotels Hit Hard as CMBS Delinquencies Reach Historic High
According to an article in the National Real Estate Investor, the delinquency rate for commercial real estate loans in commercial mortgage-backed securities (CMBS) jumped in May, rising 40 basis points to 8.42%, the highest rate in the history of the CMBS industry, according to research analytics firm Trepp.
The figure includes loans 30 or more days delinquent or in foreclosure, as well as real estate owned by lenders. The percentage of seriously delinquent loans, at least 60 days delinquent, jumped 41 basis points to 7.55%. The serious delinquencies include non-performing balloon loans, as well as foreclosures.
The national delinquency rate has climbed steadily for months. In March, it was 7.61%, and in April, 8.02%.
Among all property types, hotels had the highest CMBS delinquency rate in May, 18.45%, up from 17.16% in April. The multifamily delinquency rate increased 28 basis points, from 13.06% in April to 13.34% in May.
Office delinquencies rose from 5.37% a month earlier to 5.81% in May, and retail delinquencies climbed from 6.44% in April to 6.86% in May.
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Study: Homeownership Rate Declines
Homeownership rates are down 2 percentage points from their 2006 peak, but could fall another 5 percentage points in the next couple of years, according to a study by the Federal Reserve Bank of New York.
The study subtracts the number of home owners who are underwater from the official homeownership rate calculated quarterly by the U.S. Census Bureau.
Officially, homeownership was 67.2% at the end of 2009, but the report says that effectively the rate is about 62% if those home owners likely to lose their homes are subtracted from the total.
Cities cited as having very low effective homeownership rates include Las Vegas, Phoenix, San Diego, Los Angeles, San Francisco, Miami, Tampa, Detroit, and Washington, D.C.
See Full Article
Posted by Scott R. Lodde