Magazine article Mortgage Banking

CMBS Resolutions and Loss Severities Edge Higher

Magazine article Mortgage Banking

CMBS Resolutions and Loss Severities Edge Higher

Article excerpt

Commercial mortgage-backed security loan resolutions and loss severities rebounded in April and May from relatively low levels in the first quarter, reported Trepp LLC, New York.

"In particular, February and March saw losses well below the 12-month moving average," stated Trepp's May Loss Analysis report. "The April and May loss severities have proven more indicative of recent trends."

April's loss severities rose to 42.68 percent and losses rose again in May to 43.87 percent, topping the 12-month moving average of 43.8 percent.

Liquidations increased to $1.64 billion in May, 23 percent higher than the 12-month moving average of $1.33 billion per month. May liquidations increased 15 percent compared with April and 85 percent from the 12-month low seen in February.

Trepp said special servicers have liquidated at an average rate of $1.11 billion per month since the beginning of 2010. May saw 164 CMBS conduit loans liquidated, an 11 percent increase from the month before and to percent above the 12-month moving average of 149. Liquidation losses summed to $723 million, up 1.19 percent from April.

But the numbers look different when Trepp removed small-loss loans--those with losses of less than 2 percent. "We suspect that in many cases, the small-loss loans are actually refinancings that have taken place where the losses reflect small, unpaid special servicer fees or other costs," the report said. "On this basis--after taking out the small-loss loans--about $1. …

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