Non-agency CMBS issuance doubled from the second to the third quarter, but production remained well below 2019 levels. Agency multifamily MBS set a record. (Includes data chart.)
The delinquency rate for commercial MBS continued to improve in September, but the “special servicing” rate surged to a seven-year high, signaling that economic fallout from the pandemic is still festering.
KBRA was accused of getting sloppy on due diligence tied to CMBS and CLO deals. Without admitting wrongdoing, the rating agency agreed to pay $2 million-plus.
While the delinquency rate for office property CMBS has (so far) been contained, the acceleration of the work-from-home trend may reduce demand for office space and increase cash flow volatility.
But that’s easier said than done. The CMBS structure prohibits borrowers from taking on additional debt and includes a prepayment penalty clause, Federal Reserve Chair Jerome Powell pointed out.
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