The level of commercial and multifamily mortgage debt decreased by 0.4 percent from the first to the second quarter of 2012 according to the Mortgage Bankers Association (MBA).  The outstanding balance of this debt decreased by $10.4 billion from the total in the first quarter to $2.37 trillion in outstanding debt.

Commercial banks continue to hold the largest share of commercial and multifamily mortgages, $815 billion or 34.4 percent of the total.  The second largest holder is the sector for commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs), and asset-backed securities (ABS) which account for 23.4 percent.  Agency and government sponsored enterprise (GSE) portfolios and residential mortgage-backed securities (MBS) hold 15.2 percent of the debt, life insurance companies 13.5 percent, and state and local governments 3.6 percent.  All other debt holders account for the remaining 9.9 percent of the debt, a category that includes households, the federal government, other insurance companies, finance companies, REITS, and public and private pension funds.  Many of the sectors above also hold CMBS, CDO, and other ABS issues and their holdings are included in the CMBS/CDO sector.

The largest decrease in holdings of CMBS and multi-family debt was in the CMBS, CDO, ABS sector which decreased by $19.8 billion or 34 percent followed by finance companies, down $5.1 billion or 8.4 percent.  The largest percentage decrease was in the household sector, down 13.4 percent.  The largest increases were in Agency and GSE Portfolios and MBS, up $7.10 billion or 2.0 percent while other insurance companies had the largest percentage increase at 4.1 percent.

"CMBS loans paid-off, paid-down, and were liquidated at a far faster pace than new CMBS loans were originated during the quarter," Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research said.  "The drop in CMBS balances more than offset the increases in holdings by Fannie Mae, Freddie Mac, and FHA, banks, and life insurance companies.

Looking only at multi-family mortgage debt, holdings in the second quarter increased by $5.4 billion or 0.7 percent to $826 billion.  The largest increase was in the agency and GSE portfolios and MBS which increased $7.1 billion or 2 percent.  Commercial banks increased their holdings of this debt by $3.6 billion or 1.6 percent and life insurance companies increased by $576 billion or 1.2 percent.  CMBS, CDO, and other ABS issues decreased their holdings by $4.8 billion or 5.4 percent.

Private pension funds had the largest decrease in multifamily mortgage holdings, down 8.6 percent followed by CMBS, CDO, and other ABS issues at -5.4 percent.