Wells Fargo Ranks First in Commercial Mortgage Servicing, Bankers Report


Wells Fargo Ranks First in Commercial Mortgage Servicing, Bankers Report

Aug 24, 2010 10:06 AM, By NREI Staff


Wells Fargo tops the list of the nation’s commercial mortgage servicers at midyear, according to the Mortgage Bankers Association. Wells Fargo recorded $462.8 billion in U.S. master and primary servicing volume through June 30.

PNC Real Estate/Midland Loan Services reported the second-highest volume, $307.9 billion, while Berkadia Commercial Mortgage registered $202.6 billion, followed by Bank of America Merrill Lynch with $133.4 billion and KeyBank Real Estate Capital, $124.7 billion, according to the MBA.

The totals include multifamily master and primary servicing as well as other commercial property types.

A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors.

Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial, including multifamily, loans in U.S. commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset-backed securities, according to the Mortgage Bankers Association.

GEMSA Loan Services, PNC/Midland, Prudential Asset Resources, Northwestern Mutual, and NorthMarq Capital are the largest servicers for life companies. PNC/Midland, Wells Fargo/Wachovia Bank, Deutsche Bank, Berkadia and Prudential are the largest Fannie Mae/Freddie Mac servicers.

PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for mortgages in warehouse facilities; and Berkadia the top for other investor type loans.

The Mortgage Bankers Association also asked firms to provide information about CMBS loans on which they are the "named special servicer," where the firm stands ready to service the loan should special problems develop, such as delinquency. The leading named special servicers were LNR Partners, Inc., CWCapital LLC & CWCapital Asset Management, C-III Asset Management LLC, PNC/Midland and Berkadia.

The survey also collected servicing volumes for loans on commercial properties located outside the United States. Hatfield Philips International ranks as the largest master and primary servicer of non-U.S. commercial/multifamily mortgages, followed by, Deutsche Bank, PNC/Midland, GEMSA and Situs Asset Management.

Wells Fargo Ranks First in Commercial Mortgage Servicing, Bankers Report


Commercial Real Estate Loans Contribute to Bank Failures



The Federal Deposit Insurance Corp. (FDIC) has confirmed that commercial real estate loans played a significant role in the failure of five banks closed by the Comptroller of the Currency and state agencies over the Memorial Day holiday.

Three Florida banks, along with a California and a Nevada lender were shut down. All five institutions reopened on Tuesday after other banks assumed their deposits.

To date this year, 78 banks have failed, and the number of failures for 2010 is expected to exceed last year’s total of 140, says FDIC spokesman Greg Hernandez, in Washington, D.C.

“So far, in the failures this year of community banks, commercial real estate loans have been playing a large role,” says Hernandez. “It looks like all three Florida banks did experience significant losses in their acquisition, development and construction loan portfolios, as well as their commercial real estate portfolios,” he notes.

That coupled with weak real estate market conditions, contributed to the lenders’ collapse. The other two failed banks also had troubled commercial real estate loans, he says.

The price of bank failures is steep. The 140 bank failures that occurred in 2009 cost the nation’s Deposit Insurance Fund $37.4 billion, says Hernandez. Although the FDIC doesn’t make official projections, the cost is expected to be even larger this year. But the FDIC anticipates that bank failures will peak in 2010, and begin to diminish next year.

‘Problem’ list grows

The number of institutions on FDIC’s confidential list of “problem” institutions with troubled loans rose to 775 in the first quarter of 2010, up from 702 in the fourth quarter of 2009. “It’s a similar thing to what we saw during the [savings and loan] crisis,” says Hernandez. However, not all the institutions on the problem list are expected to fail. Only about 14% have failed in the past.

According to commercial real estate data and analytics firm Trepp, non-performing commercial real estate loans constituted 80% of the total non-performing loans for the five newest failed banks. That percentage was split almost evenly between construction and land loans (40.9%) and commercial mortgages (39.1%).

The Bank of Florida, Southeast, in Ft. Lauderdale, the Bank of Florida, Southwest, in Naples, and the Bank of Florida, Tampa Bay, were all closed by the Florida Office of Financial Regulation. The FDIC was appointed receiver for the three banks, whose deposits were acquired by EverBank of Jacksonville, Fla. The three were owned by the same holding company, Bank of Florida Corp., which was not part of the past week’s transaction, according to the FDIC.

The Florida banks had assets of nearly $1.5 billion, and deposits totaling $1.3 billion. “Commercial real estate loans accounted for a very large proportion of losses, which diminished the banks’ capital,” says Hernandez. The three lenders resumed business operations on Tuesday under the EverBank name, the FDIC reports.

The failed institutions also include Sun West Bank in Las Vegas, whose seven branches reopened Tuesday after City National Bank of Los Angeles agreed to assume Sun West’s deposits. Sun West was put on FDIC’s list of problem institutions back in October 2009, says Hernandez.

The remaining lender was the Granite Community Bank in Granite Bay, Calif. It had been placed on FDIC’s problem list in June 2009.

Commercial Real Estate Loans Contribute to Bank Failures

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