WASHINGTON, DC-The level of outstanding commercial/multifamily mortgage debt decreased by $10.4 billion, or 0.4%, according to the Mortgage Bankers Association. The driver in the decline was a drop in CMBS balances that more than offset the increases in holdings by Fannie Mae, Freddie Mac and FHA, banks and life insurance companies.

Last quarter there was also a decline in the total balance of loans for CMBS, Jamie Woodwell, MBA’s vice president of commercial real estate research, tells GlobeSt.com. However the increased holdings by banks, life companies and the GSEs offset it. Not this quarter. “More CMBS loans are being paid off and paid down and being liquidated.”

MBA reports that $2.37 trillion in outstanding commercial/multifamily mortgage debt was $10.4 billion lower than the first quarter 2012 figure. Multifamily mortgage debt outstanding rose to $826 billion, an increase of $5.4 billion or 0.7% from the first quarter of 2012.

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $815 billion, or 34% of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $555 billion, or 23% of the total. Agency/GSE portfolios and MBS hold $360 billion, or 15% of the total, and life insurance companies hold $320 billion, or 14% of the total.

Much of the CMBS activity was a matter of timing, Woodwell says. Q2 was the peak of maturity of five-year loans originated in 2007, he notes. “So with a pretty sizeable balance of those loans coming due in Q2, that would push an uptick of loans being paid off and paid down.” Most of the originations in 2007 occurred in the first half of the year as well, he also notes.