Mortgage Bankers Association 11/18/2018 An Update on the Mortgage Lending Business August 2016 Mike Fratantoni Chief Economist Mortgage Bankers Association

MBA Forecast Outlook Source: MBA Forecast

Incomes have not kept pace with shelter or total costs in recent years Mortgage Bankers Association 11/18/2018 Incomes have not kept pace with shelter or total costs in recent years 1967 – 2007 Median Household Income: +5.0% average annual growth Total Cost of Living: +4.7% average annual growth Shelter Costs: +5.4% average annual growth 2007 – 2015 Median Household Income: +0.8% average annual growth Total Cost of Living: +1.5% average annual growth Shelter Costs: +1.9% average annual growth Source: Census and BLS Mortgage Bankers Association

Single-family Starts Improving, Multifamily Starts Slowing Source: Census

Home Sales Still Below Pre-Recession Levels Source: Census, NAR

Purchase Applications Ahead of Last Year Source: MBA Weekly Applications Survey

Broad Improvement for Purchase Market Mortgage Bankers Association 11/18/2018 Broad Improvement for Purchase Market Source: MBA Weekly Applications Survey Mortgage Bankers Association

Refinance Activity Burning Out Despite Low Rates

Changing FHA Credit Score Profiles

Estimated Originations 2000 to 2018 Mortgage Bankers Association 11/18/2018 Estimated Originations 2000 to 2018 484 refi / 638 pur 570 / 801 42% 379 / 885 30% Source: MBA Forecast – July 2016 Mortgage Bankers Association

Changing Composition of Lending Institutions Source: HMDA

Independent Mortgage Lenders Continue to Gain Market Share

Origination Business is Tough Source: MBA’s Quarterly Mortgage Bankers Performance Report, www.mba.org/performancereport

IMB Fully-Loaded Production Expenses ($ per loan): Source: MBA’s Quarterly Mortgage Bankers Performance Report, www.mba.org/performancereport

Personnel Expenses Have Increased Source: MBA’s Quarterly Mortgage Bankers Performance Report, www.mba.org/performancereport

Mix of Personnel Has Shifted Source: MBA’s Quarterly Mortgage Bankers Performance Report, www.mba.org/performancereport

Fully-Loaded Servicing Operating Costs of Performing and Non-Performing Loans* * Includes direct cost to service, unreimbursed servicer-related foreclosure and REO costs (less lookbacks), compensatory fees, corporate allocation Source: MBA’s Servicing Operations Study and Forum, Prime Servicers. www.mba.org/sosf

Mortgage Performance Improving with Job Market Source: MBA National Delinquency Survey

Recent Loan Vintages Performing Extremely Well Source: MBA National Delinquency Survey

MBA Research Sign-ups and Services Mortgage Bankers Association

Mortgage Bankers Association 11/18/2018 Contact Information & MBA Resources Mike Fratantoni Chief Economist and SVP, Research and Industry Technology mfratantoni@mba.org 202-557-2935 RIHA: www.housingamerica.org MBA Research: www.mba.org/research Mortgage Bankers Association