and the Regulatory Environment August 2014 Impact of the CFPB and the Regulatory Environment on Credit Access Debra Still President/CEO

Source: MBA, Powered by AllRegs® Market Clarity® Mortgage Credit Availability MCAI Index Baseline June/14 115.8 Mar/12 100 Source: MBA, Powered by AllRegs® Market Clarity®

Expanded Historical Series: Mortgage Credit Availability Index A Ways To Go Before “Normal” Expanded Historical Series: Mortgage Credit Availability Index Index Level By Month June 2014 3

CFPB Rules/Other Regulation: Impact on Credit Impact to Credit Ability to Repay – QM Modest HOEPA High-Cost Mortgage Rule None Loan Officer Compensation Rule None National Servicing Standards Modest ECOA Appraisal Disclosure Rule None Appraisals for High-Priced Mortgage Rule None HUD Disparate Impact Rule Modest Basel III Rule Modest RESPA/TILA Integration Rule None Coming Soon Risk Retention/QRM ? HMDA None Loan Officer Anti-Steering Rule None - Work = Costs to Consumers or lack of competition

If Not Regulation…Why is Credit Still Tight? Operational Risk – Loan Manufacturing “Guidelines” have become “rules” Documentation is extraordinary Lack of clarity of reps and warrants GSE LQI Fannie Mae “Zero Defect” QA program FHA new QA/QC initiative Financial Risk Repurchases Compensatory fees Curtailment of debenture interest Indemnifications Enforcement Reputation Risk Headlines FHA Compare Ratios