April, 2012

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THE LATEST SECONDARY MARKET GSEs Forecast General D espite the risk posed by more economic and political shock globally, the U.S. economy and housing market appear to be recovering, with more warmth expected for the latter in 2012, chief economists with Fannie Mae and Freddie Mac said recently. Doug Duncan, VP and chief economist with Fannie, and Frank Nothaft, with Freddie, each released separate forecasts in February for the year. The consensus: Low interest rates and job growth will help strengthen a still-soft housing market, warding off broader eco- nomic forces like rising oil, deficit politics, and potential shocks from the debt crisis in Europe. "Risks to the forecast are more balanced between the upside and downside since our January forecast," Duncan said in a statement. "The economy appears to be more resilient than in previous months and should be less vulnerable to shocks, Economic Progress for 2012 A new study from Fannie and Freddie indicates that growth is possible for the country's economy during the remainder of the year. including any spillover from the European sovereign debt crisis." He said economic growth would likely rebound from 2011 by hitting 2.3 percent this year, an improvement from 1.6 percent seen for growth last year. Nothaft's analysis largely agreed with his, with the chief economist saying in a separate statement that "[o]ur outlook anticipates gradual, but steady, improvement in the economy and the housing market, supported by low interest rates and brightening job market prospects." Citing a National Association of Realtors index, he said that a 5 percent spurt for existing- home sales in December helped balance declines in November home prices for Standard & Poor's/Case-Shiller 10- and 20-city indices by 3.6 percent and 3.7 percent, respectively. A market for historically low interest rates simultaneously keeps the market at all-time highs of affordability, with the Mortgage Bankers Association offering 4.1 percent spikes in mortgage application volume in January partly as a result, he said. Duncan added that economic growth even so will "remain constrained by various headwinds," including a possible jump in oil prices, expected dips in net export volume, and an expected increase for fiscal problems. THE M REPORT | 73 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

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