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MBA Nonprime Conference

. House Sales Levels and Inventory/Sales Ratios. Source: Census Bureau and National Association of Realtors.. Median One-family Home Prices. Year-over-year, percent change. 10.3 2.0. New Homes. . Existing Homes. . Annual Mortgage Production. Billion. Source: Mortgage Bankers Association and Department of Housing and Urban Development..

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MBA Nonprime Conference

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    1. MBA Nonprime Conference Presented by Doug Duncan SVP & Chief Economist Mortgage Bankers Association Washington, DC May 22, 2006

    2. Market Outlook

    3. House Supply Overhang on Market

    4. Economic Backdrop Long term decline in nominal interest rates has ended Credit spreads remain tight Global demand for US debt and equities has been exceptionally strong Real estate secured debt is 43% of total debt

    5. 10-Year Treasury Note Yield at Constant Maturity

    6. Residential Real Estate Finance Loan production remains strong ARM – structural vs cyclical demand Refinancing – structural vs cyclical demand Risk distribution has shifted Less government insured loans Less fixed payment loans More credit constrained borrowers

    7. Residential Real Estate Finance Consumer behavior has changed More affordability products Matching loan terms to time in property Active balance sheet management Delinquency rates will trend upward Portfolio aging Growth in nonprime Growth in adjustable payment loans Escrow adjustments

    8. Annual Mortgage Production

    9. Adjustable Rate Mortgage Share of Mortgage Applications

    10. 30-Year Fixed Mortgage Rates 1990 to Present

    11. Share of Outstanding Loans by Loan Type, 1988-Present

    12. Residential Mortgage Originations by Loan Type

    13. Originations by Amortization Type

    14. Mortgage Originations Update

    15. Change of Mortgage Originations From First to Second Half of 2005

    16. RMBS Issuance Volumes

    17. Non-agency MBS Issuance

    18. Trends in Subprime Issuance

    19. Subprime IOs

    20. Subprime: Average Loan Balance

    21. Subprime: FICO Scores

    22. Subprime Loans Hitting First Reset

    23. State-level Delinquency and Foreclosure Rates States with the highest delinquency rates: Louisiana Mississippi Alabama Indiana States with the highest foreclosure inventory rates: Ohio Indiana South Carolina Michigan

    24. Seriously Delinquent Rate

    26. Cumulative Default Rate of 2004 Subprime Loans by Product

    27. Subprime Default Rates by FICO and LTV

    28. Contact information/resources MBA homepage: www.mortgagebankers.org Research and Forecasts: http://www.mortgagebankers.org/ResearchandForecasts/EconomicOutlookandForecasts Research Data: http://www.mortgagebankers.org/ResearchandForecasts/ProductsandSurveys

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