Current State and Mortgage

Market Outlook

©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.

Compass Research & Trading, LLC

January 10, 2017

Sam Khater

VP & Deputy Chief Economist

Housing Market Heading into 2017 on Solid GroundWeekly Data, Percent Change from Year Ago in Top 100 Markets*

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Sept1

7 2

01

5O

ct15

2015

Nov

12

2015

Dec

10

2015

Ja

n0

7 2

01

6F

eb

42016

Ma

r3

2016

Mar

31

2016

Apr

28

2016

May

26

2016

Ju

n2

3 2

01

6Ju

ly21

2016

Aug

18 2

016

Sep

15

20

16

Oct13

2016

Nov

10

2016

Dec

82016

Ja

n5

2017

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

2 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic. *Four week moving average.

Sept1

7 2

01

5O

ct15

2015

Nov

12

2015

Dec

10

2015

Ja

n0

7 2

01

6F

eb

42016

Mar

32016

Mar

31

2016

Apr

28

2016

May

26

2016

Jun

23 2

016

Ju

ly21

2016

Aug

18

20

16

Sep

15

20

16

Oct13

2016

Nov

10

2016

Dec

82016

Ja

n5

2017

Home Sales Home Prices

Purchase Mortgage Application Growth Decelerating Before Late ‘16 Rate SpikePercent Change from Year Ago in Purchase Application 4 Week Moving Average

2012 - 2016 2016 Only

3 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: MBA

-30%

-20%

20%20%

10%

15%

0%

10%

-10%

30%

40%

Ja

n-1

2A

pr-

12

Ju

l-12

Oct-

12

Ja

n-1

3A

pr-

13

Ju

l-13

Oct-

13

Ja

n-1

4A

pr-

14

Ju

l-14

Oct-

14

Ja

n-1

5A

pr-

15

Ju

l-15

Oct-

15

Ja

n-1

6A

pr-

16

Ju

l-16

Oct-

16

0%

5%

25%

30%

25

-Ma

r 8

-Ap

r 2

2-A

pr

6-M

ay

20

-Ma

y

3-J

un

1

7-J

un

1

-Ju

l 1

5-J

ul

29

-Ju

l 1

2-A

ug

26

-Au

g

9-S

ep

2

3-S

ep

7-O

ct

21

-Oct

4-N

ov

18

-Nov

2-D

ec

16

-Dec

30

-Dec

FHA Purchase Share of Market Sensitive to MIP ChangesFHA Share of Purchase Originations

45.0%

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Ja

n-0

0

Au

g-0

0

Ma

r-0

1

Oct-

01

Ma

y-0

2

De

c-0

2

Ju

l-0

3

Fe

b-0

4

Se

p-0

4

Ap

r-0

5

No

v-0

5

Ju

n-0

6

Ja

n-0

7

Au

g-0

7

Ma

r-0

8

Oct-

08

Ma

y-0

9

De

c-0

9

Ju

l-1

0

Fe

b-1

1

Se

p-1

1

Ap

r-1

2

No

v-1

2

Ju

n-1

3

Ja

n-1

4

Au

g-1

4

Ma

r-1

5

Oct-

15

Ma

y-1

6

+35 Bps

FHA MIP

-50 Bps

FHA MIP

-25 Bps

FHA MIP

4 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

FHA MIP Not Just About Product but Temporal SubstitutionPercent Change from Year Ago for 95%+ LTV Purchase Loans

-50 Bps FHA MIP

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Ja

n-1

2

Apr-

12

Jul-12

Oct-

12

Jan

-13

Apr-

13

Ju

l-13

Oct-

13

Jan

-14

Apr-

14

Ju

l-14

Oct-

14

Jan

-15

Apr-

15

Ju

l-15

Oct-

15

Jan-1

6

Ap

r-1

6

Ju

l-16

FHA 95+ Loans All Non-FHA 95+ Loans

5 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

34

33

32

31

30

29

6 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: BLS

6

35

Jan

-00

Oct-

00

Ju

l-0

1

Apr-

02

Jan

-03

Oct-

03

Ju

l-0

4

Apr-

05

Jan

-06

Oct-

06

Ju

l-0

7

Apr-

08

Jan

-09

Oct-

09

Ju

l-1

0

Apr-

11

Jan

-12

Oct-

12

Ju

l-1

3

Apr-

14

Jan

-15

Oct-

15

Ju

l-1

6

Boom in Millennial Job Growth Provides

Tailwind to Purchase Market2

5–

34

Ye

ar

Old

Em

plo

ym

en

t,in

Mill

ion

s

20%

18%

16%

14%

12%

10%

8%

6%

4%

Millennial Share of Purchase Applicants Lower in Expensive MarketsYTD 2016 Share of Applicants Under 30 Years Old

7 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

7

YT

D2016 S

hare

ofA

pplic

ants

Belo

w30

Years

Old

0

2,000

4,000

6,000

8,000

10,000

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

Refinance Mortgage Applications Down, But Should Not Decline Much More at Current RatesWeekly Level

2000 - 2016 2013 - 2016

12,000 6,000

8 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: MBA

0

1,000

2,000

3,000

4,000

5,000

Ja

n-1

3

Ap

r-13

Ju

l-13

Oct-

13

Ja

n-1

4

Ap

r-14

Ju

l-14

Oct-

14

Ja

n-1

5

Ap

r-15

Ju

l-15

Oct-

15

Ja

n-1

6

Ap

r-16

Ju

l-16

Oct-

16

Why Should Refi’s Not Drop Much More at Current Rates?

Because Cash-Out Refinances Recovering Due to Higher PricesCash Out Share of Refinance Originations

45.0%

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

9 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

Jan

-00

Sep-0

0

May-0

1

Jan

-02

Sep-0

2

May-0

3

Jan

-04

Sep-0

4

May-0

5

Jan

-06

Sep-0

6

May-0

7

Jan

-08

Sep-0

8

May-0

9

Jan

-10

Sep-1

0

May-1

1

Jan

-12

Sep-1

2

May-1

3

Jan-1

4

Sep-1

4

May-1

5

Jan

-16

Sep-1

6

Why Should Refi’s Not Drop Much More at Current Rates?Because FHA to Conventional Refinance is ElevatedFHA to Conventional Refinancing

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

10 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

Jan

-00

Sep

-00

May-0

1

Jan

-02

Sep

-02

May-0

3

Jan

-04

Sep

-04

May-0

5

Jan

-06

Sep-0

6

May-0

7

Jan

-08

Sep

-08

May-0

9

Jan

-10

Sep

-10

May-1

1

Jan-1

2

Sep

-12

May-1

3

Jan

-14

Sep

-14

May-1

5

Ja

n-1

6

Why Should Refi’s Not Drop Much More at Current Rates?

Because VA-to-VA Refinances High and RisingSerial Refinance VA share of Refinance Originations

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

11 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

Ja

n-0

1

Aug-0

1

Mar-

02

Oct-

02

May-0

3

Dec-0

3

Ju

l-04

Feb-0

5

Sep-0

5

Apr-

06

Nov-0

6

Ju

n-0

7

Ja

n-0

8

Aug-0

8

Mar-

09

Oct-

09

May-1

0

Dec-1

0

Ju

l-11

Feb-1

2

Sep-1

2

Apr-

13

Nov-1

3

Ju

n-1

4

Ja

n-1

5

Aug-1

5

Mar-

16

HELOC Volume Up in 2016, But Growth Front Loaded

Approved HELOCs (Billions of Dollars)

$400

$350

$300

$250

$200

$150

$100

$50

$0

12 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.

2000 2004 2008 2012 2016(Through August,

Annualized)

Source: CoreLogic

©2016 CoreLogic, Inc. All rights reserved. Proprietary

At First Glance Underwriting Seems ConservativeCoreLogic Housing Credit Index (2001 = 100)

Credit Score LessThan 640

LTV Share 95 AndAbove

DTI Share 43And Above

Non-Owner Occupancy Share

Condo Co-op Share

Low & No Doc Share

0

25

50

75

100

125

150

Benchmark (2001 and 2002 Originations)

Current (2016:Q3)

13 and Confidential.

Housing Credit Index

120

100

80

60

40

20

140

20

01

:Q1

20

01

:Q3

20

02

:Q1

20

02

:Q3

20

03

:Q1

20

03

:Q3

2004

:Q1

20

04

:Q3

2005:Q

12

00

5:Q

32

00

6:Q

12

00

6:Q

32

00

7:Q

12

00

7:Q

32

00

8:Q

12

00

8:Q

32

00

9:Q

12009:Q

32

01

0:Q

12

01

0:Q

32011

:Q1

2011

:Q3

20

12

:Q1

20

12

:Q3

20

13

:Q1

2013

:Q3

20

14

:Q1

20

14

:Q3

20

15

:Q1

20

15

:Q3

20

16

:Q1

Index (2001=100)

Source: CoreLogic Loan Servicing Database

HCI Factors

Credit Score

Loan-to-Value Ratio (LTV)

Debt -to-Income Ratio (DTI)

Documentation Type

Occupancy Status

Condo/Co-op Share

2001

-2003

Be

nchm

ark

More

Ris

kLess

Ris

k

14 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.

Leverage is at All Time High for Entry Level BuyersCLTV by Price Segment, Includes Piggybacks/Silent Seconds

95

90

85

80

75

70

65

$2

0,0

00

$5

0,0

00

$80,0

00

$11

0,0

00

$1

40

,00

0

$1

70

,00

0

$2

00

,00

0

$2

30

,00

0

$2

60

,00

0

$2

90

,00

0

$3

20

,00

0

$3

50

,00

0

$3

80

,00

0

$4

10

,00

0

$4

40

,00

0

$4

70

,00

0

$5

00

,00

0

$5

30

,00

0

$5

60

,00

0

$5

90

,00

0

$6

20

,00

0

$6

50

,00

0

$6

80

,00

0

$7

10

,00

0

$7

40

,00

0

$7

70

,00

0

$8

00

,00

0

2000 2005 2016 (YTD)

CLT

V

15 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

16 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.Source: CoreLogic

2017 US Single-Family Housing Market Forecast

17 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.

1. Low mortgage rates are the norm, but going up slightly

2. Home prices up +4% to +5%

3. Purchase originations up +6% (+2% to +10%) to $1.1 trillion

Refinance originations down -44% (-33% to -55%) to $511 billion

Total originations down -18% (-11% to -25%) to $1.6 trillion

Refi share 32% (28% to 35%)

4. New loan performance is pristine but we are at trough of credit cycle

The views, opinions, forecasts and estimates herein are those of the CoreLogic Office of the Chief Economist, are subject to change without notice and do not necessarily reflect the position of CoreLogic or

its management. The Office of the Chief Economist makes every effort to provide accurate and reliable information, however, it does not guarantee accuracy, completeness, timeliness or suitability for any

particular purpose.

CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.

18 ©2016 CoreLogic, Inc. All rights reserved. Proprietary and Confidential.

Where to find more information

http://www.corelogic.com/about-us/research.aspx

Twitter: @TheSamKhater