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41 ability to assist customers with payment relief. • Asset Prices: Home and auto values will continue to play a very important role in this cycle. Homeowners are sitting on a record amount of equity this time when compared to the housing crisis of 2008. is enables most homeowners to exit, sell for a gain, and use the proceeds to downsize or find alternative hous- ing. e risk here is, with elevated rates and slowing demand, any major wave of homes hitting the market could put immediate pres- sure on home values. Once again, this should be more of a regional issue, but with such a lack of demand, it's something that could rapidly shift if a region were to experience a severe spike in unemployment. e hedge we have today is an equal void of sellers: those sitting on a low, 30-year fixed rate will be more than likely to remain in their home for a longer duration, keeping supply in balance. Monitor- ing regional unemployment rates will be key. • Geopolitics: e main driver here is the cost of energy, oil, and supply chains. If we see sta- bilization in China and Ukraine, this could be a massive tailwind for consumers as it should lead to a drop in energy prices and ultimately offer support to the equities markets, bolster- ing household balance sheets and consumer sentiment. As crazy as it may sound, we could see a direct benefit in consumer delinquencies as a byproduct of stabilization in these regions. • Corporate Earnings: Q1 and Q2 earnings will be heavily watched as corporations lay out the guidance for the year. Why is this so important? ese earnings will give insight into layoffs, wage growth, consumer spending, delinquency trends, and other critical data points that will influence market volatility, interest rates, and asset prices. All of the above are part of the complex environment that will ultimately lead to what has been commonly referred to as a post-pan- demic "soft" or "hard" landing. All servicers can do is build into their plans what data points will they ascribe the most weight to trigger a certain plan or aspect of it. How will you address with customers a sustained, high-rate environment with government-backed loans? How will servicers communicate and educate a customer on the importance of acting swiftly to preserve and protect their credit and equity? What are servicers doing to remove as much friction and simplify their processes for customers to gain as- sistance? What digital, DIY, and DIT capabilities are servicers driving to improve and implement? How can servicers increase customer engagement even when the only solution may be the customer selling and transitioning to a more affordable long-term housing solution? We at USB have plans in place to tackle the above, most of which I am not at liberty to discuss in a public forum. However, I think we can accomplish as much as an industry when we share the questions and challenges we should all have on our radar. I believe that can be just as effective when we take our common problems, concerns, and questions to the industry trade groups such as Five Star to bring us together and discuss ideas. One thing is for certain: if you're a default leader and you're not thinking about the above items and establishing plans for several scenarios, you will be caught off guard in 2023. Jake Williamson SVP, Single-Family Collateral Risk Management, Fannie Mae (Editorial Advisory Board Member) What are the biggest challenges you are trying to solve for in 2023? How are you working to surmount those challenges? It's been more than 50 years since President Lyndon B. Johnson signed the Fair Housing Act, yet the vast gap in homeownership rates between Black and white people remains. In June 2022, Fannie Mae released its Equitable Housing Finance Plan, which outlines a range of specific actions Fannie Mae is taking over the next three years to knock down barriers faced by Black homeowners and renters throughout their housing journey. Just one piece of a much larger and evolving strategy for Fannie Mae, the plan addresses inequalities in the housing finance system and extends the wealth-building benefits of homeownership, including in areas related to home valuations. "I think we can accomplish as much as an industry when we share the questions and challenges we should all have on our radar." —Douglas Whittemore, Head of Default Servicing, U.S. Bank (Editorial Advisory Board member)