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» VISIT US ONLINE @ DSNEWS.COM 45 FEBRUARY GAINS POINT TO SELLER OPTIMISM Realtor.com released its February Monthly Housing Trend Report, which showed an increase in listing prices as well as an increase of housing inventory. e increase in both list price as well as inventory points to a "strong early beginning to this spring's home buying season," the report said. Nationally, median listing price increased to $199,000 year-over year. e gain represents a 7.6 percent increase from the previous year and is up 2.05 percent from the previous month "Overall these figures indicate a continued reinforcement of steady gains and market stabilization that we've been watching since late last summer," said Steve Berkowitz, CEO of Move, Inc. Posting a decrease by 0.9 percent from the previous month, the median age of inventory shrunk slightly to 114 days. e report found that inventory increased by 10.1 percent nationally year-over-year, with total listings of approximately 1.7 million. "Seller confidence is the factor to watch as we head into the spring home-buying season, and these are very encouraging indicators— not only are more homes coming onto the market, but typically we don't see a rise in asking prices this early into the year. is is the market these sellers have been waiting for," Berkowitz added. e top five metros for median list price all reside in California: San Francisco ($849,000), Santa Barbara-Santa Maria-Lompoc ($700,000), San Jose ($669,000), Orange County ($599,900), and Ventura ($523,950). Chicago topped the list with the most total listings at 45,998, followed by Atlanta (34,045); Phoenix-Mesa, Arizona (23,654); Philadelphia (21,909); and Riverside-San Bernardino, California (21,221). Fitch: RMBS Servicers to See a 'New Normal' In a press release issued by Fitch Ratings, the company comments that the past year has seen a "sea change" in who is servicing severely delinquent U.S. mortgage loans—and how they are being serviced. Fitch found that 2013 saw many portfolios of non-agency residential mortgage-backed securities (RMBS) mortgage servicing rights (MSR) move from banks to non-bank servicers. Fitch's analysis is supported by increased investigations by government agencies into possible concerns associated with non-bank servicer's rapid growth. Fitch found, "In fact, non-banks now service nearly three-quarters (72 percent) of non-agency deals. Large non-bank servicers such as Ocwen and Nationstar have absorbed much of this product, with their total servicing portfolios growing by 250 percent and 100 percent, respectively, over the past 12 months." e shift in servicing portfolios has had a large impact on existing RMBS. According to Managing Director Roelof Slump, servicing transfers from banks to non-banks reveal key strategic goals between the two types. "Non-bank servicers are proving to be more aggressive in their monitoring of principal and interest advances," Slump said. "Non-bank servicers are also showing themselves to be more proactive in their use of loan modifications and are seeing shorter overall timelines." ese differences in strategy affect both monthly cash flow and ultimate loss severities, according to Fitch. In light of the recent completion of the National Mortgage Settlement Agreement, new rules went into effect that impact all mortgage servicers. e previous settlement left out non-bank servicers, who now have to abide by the Consumer Financial Protection Bureau's (CFPB) new regulations. "is in turn placed non-banks under greater scrutiny than what they had seen previously," Fitch said. Fitch notes that new oversight will yield higher fixed costs, as technology and process enhancements are made in order to comply with the new guidelines. is increase in cost will push non-bank servicers to grow their portfolios, and Fitch suggested that "strong forces are still in place to further incent both outright MSR sales and subservicing arrangements, thus heightening scrutiny of such transactions." Conversely, commercial banks remain incentivized to control the overall size of their portfolios and reduce their servicing of underperforming loans. HAS CONSUMER OUTLOOK FOR THE HOUSING MARKET CHANGED? A recent poll from the Federal Reserve Bank of New York shows consumer expecta- tions stayed mostly flat in February, particularly on the housing side. According to responses in the New York Fed's most recent Survey of Consumer Expec- tations (SCE), consumers that month indicated a median home price change expectation of 4 percent, reversing an increase to 4.6 percent in January. Price change expectations hovered around 4.5 percent for much of last year's second half, coming down only when national reports indicated a slowdown. Meanwhile, median income growth expectations fell slightly, though responses in the bottom and top quartiles lifted. Household spending expectations were also down. On the topic of credit access, perceptions remained largely unchanged, though slightly more consumers said they think it is "some- what" or "much" easier to get a loan. Looking at labor, median earnings growth expectations pulled back slightly to 2.3 percent from January's high of 2.4 percent. While the median was down, though, the 75th percentile of responses rose to the highest level in the past nine months. If laid off, consumers projected an average chance of finding a job within three months at slightly more than 46 percent, down from January. It may be a small comfort, then, that the mean perceived chance of being laid off was also down slightly, particularly among older workers. The preliminary Reuters/ University of Michigan consumer sentiment index for April, according to the university, is an increase from 80 at the end of March, and 79.9 in mid-March. The latest reading is the highest since last summer, according to theMHN Online/Reuters/ University of Michigan. KNOW THIS

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