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43 » VISIT US ONLINE @ DSNEWS.COM ECONOMISTS RETAIN POSITIVE OUTLOOK DESPITE "PALTRY" GDP GROWTH IN FIRST Q1 ESTIMATE Many reports of the nation's economic prog- ress for the first quarter have been soft, and the advance estimate of real gross domestic product (GDP) growth for Q1 released at the end of April by the Bureau of Economic Analysis (BEA) is no exception. e BEA reported in the first estimate for Q1 that real GDP grew at an annualized rate of just 0.2 percent during the quarter, only a frac- tion of the 2.8 percent that was projected for the year. e real GDP grew at a rate of 2.2 percent in the fourth quarter of 2014 and 2.4 percent for the entire year. Despite the report of economic growth nearly grinding to a halt in the first Q1 estimate, however, economists' outlook for growth for the remainder of the year, particularly in relation to housing, remained unchanged. "As in recent years, the first quarter, once again, defied expectations and optimism for the year ahead. e advance estimate on GDP showed a paltry 0.2 percent annualized growth rate," Freddie Mac deputy chief economist Len Kiefer said. "e slowdown in growth was primarily driven by declining exports, with next exports shaving nearly 1.3 percentage points off of first quarter growth. And despite strong corporate balance sheets and low interest rates, nonresidential fixed investment as a share of total output remains well below historical aver- ages." e increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and private inventory investment that were partly offset by negative contributions from exports, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. In spite of the recent reports of slow eco- nomic growth in Q1, Fannie Mae maintained its forecast for GDP growth of 2.8 percent this year and its position that the economy will "drag housing upward." Fannie Mae chief economist and SVP Doug Duncan pointed out the actuals as far as housing—existing home sales, new home sales, and prices—were either at or very close to their predicted levels during Q1, and mortgage purchase applications have been way up for the last couple of months. "Today's GDP announcement doesn't change our view on housing," Duncan said. "Housing is right where we expected it to be." While Duncan said the rate of real GDP growth announced in April was "a lot weaker than anticipated," he said, "we don't think that it's going to be sustained. ere are two more revisions." Likewise, Kiefer was undeterred by the GDP report in his forecast of economic growth for the remainder of the year. "Looking ahead to the rest of the year, we maintain our positive outlook and expect a pick-up in growth," Kiefer said. "Even with a slow first quarter, economic growth should be solid enough for robust job gains and improving housing markets." e BEA's second estimate for GDP growth in the first quarter, featuring more complete data, was to be released May 29. Robert Denk, economist for the National Associa- tion of Home Builders (NAHB), wrote on the NAHB's Eye on Housing blog that growth will accelerate once the data is more complete, al- though the outlook for the near term is not rosy. "e BEA emphasizes that this 'advance' report is based on incomplete data in some sec- tors and sources that will be revised in others, so the revised estimates of first quarter growth scheduled for release in May and June could improve the picture, but based on this report the future may be significantly less sunny in the near term," Denk wrote. GAP BETWEEN FORECLOSURE COMPLETIONS AND ALTERNATIVES WIDENS e gap between the number of non- foreclosure solutions for homeowners compared with completed foreclosures widened in February, according to data recently released by HOPE NOW. e industry provided 147,000 non- foreclosure solutions for distressed homeowners in February compared to 28,000 completed foreclosures for the month, a ratio of more than five-to-one, according to HOPE NOW. February's total foreclosure completions represented a 22 percent decline from January's total of 34,000. Non- foreclosure solutions also declined month- over-month, but at a much slower pace (6.9 percent, down from 158,000) than foreclosure completions, thus further extending the chasm between the two. Serious mortgage delinquencies dropped even further, falling to 1.85 million in February, down from 1.9 million in January. ey are now at their lowest level since HOPE NOW began tracking serious delinquent data in 2007. "Non-foreclosure solutions outpaced foreclosure sales by more than a five to one margin in the month of February," said Eric Selk, executive director of HOPE NOW. "is has been a fairly consistent trend for the past year and illustrates the availability of various long term and short term solutions that benefit homeowners. e volume of solutions, including loan modifications, has remained consistent even though serious mortgage delinquencies fell to its lowest level since HOPE NOW began tracking data. Our industry members comprehensively review all at-risk families for multiple options, when going through the loss mitigation process, and attempt to apply the most viable solution for each situation." Out of the 147,000 non-foreclosure solutions completed in February, approximately 34,000 were permanent loan modifications (a 3 percent drop from 35,000 in January). Out of February's total, about 10,000 were completed through the government's Home Affordable Modification Program (HAMP) and about 24,000 were completed through proprietary programs. e number of short sales completed in February declined slightly month-over-month, from 7,700 down to 7,500. Deeds-in-lieu of foreclosure fell by 10 percent over the month in February, down from 2,000 to 1,800. e number of foreclosure starts dropped substantially—from 80,000 in January down to 66,000 in February, a drop of 18 percent, according to HOPE NOW. e number of non-foreclosure solutions offered by the industry since HOPE NOW began tracking the data in 2007 is 23.5 million, and 7.4 percent of those solutions have been permanent loan modifications, according to HOPE NOW.

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