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44 HOUSEHOLD DEBT REACHES RECESSION- ERA HIGHS Total household debt totaled $12.73 trillion in Q1 2017, according to the New York Federal Reserve's Q1 report on household debt and credit. is means that household debt has finally surpassed its $12.68 trillion peak reached during the recession in 2008. is is a $149 billion quarterly increase. "Almost nine years later, household debt has finally exceeded its 2008 peak, but the debt and its borrowers look quite different today," said Donghoon Lee, Research Officer at the New York Fed. "is record debt level is neither a reason to celebrate nor a cause for alarm. But it does provide an opportune moment to consider debt performance. While most delinquency flows have improved markedly since the Great Recession and remain low overall, there are divergent trends among debt types. Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high." Mortgage debt proved to be the highest increasing debt factor, going up by $147 billion quarterly and $258 billion annually. Total mortgage debt as of Q1 2017 was $8.63 trillion. Home equity line of credit decreased by $17 billion quarterly and $29 billion over the year, totaling $456 billion as of Q1. e New York Fed found that mortgage balances increased again, while originations declined and median credit scores of borrowers for new mortgages increased, reflecting tightening underwriting. Mortgage delinquencies worsened slightly, and the Fed noted that foreclosure notations increased but remain low by historical standards. Additionally, other types of debt saw similar increases in Q1 2017, notably student loan debt, which grew by $34 billion in Q1, totaling $1.34 trillion. According to the report, student loan delinquencies have remained high, sitting at 11.2 percent—the highest delinquency rate of any of other debt type covered by the Fed. GSEs SELL 72K NPLS, GAIN $14.2 BILLION Fannie Mae and Freddie Mac have sold 72,502 nonperforming loans in delinquency, with a sum of $14.16 billion of total unpaid principle balance and a mean delinquency time of 3.4 years, according to the recent Enterprise Non- Performing Loan Sales Report released by the Federal Housing Finance Agency. Freddie Mac accounted for 32,448 loans at $6.6 billion and an average delinquency time of 3.1 years, while Fannie Mae sold 40,054 loans at the cost of $7.5 billion and an average delinquency of 3.6 years. Forty-eight percent of the total NPLs sold came from New York, New Jersey, and Florida, which also accounted for 47 percent of the Enterprises' loans that were more than one year delinquent by the end of 2014. e borrower outcomes, however, are only based on 45,446 NPLs that were settled by June 30, 2016, and reported through December 31, 2016. e report found that occupied homes had a far lower foreclosure rate (16.6 percent) than vacant properties (38.5 percent) and completely avoided foreclosure 18.8 percent of the time as opposed to 10.1 percent. In addition, loans sold by the Enterprises to third parties avoided foreclosure more often than loans that weren't sold. LENDER REVENUES TAKE HIT Nationstar Holdings reported declining income in Q1. e company's mortgage-related revenue fell from $173 million to $144 million, while the firm's services-related net revenue fell from $616 million to just $283 million. e market overall saw declines in mortgage revenue with PNC Financial Services Group, Wells Fargo, and JPMorgan Chase all reporting reductions in mortgage revenue in Q1 2017. Even Bank of America, which reported a 40 percent increase in net revenue in the quarter, experienced a downturn in mortgage revenue, with total mortgage production of $15.5 billion in Q1, down by about $900 million compared to last year. Average loans and leases were down 20 percent overall. Residential mortgages comprised $69 billion in Q1, down from $87 billion a year ago. What drove Nationstar in Q1 was its strong servicing segment, which saw a $26 million GAAP pretax income or $65 million adjusted pretax income—still down from the firm's strong Q 4 2016, but a high-performing segment. "In the quarter, servicing delivered solid operational results with 5.6 basis points in profitability," said Jay Bray, Chairman and CEO of Nationstar. "For the third year in a row, our servicing operations achieved Fannie Mae's highest level of recognition for performance, which reflects the dedication of our team members in providing the best-possible home loan experience to all of our nearly 3 million customers." Nationstar's Q 4 2016 was a strong end to the year, even stronger than the year before. Bray called 2016 an "incredible year of success," and the company hopes to maintain that level of success following the transition of their company from Nationstar to Mr. Cooper, its new moniker. "Looking forward, we believe we have significant growth prospects across all three segments, and we continue to evaluate additional ways to increase shareholder value under our new Mr. Cooper brand," Bray said. The drop in overall mortgage originations over the first quarter of the year. Source: Black Knight Financial Services' Mortgage Monitor report for April 2017 STAT INSIGHT 34%

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