Based on recent improvements to housing, this document summarizes a few reasons why housing will continue to improve the US economy.

1. Why is housing important? JOBS.
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2. Three segments of economic growth that benefit from
a stable housing market
Home Building &
1 Improvement
2 Transaction Economy
Finance, Origination &
3 Servicing
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3. “About half of the jobs created by building new homes are in
1 Home Building construction. They include framers, electricians, plumbers, finish
carpenters … “ - National Association of Home Builders
New Single-Family Housing Starts
(in thsds of units)
1,600
800
Source: NAHB/Wells Fargo Housing Starts
1985 1989 1993 1997 2001 2005 2009 2013
NAHB analysis of the broad impact of new construction shows that building 100 average
single-family homes generates:
§ 305 jobs
§ $23 mn in wage & business income
§ $9 mn in taxes and revenue for state, local & federal governments
3

4. 1 Home Improvement
National Association of Realtors
2013 Profile of Buyer’s Home
Feature Preferences Of buyers that undertook a home
improvement project…
§ Within 3 months of a home purchase,
53% of buyers undertook a home kitchen improvement 47%
improvement project.
§ The typical buyer spent $4,550 on
various projects.
bathroom improvement 44%
A
added or replaced lighting 41%
added or replaced appliances 37%
“… homeowners still said they would like
more or larger closets and storage
space. In addition, nearly half of recent
buyers would prefer a larger kitchen...”
- Paul Bishop, NAR VP Research Demand for home improvement
drives commerce & enterprise
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5. 2 Transaction Economy
The ecosystem of housing, provides a substantial
living to many professionals
- Architects & engineers
- Attorneys
- Appraisers
- Agents & brokers
- Movers
- Escrow, insurance & title
- Suppliers of wood & concrete products
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6. 2 Transaction Economy 90% of consumers start their real estate journey online (NAR)
- The ecosystem is evolving, as a function of the consumer’s desire for mobile & online platforms
- Innovation is providing a new ecosystem to the transaction economy
- Job growth in online real estate companies
Free: Buy or sell:
- Instant AVM - Houses
- Search listings - Land
- Find rentals - Notes
- Market comps - Condos
- CRE
- US & abroad
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7. Finance, Origination & The refinance boom has sustained tens of thousands of jobs with
3 Servicing GSEs, banks, originators and servicers
Total RMBS issuance
$2.2T
$2.0T
$1.9T
$1.8T
$1.7T
$1.4T
$1.2T $1.2T As of 4Q12, the
refi-to-purchase
ratio is 3:1
2005 2006 2007 2008 2009 2010 2011 2012
Pending refi “cliff” or “taper”? | Estimates suggest refinance share
could drop to as low as 40% by 4Q13
Redwood Trust is notable for their private-label MBS issuances;
however, as of 4Q12, 99% of the MBS issuance were gov’t-backed
High concentration remains | Top-5 originators: WFC, JPM, USB,
BAC, & Quicken Loans comprised 53% of all originations in 3Q12
Source: Inside Mortgage Finance (Dec 2012)
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8. Finance, Origination &
3 Servicing 50.8 million First-lien
mortgages
Delinquency rates dropped substantially YoY in
4Q12, due to improved credit quality & stronger
$17 Trn
Approximate performance of recent origination vintages
value of housing
stock in the U.S.1 Source: OCC Mortgage Market Metrics 4Q12
Mortgage debt in relation to the housing stock
The housing finance industry requires
professionals across the value chain
Finance & Capital Markets
Total US Mtg
- Note sales & MSR trades
$7.7T - Securitization
debt
$9.5T
2 Net Equity - Basel III RWA
Origination
- CFPB/QM compliance
- MLOs, Ops/fulfillment
- due diligence & underwriting
Negative equity is still prevalent, estimates vary
how much and how long this will remain Servicing
- Workouts, HAMP/HAFA
Servicers continue to improve workout
- Specialty, Master & Sub-servicing
capabilities and are working through the backlog
Source: Fed Flow of Funds Accounts, Table B.100 (Dec 2012) 8