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Economy Expected to Heat Up Through the Summer as Inflation Risks Mount

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Lack of Listings and Increasing Supply Constraints Continue to Limit Existing and New Home Sales Expectations for full-year 2021 economic growth were revised upward in May to 7.0 percent, a modest improvement from last month’s projection of 6.8 percent, attributable primarily to stronger-than-expected first quarter real GDP growth and an improved near-term outlook for consumer spending, according to the May 2021 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The additional strength in consumer spending was previously projected to occur later in 2021 or early 2022, but recent incoming data increasingly points to eagerness on the part of consumers amid continued progress mobilizing COVID-19 vaccinations and waning virus-related restrictions. With stronger growth expected in the current year, the ESR Group slightly downgraded its expectations for 2022 real GDP growth by 0.2 percentage points to 2.8 percent. Despite expectations that the economy will continue to grow over the forecast horizon, downside risks to the forecast are increasing and include supply chain disruptions, labor scarcity, and rising inflationary pressure. On housing, the ESR Group expects home sales in 2021 to increase 6.3 percent as the industry continues to grapple with strong demand and limited supply. While a lack of existing homes for sale is heightening the demand for new homes, supply constraints – most notably lumber – and a dearth of buildable lots, as well as hiring difficulties, are limiting homebuilders’ pace of single-family construction, which is still forecast to be 24.8 percent higher in 2021 than 2020. The ESR Group’s mortgage origination forecast remains largely unchanged at $4.1 trillion in 2021, but the recently lower mortgage rate environment contributed to a slight shift in its composition, with the expected refinance share ticking up a couple percentage points to 55 percent. “While most indictors point toward brisk economic growth over the second quarter, the combination of a disappointing employment report and an unexpectedly strong burst of inflation has raised in the minds of many market participants the potential confluence of broad-based supply restraints, very strong house price growth, and the posture of monetary and fiscal policies,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Supply constraints across multiple sectors are pointing toward ongoing price pressure, most prominently in microchips and the auto sector. This has yet to significantly affect mortgage rates, except to the extent that the rise in the 10-year Treasury since the beginning of the year contains an increased expected inflation component and has prevented mortgage rates from retreating further from their temporary recent peak.” Duncan continued: “Stronger inflation and a resultant move in interest rates are risks that we believe should be monitored. As the effects of expansionary monetary policy continue to work their way through the economy, inflationary expectations may continue to rise. This could lead to prices rising further even with growth concurrently slowing in the presence of diminished labor market slack and waning fiscal policy support. If such a scenario were to play out, the question then becomes whether this necessitates a response by the Federal Reserve. While momentum in the housing market will likely continue in the near term, this is an increasingly important consideration for 2022.” Visit the Economic & Strategic Research site at fanniemae.com to read the full May 2021 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here. About Fannie MaeFannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit:fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog Fannie Mae Newsroomhttps://www.fanniemae.com/news

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NPL 2021-1 Includes the Company’s Seventeenth Community Impact Pool Offering Fannie Mae (OTCQB: FNMA) announced its latest sale of non-performing loans as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio, including the company’s seventeenth Community Impact Pool (CIP). CIPs are typically smaller pools of loans that are geographically focused and marketed to encourage participation by non-profit organizations, minority- and women-owned businesses (MWOBs), and smaller investors. The four larger pools include approximately 8,090 loans totaling $1.6 billion in unpaid principal balance (UPB) and the CIP of approximately 400 loans totaling $98.1 million in UPB. The CIP consists of loans geographically located in the Miami-Dade area. All pools are available for purchase by qualified bidders. This sale of non-performing loans is being marketed in collaboration with Bank of America Merrill Lynch and First Financial Network, Inc. as advisors. Bids are due on the four larger pools on June 8, 2021 and on the CIP on June 22, 2021. Among other elements, terms of Fannie Mae’s non-performing loan transactions require the buyer of the non-performing loans to pursue loss mitigation options designed to be sustainable for borrowers. In the event a foreclosure cannot be prevented, the owner of the loan must market the property to owner-occupants and non-profits before offering it to investors, similar to Fannie Mae’s FirstLook® program. Interested bidders are invited to register for future announcements, training and other information here. Fannie Mae will also post information about specific pools available for purchase on that page. About Fannie MaeFannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit:fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

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Equity-Rich Properties Outnumber Seriously Underwater Homes by Seven-to-One Ratio; Portion of U.S. Homes Considered Equity-Rich Up To 32 Percent; Seriously Underwater Properties Below 5 Percent ATTOM Data Solutions, curator of the nation’s premier property database, released its first-quarter 2021 U.S. Home Equity & Underwater Report, which shows that 17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value. The count of equity-rich properties in the first quarter of 2021 represented 31.9 percent, or about one in three, of the 55.8 million mortgaged homes in the United States. That was up from 30.2 percent in the fourth quarter of 2020, 28.3 percent in the third quarter and 26.5 percent in the first quarter of 2020 – one of many measures showing how the U.S. housing market continues fending off economic damage caused by the worldwide Coronavirus pandemic. The report also shows that just 2.6 million, or one in 21, mortgaged homes in the first quarter of 2021 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value. That figure represented 4.7 percent of all U.S. properties with a mortgage, down from 5.4 percent in the prior quarter, 6 percent in the third quarter of 2020 and 6.6 percent a year ago. Among the 50 states, 41 showed an increase from the fourth quarter of 2020 to the first quarter of 2021 in the percentage of homes considered equity-rich, while 49 saw a decrease in the percentage that were seriously underwater. The improvement at both ends of the equity scale continued across the nation despite the fallout from the pandemic. Gains came as median home prices nationwide rose 16 percent, year over year, in the first quarter of 2021 and were up at least 10 percent in most of the country. As the nine-year U.S. housing-market boom has surged ahead, equity has continued to improve because price increases have widened the gap between what homeowners owe on mortgages and the value of their properties. Prices have kept rising over the past year as rock-bottom interest rates and a desire to escape virus-prone areas have led to a bubble of home buyers largely untainted by the pandemic’s financial damage. Those buyers have been chasing a declining supply of properties for sale, resulting in soaring values. “It continues to be a great time to be a homeowner most everywhere in the country. The ongoing price spikes we’re seeing help to cut down the number of seriously underwater properties and boost the level of equity-rich properties,” said Todd Teta, chief product officer with ATTOM Data Solutions. “However, that may shift once the foreclosure moratorium is lifted and that’s something we’re watching, partly because it could limit equity gains and draw people underwater. For now, though, the equity picture remains one of many signs that the long U.S. housing market boom keeps charging ahead.” Western and northeastern states show biggest improvement in equity-rich share of homes Nine of the 10 states with the biggest gains in the share of equity-rich homes from the fourth quarter of 2020 to the first quarter of 2021 were in the West or Northeast. States where the portion of mortgaged homes considered equity-rich rose most were Idaho (up from 42.7 percent in the fourth quarter of 2020 to 50.6 percent in the first quarter of 2021), Utah (up from 37.9 percent to 42.5 percent), Colorado (up from 36.5 percent to 40.6 percent), Vermont (up from 47.8 percent to 51.5 percent) and Washington (up from 41 percent to 44.5 percent). States where the share of equity-rich homes decreased the most from the fourth quarter of 2020 to the first quarter of 2021 were West Virginia (down from 21.6 percent of mortgaged properties to 19.5 percent), Louisiana (down from 17.1 percent to 15.7 percent), Pennsylvania (down from 26.1 percent to 24.9 percent), Iowa (down from 22.1 percent to 20.9 percent) and Mississippi (down from 25.6 percent to 25.2 percent). Largest declines in underwater properties across Midwest and South Nine of the 10 states with the biggest declines in the percentage of mortgaged homes considered seriously underwater from the fourth quarter of 2020 to the first quarter of 2021 were in the South and Midwest. They were led by Iowa (share of homes seriously underwater down from 11.3 percent to 8.7 percent), Mississippi (down from 11.4 percent to 9.1 percent), Louisiana (down from 14.9 percent to 13 percent), South Dakota (down from 8.2 percent to 6.3 percent) and Nebraska (down from 7.3 percent to 5.5 percent). States where the percentage of seriously underwater homes rose, or dropped by the smallest amounts, from the fourth quarter to the first quarter were Pennsylvania (up from 7.1 percent to 7.3 percent), Oklahoma (down from 8.3 percent to 8.2 percent), Washington (down from 2.2 percent to 2.1 percent), Illinois (down from 10.6 percent to 10.4 percent) and Minnesota (down from 4.2 percent to 3.9 percent). Northeast and West continue to have largest shares of equity-rich homes The Northeast and West again had far higher levels of equity-rich properties than other regions. The top 11 states with the highest levels in the first quarter of 2021 were led by Vermont, (51.5 percent of mortgage properties were equity-rich), Idaho (50.6 percent), California (49 percent), Washington (44.5 percent) and Utah (42.5 percent). The 10 states with the lowest percentage of equity-rich properties in the first quarter of 2021 were in the Midwest and South, led by Louisiana (15.7 percent), Illinois (16.8 percent), Oklahoma (18 percent), West Virginia (19.5 percent) and Alabama (20.3 percent). Among 106 metropolitan statistical areas with a population greater than 500,000, the 10 with the highest shares of equity-rich properties again were in the West during the first quarter of 2021. They were led by San Jose, CA (67.4 percent of mortgaged properties were equity-rich); San Francisco, CA (60.8 percent); Boise,

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Foreclosure Starts and Completed Foreclosures Decrease 1 Percent from Last Month, 17 Percent Compared to April 2020 ATTOM Data Solutions, licensor of the nation’s most comprehensive foreclosure data and parent company to RealtyTrac (www.realtytrac.com), a foreclosure listings portal, released its April 2021 U.S. Foreclosure Market Report, which shows there were a total of 11,810 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — down 1 percent from a month ago and down 17 percent from a year ago. “Foreclosure activity continues to trend near historic lows as we enter the 14th month of the Federal Government’s foreclosure and eviction moratorium,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM Data Solutions company. “Coupled with the CARES Act mortgage forbearance program, the government and mortgage servicing industry have worked together exceptionally well to prevent millions of unnecessary foreclosures. Because of these programs, and the nearly 90 percent success rate of borrowers resuming mortgage payments as they exit forbearance, a large influx of foreclosures when the programs expire seems very, very unlikely.” Delaware, Nevada and Illinois had the highest foreclosure rates Nationwide one in every 11,636 housing units had a foreclosure filing in April 2021. States with the highest foreclosure rates were Delaware (one in every 5,700 housing units with a foreclosure filing); Nevada (one in every 5,738 housing units); Illinois (one in every 5,890 housing units); Florida (one in every 6,375 housing units); and New Jersey (one in every 6,390 housing units). Among the 220 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in April 2021 were Macon, GA (one in every 2,334 housing units with a foreclosure filing); Provo, UT (one in every 3,295 housing units); Pensacola, FL (one in every 3,492 housing units); Cleveland, OH (one in every 3,550 housing units); and Beaumont, TX (one in every 3,561 housing units). Those metropolitan areas with a population greater than 1 million, with the worst foreclosure rates in April 2021 including Cleveland, OH were: Las Vegas, NV (one in every 4,838 housing units); Riverside, CA (one in every 5,020 housing units); Jacksonville, FL (one in every 5,243 housing units); and Chicago, IL (one in every 5,324 housing units). Foreclosure starts increase monthly in 24 states nationwide Lenders started the foreclosure process on 6,355 U.S. properties in April 2021, down 1 percent from last month and down 26 percent from a year ago. “April 2020 was the first full month of the foreclosure moratorium, and foreclosure activity that month dropped by 75 percent compared to April 2019,” Sharga noted. “Given that, it’s a little surprising to see foreclosures drop by another 24 percent compared to last year, but virtually all of the foreclosure activity today is made up of vacant and abandoned properties, or commercial loans, which often don’t have the same protections as loans on residential properties.” Counter to the national trend, states that had at least 100 foreclosure starts in April 2021 and saw the greatest monthly increase in foreclosure starts included: Washington (up 76 percent); New York (up 53 percent); Kentucky (up 47 percent); Alabama (up 28 percent); and Indiana (up 26 percent). In looking more granular, those counties that had the greatest number of foreclosure starts in April 2021 included: Los Angeles County, CA (259 foreclosure starts); Cook County, IL (256 foreclosure starts); Clark County, NV (142 foreclosure starts); Riverside County, CA (98 foreclosure starts); and Maricopa County, AZ (86 foreclosure starts). Foreclosure completion numbers decrease 1 percent from last month Lenders repossessed 1,555 U.S. properties through completed foreclosures (REOs) in April 2021, down 1 percent from last month and down 41 percent from last year. Those states that had the greatest number of REOs in April 2021, included: California (190 REOs); Florida (176 REOs); Illinois (127 REOs); Texas (111 REOs); and New Jersey (109 REOs). Those major metropolitan statistical areas (MSAs) with a population greater than 1 million that saw the greatest number of REOs in April 2021 included: Chicago, IL (113 REOs); Philadelphia, PA (90 REOs); Riverside, CA (53 REOs); Los Angeles, CA (43 REOs); and Miami, FL (35 REOs). About ATTOM Data Solutions ATTOM Data Solutions provides foreclosure data licenses that can power various enterprise industries including real estate, insurance, marketing, government, mortgage and more. ATTOM multi-sources from 3,000 counties property tax, deed, mortgage, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. About RealtyTrac (Powered by ATTOM’s Property Data) RealtyTrac.com is the premier foreclosure listing and search portal for investors and consumers looking to gain a competitive edge in the distressed market. Realtytrac.com grants access to insight that is typically only available to real estate professionals.

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Origination Milestone Confirms Company’s Strength in the Private Lending Industry RCN Capital, a leading nationwide private lender specializing in providing financing for real estate investors, announced that it has funded over 10,000 loans since its inception in 2010, affirming the company as an influential lender in the space. This is the second funding milestone RCN Capital has reached in 2021. RCN, which offers financing for short-term fix & flip projects, long-term rentals, & ground-up construction, surpassed $2 billion in originations since its founding in February, no small feat in the private lending industry. “This is an incredible milestone that would not have been possible without RCN Capital’s hard-working employees” said Jeffrey Tesch, RCN Capital’s CEO. “A tremendous thank-you to all of our current, former, and soon to be RCN Capital family members.” 2021 is off to a monumental start for RCN Capital as the company is currently on track to exceed $1.1 billion in originations for the year. The company was also already recognized this year for its explosive growth after ranking number 180 on the 2021 Inc. 5000 Regionals: NYC Metro list which ranks the fastest-growing private companies in the New York City Metro Region. “We look forward to continued leadership in the private lending industry and growing with our clients, brokers and correspondent lending partners in 2021 and beyond” Tesch added. About RCN Capital RCN Capital is a South Windsor, CT based national, direct, private lender. Established in 2010, RCN provides commercial loans for the purchase or refinance of non-owner occupied residential and commercial properties. The company specializes in new construction financing, short-term fix & flip and bridge financing and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com.

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Brooke Carillo To Join As Chief Financial Officer Redwood Trust, Inc.(NYSE: RWT), a leader in expanding access to housing for homebuyers and renters, announced that Brooke Carillo will join Redwood to serve as its next Chief Financial Officer. Ms. Carillo is expected to start at Redwood in May 2021 and will report to Redwood’s Chief Executive Officer, Chris Abate. Mr. Abate stated, “We are very pleased to welcome Brooke to Redwood. She brings to us a valuable blend of strategic acumen, industry relationships and transactional experience, which will further strengthen our leadership team.” Ms. Carillo commented, “I am thrilled to join Redwood during this stage of corporate innovation and rapid progress. I share the excitement of my fellow team members about the extraordinary opportunity ahead of us to expand the company’s leadership position within a sector that is only growing in scale and importance.” Ms. Carillo brings a strong and relevant professional background to Redwood. She most recently served as Head of Corporate Strategy at Annaly Capital Management, where she held a variety of roles over more than a decade of service, including membership on that firm’s Operating Committee and oversight of its corporate strategy, capital markets and investor relations departments. Ms. Carillo also has previous experience in investment banking, having worked as part of the Financial Institutions Group at Bank of America Merrill Lynch. Ms. Carillo holds a B.S. in Economics from Duke University. Collin Cochrane, Redwood’s current CFO, will continue in that capacity until Ms. Carillo’s role commences, at which time he will take on the role of Chief Accounting Officer while also assuming dedicated responsibility for certain other corporate finance initiatives. He will continue to serve as Redwood’s principal accounting officer. Mr. Abate commented, “Collin has served admirably at Redwood in various capacities since he joined the company in 2013. Most recently, as CFO, he successfully managed the transition and institutionalization of the finance and accounting departments to scale with our operating platforms. We are pleased that Collin will be heading up key initiatives enterprise-wide that will leverage his financial expertise, while maintaining his strong leadership of the accounting function.” Mr. Abate concluded, “The complementary skillsets of Brooke, Collin, and the financial leadership team at Redwood positions us to best execute on our ambitious growth plan going forward.” About Redwood Trust Redwood Trust, Inc. (NYSE: RWT) is a specialty finance company focused on several distinct areas of housing credit. Our operating platforms occupy a unique position in the housing finance value chain, providing liquidity to growing segments of the U.S. housing market not served by government programs. We deliver customized housing credit investments to a diverse mix of investors, through our best-in-class securitization platforms; whole-loan distribution activities; and our publicly traded shares. Our consolidated investment portfolio has evolved to incorporate a diverse mix of residential, business purpose and multifamily investments. Our goal is to provide attractive returns to shareholders through a stable and growing stream of earnings and dividends, capital appreciation, and a commitment to technological innovation that facilitates risk-minded scale. Since going public in 1994, we have managed our business through several cycles, built a track record of innovation, and a best-in-class reputation for service and a common-sense approach to credit investing. Redwood Trust is internally managed and structured as a real estate investment trust (“REIT”) for tax purposes. For more information about Redwood Trust, visit our website at www.redwoodtrust.com or connect with us on LinkedIn, Twitter, or Facebook.