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The MReport Webcast: Tuesday 8/9/2016

The Dodd-Frank Act Stress Tests (DFAST)—Severely Adverse Scenario report, released by the FHFA on Monday, indicated that when hypothetical severely adverse economic conditions for a forecast horizon from December 31, 2015, to March 31, 2018, are applied, the GSEs would be projected to make incremental draws on Treasury ranging between 49 billion dollars and 126 billion dollars depending on the treatment of deferred tax assets.

Certain financial institutions with more than 10 billion dollars in assets are required by the Dodd-Frank Act to conduct annual stress tests to determine if they can absorb losses during a period of adverse economic conditions. The severely adverse conditions applied in the 2016 tests include an immediate decline in real GDP until it reaches a trough in the first quarter of 2017, representing a decline of 6 point 26 percent from the pre-recession peak, and an increase in unemployment rate from 5 percent at the beginning of the forecast horizon to a peak of 10 percent in the third quarter of 2017.

The confidence of consumers in the U.S. housing market is now at an all-time high, according to Fannie Mae’s Home Purchase Sentiment Index and National Housing Survey for July 2016. July’s index rose by 3 point 3 points from June up to an all-time survey high of 86 point 5 with results indicating a more positive outlook for the housing-market specific components of the index. One notable result of the HPSI is the share of consumers who said they would buy a home if they were to move, which increased in July up to 67 percent.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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