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Analysis of Macro-Environment Implications for the Mortgage Origination

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TO: BUS 470 Consultants

FROM: Fred Smith, President Mortgage Loan Origination Trade Association

DATE: November 20, 2011

RE: Analysis of Macro-environment implications for the Mortgage Origination

After pondering recent Wall Street Journal articles on sovereign debt, fiscal policy and monetary policy, I decided to use consulting services to assist me with identifying the most critical strategic issues and their respective root causes our industry faces and developing 'actionable' recommendations to ensure the industry's continued success.

Recommendations

First, we recommend you to release a series of assistance programs, including the requirements of higher taxes, freezing pensions and wage growth. The second recommendation is to enact large-scale economic stimulus plan, such as financial aid to companies, state governments. Third, we suggest you to continue implement more national bonds purchase plan. Finally, we recommend you to depress current housing price in order to ease the oversupply situation of U.S. housing market.

Current Situation and Fact Summary

Since 2008 the U.S. subprime mortgage crisis triggered a global financial crisis and it cause a series of domestic economic regression. Economic recession makes consumers cut their spending, companies cutting production and reduce the production scale. Consumer spending has been further suppressed, resulting in more layoffs, and economy is engaged into a vicious circle. Our recommendation is aimed at stabling unemployment rate and relief financial pressure of state governments and companies.

Analysis and Conclusion

The reasons summed up in the recession are mainly in the following aspects: First, the role of cyclical factors, the U.S. economy experienced high growth over 10 years after undergoing a necessary adjustment; two of the new economy and stock market bubble burst, making it an economic summit to support the information technology revolution, power suddenly reduced; Third, economic structural factors, the peak of over-investment in the economy, over research and development leading to production of excess capacity, once the economic downturn, the original non-linear growth of IT spending and other private investment is immediately thrown into sharp decline; Fourth, macro-control reasons, the Federal Reserve to curb economic overheating and the bubble economy in a substantial increase in interest rates also led to a cooling economy.

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