���������ֳ�

���������ֳ�’s Sector Outlook: Neutral While the U.S. economy has remarkably averted recession thus far, the U.S. Community Development & Social Lending (CDSL) sector is not out of the woods just yet. Although ���������ֳ� is no longer forecasting a recession in 2024, the U.S. economy is expected to slow sharply as higher interest rates and a slowdown in bank credit weigh on consumer spending and private investment. However, ���������ֳ� believes that CDSL issuers are well-positioned to face these headwinds, given their strong financial profiles, conservative risk management practices, the effective oversight provided by their underwriting and servicing teams, and their long, successful track record of executing loss mitigation strategies. In addition, many CDSL issuers, particularly state housing finance agencies (HFAs), hold loan portfolios that benefit from federal government guarantees, insurance, and other forms of support such as excess overcollateralization, which insulate them to a large degree from the worst effects of economic downturns. Despite the perceived higher risk and lower credit quality of their loan portfolios and borrowers relative to the prime borrowers served by mainstream banks and other financial institutions, the loan portfolios of CDSL issuers have experienced generally low delinquency, default, and loss rates. This strong loan performance is directly attributable to the prudent risk management and effective oversight provided by CDSL issuers. As such, even if macroeconomic and housing market conditions deteriorate in 2024, ���������ֳ� expects any loan losses to remain manageable.