In a new forecast on the housing market, Fannie Mae economists remain cautious about demand citing "consumer uncertainty" which will translate into declining originations.

"This uncertainty, coupled with the rise in oil prices, is precipitating reluctance among people to take on large financial obligations such as borrowing money to purchase a home," said Fannie economist Doug Duncan.

When it comes to loan production, the GSE's new forecast is not much different from an earlier one. 

Fannie sees residential production falling to just over $1.03 trillion this year compared to $1.6 trillion in 2010. (The latter figure was calculated by National Mortgage News, not Fannie Mae.)

The GSE sees the first quarter of 2011 being the strongest of the year in terms of loan production ($266 billion) with subsequent quarters coming in at $261 billion, $266 billion, and $235 billion, respectively. But it sees 2012 as being a better year for lenders with $1.12 trillion in production expected.

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