Average Time From Application To Closing Rises To 48 Days

by devteam August 15th, 2012 | Share

Fifty-eightrnpercent of mortgages that closed in July were loans for the purpose ofrnrefinancing, up from 54 percent in June according to Ellie Mae’s Origination Insight Report releasedrntoday. Conventionalrnmortgages made up 67 percent of the mortgages originated through Ellie Mae andrnFHA loans accounted for 24 percent.</p

The Origination Insight report is based on arnsample of loan originations that flow through Ellie Mae’s mortgage managementrnsoftware and network and represent more than 20 percent of U.S. mortgagernoriginations.   The company began issuingrnits report in August of 2011 so for the first time annual information isrnavailable.</p

The vastrnmajority of loans were 30 year fixed-rate mortgages (FRM) with 15-year FRMrntaking a 15.3 percent market share and adjustable rate mortgages (ARMs) onlyrn3.1 percent.  The average rate on arn30-year FRM that closed during the month was 3.87 percent compared to 3.99 percentrnin June and 4.64 percent in August 2011. </p

It took loans an average of 48 days fromrnapplication to close in July, a number that has inched up slowly over the lastrnfew months.  There was little differencernin the time required to close a refinance loan and a loan for the purpose of purchasing.  Jonathan Corr, chief operating officer of ElliernMae said, “The combination of extremely low interestrnrates and a strengthening purchase market pushed out closing times for bothrnrefinance and purchase loans in July. These time frames are similar to what wernsaw in January of last year, when a surge of activity challenged the industry’srncapacity.”</p

To get a meaningful view of lenderrn”pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90rndays prior (i.e., the April applications) to calculate a closing rate for July.rnEllie Mae found that 45.8% of all applications closed in July 2012 compared to 46.2%rnin June 2012.</p

A typical loans closed during the period hadrna borrower FICO score of 748, debt to income (DTI) ratio of 23/34 and a loan tornvalue of 80 percent.  With the exceptionrnof the LTV which has increased by one percentage points, the quality standardsrnare higher than a year ago when the typical FICO was 741 and the DTI was 25/36.rn Loans for which the applications were deniedrntypically had an LTV of 85 (compared to 82 percent a year earlier) and a 710rnFICO score and 28/44 DTI.  The last twornare again higher than a year ago when the typical FICO was 696 and the DTI wasrn29/45.</p

Conventional loans with LTV’s above 95rnpercent declined for the second straight month. rnCorr said this might indicate that HARP 2.0 activity is slowing,rnsomething that is not borne out by data from Freddie Mac and Fannie Mae.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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