Ellie Mae Notes Looser Underwriting, Quicker Closes

ElliernMae’s Origination Insight Report forrnFebruary noted a distinct drop in the share of loans originated for refinancingrnduring the month.  After spiking to 73rnpercent in January, the highest share in the Report’s 18-month history, itrnsettled back into the more normal range of 68 percent.  Purchase originations had a 32 percent share.  Conventional loans made up 71 percent of therntotal loans in Ellie Mae’s sample, down from 74 percent in January and FHArnloans had a 20 percent share compared to 18 percent the previous month. </p

Ellie Mae placed the “pull through” or closing raternfor February at 56.8 percent, up from 55.0 percent in January.  To obtain this rate the company reviews arnsampling of loan applications initiated 90 days earlier, in this case in Novemberrn2012, to see how many had closed.  Despiternfrequent course changes the closing rate has trended higher since the first samplingrnin August 2011 when the rate was 47.1 percent. </p

Jonathan Corr, president and CEO of Ellie Mae said there was slightrneasing in February in average FICO scores, loan-to-value ratios (LTV) and debt-to-incomernratios (DTI) for closed loans. “The average FICO dropped from 749 in Januaryrn2013 to 745 in February 2013, the lowest point since May 2012. Meanwhile, thernaverage loan-to-value hit 80% for the first time since July 2012 and thernbackend debt-to-income ratio was 35% for the first time since June 2012–suggestingrnthat the credit box may be expanding.”</p

Corr added, “HARP 2.0 continues to show traction with conventionalrnrefinances at 95%-plus LTV rising for the sixth month in a row to 12.1% inrnFebruary 2013, the highest level since we began tracking in October 2011.”</p

The time required to close loans improved with the average timerndropping to 50 days in February from 54 days in January.  Refinancing went from an average of 55 daysrnto 51 while purchase loans required 47 days compared to 51 in January. </p

Ellie Mae draws its data from a sampling of the loan applications – threernmillion in 2012 or more than 20% of all originations in the United States – thatrnflow through its management software and proprietary network. 

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