Ellie Mae: Origination Insight Report for May

The averagernloan to value ratio of closed loans broke through 80 percent in May accordingrnto the Origination Insight Report released today by Ellie Mae.  The average LTV was 81 percent, up from 80rnpercent in April and the highest level since Ellie Mae began tracking theserndetails in August of last year.  </p

ElliernMae reports detail of both closed loans and denied loan applications that flowrnthrough its mortgage management software and network and represent more than 20rnpercent of U.S. mortgage origination volume.</p

“In May, the average loan-to-value (LTV) for closed loans broke thern80% mark for the first time since our tracking began in August 2011,” saidrnJonathan Corr, chief operating officer of Ellie Mae. “The increase appeared tornbe driven by an easing of LTVs on conventional refinances (the average LTV wasrn72% in May compared to 69% in April). Last month, closed conventional refinancesrnwith LTVs of 95%-plus jumped to 11%, up from 7.1% in April and 3.6% in March,rnwhich may be a sign that HARP 2.0 is helping more borrowers.</p

At thernsame time the LTV of closed loans is rising so has the LTV of denied loans,rnincreasing steadily from 82 percent in August to 88 percent in May while debtrnto income ratios (DTI) and FICO scores have remained relatively unchanged.  While more underwater borrowers have beenrnattracted by the publicity attending the changes in HARP apparently many havernnot successfully refinanced.  </p

To get a meaningful view of lender “pull-through,”rnEllie Mae reviewed a sampling of loan applications initiated 90 days priorrn(i.e., the February applications) to calculate a closing rate for May. ElliernMae found that 47.2% of all applications closed in May compared to 48.1% inrnApril.</p

Refinancingrnrepresented 54 percent of closed loans in May, down 2 percentage points fromrnApril.  FHA loans had a 25 percent share,rndown 3 points while conventional loans increased 3 points to a 65 percentrnshare.  It took the average loan 46 daysrnto close, up one day from April. rnRefinancing loans required an average of 48 days and purchases 44.</p

Inrnaddition to the 81 percent LTV, the average closed loan in May had a FICO scorernof 744, one point higher than April, and a DTI of 24/35, a number that hasrnremained virtually unchanged since tracking began last August.  A loan that was denied had, in addition tornthe 88 percent LTV, a FICO of 702, unchanged from April, and a DTI of 28/43, littlernchanged over the last ten months.</p

As mightrnbe expected, there were substantial differences in the profiles of loans acceptedrnand denied by FHA and conventional lenders. rnWhat was surprising was the additional leeway FHA lenders appear torngrant to purchasers over refinancers.</p

May Loan Outcomes</p<table border="1" cellpadding="0" cellspacing="0"<tbody<tr<td valign="top" width="133"</td<td colspan="3" valign="top" width="270"

Closed Loans</p</td<td colspan="3" valign="top" width="235"

Denied Applications</p</td</tr<tr<td valign="top" width="133"

Loanrn Type</p</td<td valign="top" width="84"

FICO</p</td<td valign="top" width="90"

LTV</p</td<td valign="top" width="96"

DTI</p</td<td valign="top" width="78"

FICO</p</td<td valign="top" width="84"

LTV</p</td<td valign="top" width="73"

DTI</p</td</tr<tr<td valign="top" width="133"

Conv.rn Purchase</p</td<td valign="top" width="84"

764</p</td<td valign="top" width="90"

79</p</td<td valign="top" width="96"

21/33</p</td<td valign="top" width="78"

728</p</td<td valign="top" width="84"

82</p</td<td valign="top" width="73"

25/41</p</td</tr<tr<td valign="top" width="133"

Conv.rn Refi</p</td<td valign="top" width="84"

766</p</td<td valign="top" width="90"

69</p</td<td valign="top" width="96"

23/33</p</td<td valign="top" width="78"

721</p</td<td valign="top" width="84"

87</p</td<td valign="top" width="73"

27/42</p</td</tr<tr<td valign="top" width="133"

FHArn Purchase</p</td<td valign="top" width="84"

701</p</td<td valign="top" width="90"

95</p</td<td valign="top" width="96"

27/41</p</td<td valign="top" width="78"

670</p</td<td valign="top" width="84"

95</p</td<td valign="top" width="73"

32/47</p</td</tr<tr<td valign="top" width="133"

FHArn Refi</p</td<td valign="top" width="84"

713</p</td<td valign="top" width="90"

86</p</td<td valign="top" width="96"

26/39</p</td<td valign="top" width="78"

669</p</td<td valign="top" width="84"

88</p</td<td valign="top" width="73"

30/48</p</td</tr</tbody</table

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