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Origination Report Notes Improving Closing Rates and Timing
<pRefinancing andrnpurchases held their respective market shares for closed loans in Mayrnat 58 percent and 42 percent respectively according to Ellie Mae’srnOrigination Insight Report</bfor the month. Loans originated for FHA fell slightly to 19 percentrnfrom 22 percent the month before while the market share ofrnconventional mortgages rose from 68 percent to 72 percent.</p<pElle Mae compilesrnits monthly data from a sampling of the volume of loan applications,rnmore than 20 percent of all applications nationally, that flowrnthrough its mortgage management software and network.</p<pThe average days tornclose a loan continued to fall, averaging to 44 days for all loans,rnand for refinances and 45 days for purchase loans. This is downrnfrom 50 days for all loans six months ago and the lowest point of thernyear. </p<pCredit quality hasrnloosened slightly since the first of the year with FICO scores forrnboth closed and denied loans easing down six points over the last sixrnmonths to 743 and 701 respectively. Loan -to-value (LTV) andrndebt-to-income (DTI) ratios have moved only slightly over the lastrnsix months and are currently at 79 and 23/35. </p
Tornget a meaningful view of lender “pull-through,” Ellie Maernreviewed a sampling of loan applications initiated 90 days priorrn(i.e., the February 2013 applications) to calculate an overallrnclosing rate of 53.5% in May 2013, up slightly from 53.2% in Aprilrn2013. </p
“Onrna month-over-month basis, the market in May mirrored April, andrncredit quality, as measured by FICO, LTV and DTI, continued its slowrnloosening that started in January 2013,” said Jonathan Corr,rnpresident and chief operating officer of Ellie Mae.</p
Corrrnsaid the interest rate dip in May, from a 3.808 percent average inrnApril to 3.737 percent in May may have prompted borrowers and lendersrnto lock in refinance rates and close. While this probably factoredrninto the study pull-through rate during the month, its didn’t havernany affect on the improved days to close. </p
“Forrnthe past few months, we’ve noted a gradual decline in high-LTVrnrefinances that are most likely HARP-related,” said Corr. “InrnMay, for the first time this year, HARP-related refinancing activityrnfell below 10% to 9.4%.”
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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