Understanding The News: Knowledge Is Power

*Knowledge Is Power*
**LOS Sees Refi Upswing**

***As vendors look to provide more value, they are realizing the importance of market visibility. So, what are they doing? They are using their data to create industry reports. Interthinx has been very successful in publishing its fraud report, for example. Now, origination vendor Ellie Mae has released its Origination Insight Report for April 2012. The report draws its data and insights from a sampling of the volume of loan applications that flow through Ellie Mae’s Encompass360 mortgage management software and Ellie Mae Network. Here’s what the report found:

****“As we move into the spring and summer buying season, there was a significant pick up in the percentage of purchase loans: 44% in April up from 39% in March,” said Jonathan Corr, chief operating officer of Ellie Mae. “This is the highest level of purchase loans activity in the last nine months.”

****To get a meaningful view of lender “pull-through”, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the January applications) to calculate a closing rate for April. Ellie Mae found that 48.1% of all applications closed in April compared to 46.9% in March (see full report).

****“In April, the average loan-to-value (LTV) for closed loans hit 80%, the highest we have seen since we started tracking in August 2011,” Corr added. “The increase was driven by an easing of LTVs on conventional refinances (the average LTV was 69% in April compared with 65% in March) and what we believe to be the first surge in Home Affordable Refinance Program (HARP) 2.0 activity from correspondent lenders.

****“Last month closed refinances with LTVs of 95%-plus, nearly doubled to 7.1% compared to 3.6% in March. This has been slowly increasing since the HARP 2.0 announcement in October 2011, but correspondent lenders have only recently been able to run these loans through Desktop Underwriter and Loan Prospector.”

****However, the spike in activity has had some negative consequences. “Recently, the Wall Street Journal and other media outlets have been reporting that the nation’s largest retail lenders are now quoting long timelines for refinances—in some cases as long as 60 to 90 days,” said Corr. “While the average refinance going through our platform took five days longer in April than in March, it still only took 47 days. So, it appears that small and mid-sized lenders and community banks on our platform are providing faster decisions than the retail channels of some mega-lenders.”