To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the October 2013 applications) to calculate an overall closing rate of 54.9% in January 2014, up slightly from 54.3% in December 2013. Here’s what else the origination vendor’s January Origination Insight Report found:
“The purchase-to-refinance mix remained relatively steady in January 2014, with just a 1% change from December,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Credit requirements continued to loosen as we entered the new year. The average FICO score for all closed loans dropped to 724 in January 2014, down three points from 727 in December 2013. Last month, 32% of closed loans had FICO scores below 700, compared to 23% in January 2013.
“The percentage of ARM loans increased to 7.2%. This was the fourth month in a row that we have seen this shift and the highest level since August 2011 (8.3%). Typically, borrowers move to ARMs as a way of stretching their buying power,” continued Corr.
The report draws its data and insights from a robust sampling of the significant volume of loan applications that flow through Ellie Mae’s Encompass mortgage management software and the Ellie Mae Network. The Origination Insight Report mines its application data from a robust sampling of approximately 57% of all mortgage applications that were initiated on the Encompass origination platform.
“For a third consecutive month, HARP-related refinancing activity increased. Conventional refinances at 95%-plus LTV rose to 14.3% in January 2014, the highest they’ve been since we began tracking this data in October 2011,” Corr noted.
“Meanwhile, the average time to close a loan hit 45 days last month, up from 43 days in December 2013. This was most likely due to the holiday season and lenders adjusting to the new Ability-to-Repay and Qualified Mortgage regulations that took effect Jan. 10, 2014.”
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