Ellie Mae: Credit Scores On Closed Loans Are Falling

Credit scores on closed loans continued to fall to their lowest levels since Ellie Mae began reporting data in August 2011, according to the latest Origination Insight Report released by Ellie Mae. The average FICO score on all closed loans fell to 722, marking the fifth consecutive month of decline. Additionally, the average FHA refinance FICO score fell 7 points to 654 while the average VA purchase loan FICO score declined to 705, its lowest point since April.

Featured Sponsors:

[huge_it_gallery id=”2″]

Ellie Mae’s data also shows that the front-end and back-end debt-to-income (DTI) ratios have loosened materially to 25/39, the highest percentages since January 2014. Additionally, closing rates remained robust with over 66 percent of all loan applications closing for the fourth consecutive month. The closing rate on purchase loans remained steady at 71 percent.

“It is still too early to see if there will be impacts stemming from the Know Before You Owe changes that went into effect just last month,” said Jonathan Corr, president and CEO of Ellie Mae. “The time to close loans remained a constant 46 days for yet another month, while the closing rate on purchased loans has stayed above 70 percent. We may begin to see time to close increase in the November data as the new closing disclosures are utilized for the first time.”

Featured Sponsors:

[huge_it_gallery id=”3″]

The Origination Insight Report mines its application data from a robust sampling of approximately 66 percent of all mortgage applications that were initiated on the Encompass LOS. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

About The Author


Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.