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Ellie Mae: Millennial Refinances Rise

According to the latest Ellie Mae Millennial Tracker, the average interest rates on all 30-year notes dipped to 4.059% in August, the lowest since December 2016, spurring a surge in refinances for Millennial homebuyers. Refinances continued to climb to 25% of all closed loans for Millennials, up 2% from the previous month and the highest percentage since December 2015. Lack of affordable homes in growing markets also led to purchases dipping for the second month in a row, accounting for 74% of all closed loans.


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Conventional refinance loans rose to 29% in August, up from 27% the month prior, while Conventional purchase loans shrunk to 69%, down from 72% in July and 82% in June. Likewise, VA refinances rose to 38%, a steady month-over-month increase from 34%, as purchases fell from 66% to 62%, respectively. FHA percentages slightly varied from the previous month, with purchases down from 92% to 91% in August, and refinances up one point from 8% to 9%, the highest percentage since February 2019. 


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“We are seeing Millennial homeowners who may have purchased homes only a few years ago quickly taking advantage of the industry’s extremely low interest rates,” said Joe Tyrrell, chief operating officer at Ellie Mae. “We will also be watching to see if the increased purchase power from a lower rate environment enables some Millennials to make the leap into homeownership as we enter the fall homebuying season.”


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Additional insights from the August Millennial Tracker include:

>>Time-to-close for all loans increased slightly to 42 days in August, compared to 41 in July. Given the increase of refinances, the time-to-close on refinance loans held at 42 days from the previous month. Purchase loans also held steady for the third consecutive month at 40 days. 


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>>The average age of Millennial home buyers remained at 30.5, the highest average since November 2015.

>>The average FICO score for Millennial borrowers stayed steady at 728, the highest average since May 2015.

The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a robust sampling of approximately 80 percent of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass all-in-one mortgage management solution.

Partnerships In Lending Drive Better Business Outcomes

In today’s fast paced and ever changing mortgage market, vendors are quickly realizing that trying to “go-it-alone” is not always what’s in the best interest of their client.  Vendors need to explore new ways to deliver innovation that specifically addresses the challenges that lenders are facing today and into the future.


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Strategic partnership in lending can improve the customer experience while driving better business outcomes for each partner involved. The right partnership provides major advantages for all involved: mutual customers, each business and the industry as a whole.


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Consumer’s benefit from a seamless and fully integrated offering that truly delivers more tools and functionality in one comprehensive solutions.  The consumer doesn’t have to jump to multiple products and services to obtain their desired outcome.  This provides a frictionless user experience while improving customer satisfaction. 


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Each business partner benefits from the right partnership in a number of ways.  It allows businesses to expand their offering to deliver what their customer is looking for and more specifically needs at this point in time to address changing market condition.  It also allows each partner to leverage their specific strengths while minimizing gaps or others areas that they have less expertise.  


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In addition, businesses can expand their target audience, grow faster than they could organically, and capture additional market share.  Partnerships can also leverage synergies between the two companies, marketing and outreach strengths, sales teams, and brand awareness within the industry.

For example, we recently partnered with Ellie Mae. The integration between Capsilon and Ellie Mae allows mortgage lenders to more efficiently and securely share data between Capsilon’s solutions and Encompass® to drive quality and efficiency at every stage of the mortgage lifecycle.

Mutual Capsilon and Ellie Mae customers benefit from the seamless integration that removes manual work and time delays between the systems, making it even easier for customers to leverage both solutions.

For example, Encompass® customers can now use Capsilon to automate “stare and compare” activities. Companies can immediately access and compare Encompass® data to information within documents, instantly spotting where supporting documents and data don’t match, enabling them to use better data within Encompass & other business applications.

What this means for Ellie Mae customers, and our current mutual customers, is flexibility and options to take advantage of best of breed technologies, in which they can then create a technology stack designed to solve their specific lenders pain points, allow them to create competitive advantages and provide them a platform to proactively respond to the market and their customers. 

This is just one example of how partnership can drive better business outcomes while delivering an improved customer experience. When this happens the entire industry benefits.We are currently working with a number of vendors to develop partnerships and integrate our solutions so that we can continue to add value to lenders.  We are constantly looking for ways to drive better business outcomes.  It stats with an open mind and a willingness to realize that you don’t have to “go-it-alone”. 

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30-Year Fixed Rate Drops, Refis Tick Up Slightly

According to the March Origination Insight Report from Ellie Mae, the 30-year note rate dropped for the third straight month to 4.77 percent, down from 4.86 percent in February and 5.01 percent in January. The percentage of refinances on all loans increased to 35 percent, up from 34 percent the month prior.


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“As we enter the busy spring home buying season, we are seeing activity tick back up across the board with the 30-year note rate decline,” said Jonathan Corr, President and CEO of Ellie Mae. “We will continue to watch closing rates as they have stayed at or above 75 percent through the first quarter of 2019, a possible indication of buyers’ conviction.”


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Other statistics of note in March included:

The percentage of FHA refinances increased to 23 percent in March, up from 20 percent in February.


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Time to close all loans continued to decrease. Time to close all loans was 42 days in March, down from 43 in February and 45 in January. The time to close a purchase loan dropped to 45 days in March, down from 47 in February and 49 in January.

The percentage of Adjustable Rate Mortgages (ARMs) decreased to 7.4 percent, down from 7.6 percent in February.


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The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

In addition to the Origination Insight Report, Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker on the first Wednesday of each month. The Ellie Mae Millennial Tracker focuses on mortgage applications submitted by borrowers born between the years 1980 and 1999.

Partnership Furthers A More Digital Process

FirstClose, a provider of technology solutions for mortgage lenders nationwide, announced that its reporting suite is now available through Ellie Mae’s Encompass digital mortgage solution. The seamless integration allows lenders to order FirstClose’s solutions directly through Encompass to drive quality and efficiency in the loan origination process.


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Services can be ordered directly from Encompass at the touch of a button, eliminating duplicate key strokes when placing orders. When orders are returned, data points are sent back to Encompass, which automatically populates critical fields such as the full legal description and vesting information from the title work, the appraised value from the valuation product selected, and more. Copies of the completed reports are automatically imaged into Encompass. The integration reduces human error, as well as costs and closing times.


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Ellie Mae is a provider of innovative on-demand software solutions and services for the residential mortgage industry. Ellie Mae’s Encompass digital mortgage solution provides one system of record that enables banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency.


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“Seamless integration between the LOS and valuation and settlement services helps lenders close loans more quickly and efficiently,” said FirstClose CEO Tedd Smith. “Our secure integration with Encompass enables our clients to simplify the process of ordering our solutions, so they can more easily process mortgage loans and grow their business. We look forward to a long, successful relationship with Ellie Mae.” 


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FirstClose is a provider of best-in-class property & borrower data intelligence and settlement services nationwide. The company specializes in delivering a powerful web app and LOS plugin that is a home equity and refi tool that offers everything from application to servicing (credit score, valuation, title, tax, flood, closing and recording) on one easy-to-navigate platform.

In addition, the company delivers simplified vendor management by consolidating vendors and products on one platform.   FirstClose makes it easy to identify and repair the gaps where lender profits can be maximized.

ARMs Hit Eight-Year High

According to the December Origination Insight Report from Ellie Mae, the percentage of Adjustable Rate Mortgages (ARMs) reached 9.2 percent, the highest percentage in 2018 and since Ellie Mae began tracking data in 2011. This is up from 8.9 percent the month prior and the 2018 low of 5.5 percent. 


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The increase in ARMs continues to be correlated to the 30-year rate, which rose to 5.17 for loans closed in December, up from 5.15 the month prior. For FHAs, the 30-year rate increased to 5.20, Conventional rates increased to 5.19 and VA rates rose to 5.01.


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“With the strong demand for housing and the rapid increase in property value appreciation, more consumers are turning to Adjustable Rate Mortgages in order to gain additional flexibility when competing for a home,” said Jonathan Corr, president and CEO of Ellie Mae. “This is another key indication of how demand has outpaced supply in the housing market as consumers pursue their dream of homeownership.”


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Other statistics of note in December included:

>>The time to close all loans increased to 47 days in December, up from 46 days in November. Time to close a purchase loan decreased to 47 days, while time to close a refinance increased to 44 days. 


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>>The percentage of purchase loans rose to 71 percent of total loans in December, up from 70 percent the month prior.

>>Overall FICO scores dropped one point to 726. LTV held at 79 for the fifth month and DTI held at 26/39.

The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

In addition to the Origination Insight Report, Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker on the first Wednesday of each month. The Ellie Mae Millennial Tracker focuses on mortgage applications submitted by borrowers born between the years 1980 and 1999.

Adjustable Rate Mortgages Reach A High

 According to the November Origination Insight Report from Ellie Mae the percentage of Adjustable Rate Mortgages (ARMs) reached 8.9 percent, the highest percentage since Ellie Mae began tracking data in 2011.


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The increase in ARMs is directly correlated to the 30-year rate, which rose to 5.15 in November, up from 5.01 the month prior. For FHAs, the 30-year rate increased from 5.05 in October to 5.19 in November. Conventional rates increased from 5.03 in October to 5.17 in November, and VA rates rose from 4.83 to 4.99.


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“As interest rates continue to rise, we are seeing the percentage of Adjustable Rate Mortgages rise in lockstep, and this month they’ve risen to the highest percentage we’ve seen since we began tracking data,” said Jonathan Corr, president and CEO of Ellie Mae. “As expected, we are also continuing to see the percentage of refinances remain low—30 percent in November—due to higher interest rates.”


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Other statistics of note in November included:

The time to close all loans increased to 46 days in November, up from 45 days in October. Time to close a purchase loan increased to 48 days, up from 46 days in October, while time to close a refinance remained at 43 days for the second consecutive month.

The percentage of purchase loans rose to 70 percent of total loans in November, up from 68 percent the month prior.

Overall FICO scores remained steady at 727 in November for the third month. LTV held at 79 for the fourth month, and DTI held at 26/39 for the second month.

The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

In addition to the Origination Insight Report, Ellie Mae also distributes data from its monthly Ellie Mae  Millennial Tracker on the first Wednesday of each month. The Ellie Mae Millennial Tracker focuses on mortgage applications submitted by borrowers born between the years 1980 and 1999.

Ellie Mae Strengthens Identity, Employment And Income Verification Services

Ellie Mae has made enhancements to Encompass Consumer Connect that include identity, employment and income verification. These enhancements help lenders engage with homebuyers and provide a more streamline application process to help foster interest, engage borrowers and convert opportunities.


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The enhancements include the integration of Experian’s CrossCore platform, which enables lenders to use a passive, multi-layered approach to establish identity and assess risk, providing a positive experience for borrowers. Mortgage lenders can combine historical data, such as demographic information, and first-party fraud risk assessment with step-up authentication methods to verify an individual during the application process. Upon submission of the loan application, the data is immediately sent to the identity verification provider and a report is generated and sent to the Encompass® eFolder within one hour of submission.


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Since the launch on July 9, 2018, Encompass Consumer Connect continues to add key functionality which now includes support for Verification Services that provides lenders the ability to automate borrower identity, employment and income verification to achieve Day 1 Certainty from Fannie Mae to close loans faster.


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In addition to providing a seamless digital experience for homebuyers, Encompass Consumer Connect helps lenders close loans faster. Since the launch of Encompass Consumer Connect, Ellie Mae has seen significant momentum including more than 500 clients with more than 2,000 unique sites and more than 140,000 applications in progress. Some lenders are seeing a three-day reduction in turn times from application to underwritten loan.

“At Experian, we are constantly innovating to modernize the mortgage process and support the industry’s evolution,” said Michele Pearson, general manager of Experian Mortgage. “We’re proud to work with Ellie Mae to maximize the power of data and analytics to more quickly and accurately authenticate prospective borrowers, while helping businesses make smarter lending decisions.”

Encompass Consumer Connect gives Ellie Mae Encompass lenders the ability to offer a consumer web experience that goes beyond a mere online application. It is truly a state-of-the-art, completely customizable, branded and engaging digital mortgage experience for homebuyers – accessible from any device.

“Lenders are looking for more efficient ways to engage homebuyers and with these updates to Encompass Consumer Connect, we’re making it easier for borrowers to complete their loan applications,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “Our recent enhancements to Encompass Consumer Connect offer identity, employment and income verification and an integration with Experian that simplifies and expedites key verification activities for an improved borrower experience.”

Dave Ard Joins Ellie Mae As SVP Of Enterprise Sales

Dave Ard has joined Ellie Mae as senior vice president of enterprise sales. In this role, Dave will manage the enterprise team of account executives and relationship managers responsible for providing digital mortgage technology to the largest lenders across the United States.


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Prior to joining Ellie Mae, Dave held various leadership and management roles at First American Mortgage Solutions. Most recently he served as senior vice president, sales and business development where he led the client executive team of representatives across top clients and designed and implemented the “Solution Executive” framework where he hired and led a team of solution and business development representatives to drive solution-level focus and accountability. He also led and integrated the partner and channel sales effort across multiple product lines and acquisitions. Before First American Mortgage Solutions, Dave held roles at CoreLogic, including senior vice president of Business Development, Client Executive and Senior Vice President of Mortgage Analytics. Dave began his career at Intel Corporation. He holds a Bachelor of Science in Managerial Economics from the University of California, Davis.


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“Dave has a proven history of leading successful sales teams and knows the mortgage market well,” said Jeff Benjamin, senior vice president of sales and client management, Ellie Mae. “Going forward, Dave will be responsible for driving the sales and relationship management strategy with a focus on the largest lenders as Ellie Mae drives toward our North Star of automating everything automatable for the residential mortgage industry. It is an opportunity to help these lenders succeed and grow Ellie Mae’s market share.”


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“This is an exciting time to join Ellie Mae,” said Dave Ard. “The digital mortgage is a game-changer for all lenders as they strive to compete in today’s changing market. The Enterprise segment has so much to gain from the efficiencies, cost savings and fast return on their technology investment as they turn to Encompass to close more loans, close loans faster and reduce their cost of origination. I look forward to working alongside a great team to bring the promise of Ellie Mae’s true digital mortgage to the country’s largest lenders.”

Millennials Undeterred From Purchasing Homes Despite Rising Interest Rates

Millennials were not deterred from purchasing homes in October as the market continued to tighten, interest rates rose, and average loan amounts decreased. According to the latest Ellie Mae Millennial Tracker the average loan amount to Millennial borrowers for all closed loans was $189,686 in October, down from $192,005 in September, yet higher than last October’s average of $186,567. When men were listed as the primary borrower, the average closed loan in October was $198,864, compared to a much lower $188,607 when women were the primary borrower.


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Even with rising mortgage rates, purchase loans still accounted for 88 percent of closed loans to Millennial borrowers in October, four percentage points higher than a year ago. Of all closed loans to this demographic, 68 percent were conventional loans, while 27 percent were for FHA loans, 2 percent were VA loans and 3 percent were undisclosed.


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“Although housing prices and interest rates are still rising at a faster pace in 2018 than they have in previous years, those trends are not yet stopping Millennials from purchasing homes and putting down roots,” said Joe Tyrell, executive vice president of corporate strategy for Ellie Mae. “It is important for lenders to educate Millennials on the value of FHA loans that bring lower down payments and can allow these new homebuyers to stretch their dollar a little further even with rising interest rates.”


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Additional findings from the October 2018 Ellie Mae Millennial Tracker include:

>>Interest rates on all loans rose to 4.96 percent, the highest percentage point since Ellie Mae started tracking this data in 2016, up from 4.87 percent in September, and up from 4.13 percent a year ago.

>>Refinances slowly began to rise in the fourth quarter, representing 11 percent of all home loans to Millennial borrowers.

>>Across all home loans, it took an average of 42 days to close last month. A year ago, it took one day longer at 43 days to close. Purchase loans took an average of 41 days to close last month, compared to an average of 42 days to close a year ago. Refinance loans closed in 48 days last month, on average, compared to 45 days in 2017.

>>The average FICO score for Millennial borrowers remained flat for the third consecutive month at 722, slightly down from 723 in July.

>>The average age of all Millennial borrowers remained flat at 29.7 from the previous month, and essentially flat from 29.3 in October 2017.

>>Millennial males (both single and married) were listed as the primary borrower on 60 percent of closed loans in October. Women were listed on 32 percent and the remainder did not specify a gender.

Closing Rates Rise In October

Closing rates for all loans increased to 72.2 percent in October, the highest point in 2018 according to the October Origination Insight Report from Ellie Mae. This is up from 71.7 percent the month prior. Closing rates on refinances increased slightly to 64.9 percent in October, up from 64.4 percent the month prior, and closing rates on purchases held steady at 76.4 percent for the second consecutive month.


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In October, the average 30-year interest rate for all loans increased to 5.01 percent, also the highest in 2018 and up from 4.91 percent in September. The percentage of Adjustable Rate Mortgages (ARMs) increased to 8.2 percent in October, up from 7.2 percent in September.


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“As interest rates continue to rise, the percentage of Adjustable Rate Mortgages is increasing as homebuyers are looking to take advantage of the best rates from their lenders,” said Jonathan Corr, president and CEO of Ellie Mae. “Additionally, FICO scores remain the highest we’ve seen in 2018, indicating that lenders are not yet loosening credit availability to attract the shrinking refinance market. We’ll continue to watch this trend into the winter months.”


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Other statistics of note in October included:

>>The time to close all loans increased to 45 days in October, up from 44 days in September. Time to close a purchase loan increased to 46 days, up from 45 days in September, while time to close a refinance increased to 43 days in October, up from 42 the month prior.

>>The percentage of purchase loans dropped to 68 percent of total loans from 71 percent the month prior. Refinances represented 32 percent of total loans in October.

>>Overall FICO scores remained steady at 727 in October for the second month. LTV held at 79 for the third month while DTI increased to 26/39.

The Origination Insight Report mines data from a  sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution.

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