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Purchase Loans Represent 65% Of Total Loans

Home loans for purchases continued to gain momentum in April, representing 65 percent of total loans, according to the latest Origination Insight Report released by Ellie Mae. Refinances represented 35 percent of total loans in the month.

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The average time to close all loans dwindled to 42 days in April, down from 43 days in March and a substantial decline from 51 days in January. The time to close a refinance declined to 41 days in April, down from 43 days in March, and the time to close a purchase dropped to 42 days in April, down from 43 days the month prior.

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The average 30-year note continued to rise in April to 4.41 percent, up from 4.39 percent in March, and the percentage of Adjustable Rate Mortgages (ARMs) increased to the highest point since November of 2014 to 5.9 percent, up from 5.6 percent the month prior.

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“The purchase market continued its rise in April, representing 65 percent of total closed loans,” said Jonathan Corr, president and CEO of Ellie Mae. “We also saw the time to close loans shrink for the third consecutive month to 42 days, a substantial decrease from the 2017 high of 51 days in January. Ellie Mae customers are realizing efficiencies as they embrace technology to improve the homebuying experience.”

The Origination Insight Report mines its application data from a 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.

Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker, which focuses on mortgage applications submitted by millennials during specific time periods. Ellie Mae defines millennials as applicants born between the years 1980 and 1999. The Millennial Tracker will continue to be released on the first Wednesday of each month.

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.
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Unlocking The Purchase Market

Purchase loans as a percentage of lenders’ overall mortgage volume eclipsed 50 percent in April, according to the latest Origination Insight Report released by Ellie Mae. Last month’s overall purchase share of 52 percent represented a 6 percent jump from March. Here’s what happened:

According to the latest report, the average closing period for all loans rose from 44 to 45 days. Meanwhile, the overall closing rate on all loans exceeded 65 percent for the first time since reporting began in August 2011, reaching 65.2 percent.

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“An improving economy and ongoing attractive rates seem to be contributing to the rise in purchase percentage as we move full speed into the spring buying season,” said Jonathan Corr, president and CEO of Ellie Mae.

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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 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.

Progress In Lending
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Lenders Need To Be Better Marketers

How do you conquer the purchase market? You have to reach more borrowers, plain and simple. And if you can’t do that well on your own, that’s where technology can help. For example, mortgage Returns has launched a set of new features to their TRUE CRM system, which now provides companies with new marketing materials, content control and advanced reporting capabilities.

The new features enable mortgage lenders to do the following

>> Provide valuable home buying information to prospects that is co-branded with agent contact information;

>> Engage in co-branded email marketing with users’ real estate agents;

>> Use new Email Editor tools to manage and edit the company’s email marketing library, as well as create customized emails through the system;

>> Access the new and improved business analysis, which evaluates company and loan officer performance, compares performance to peers, tracks marketing ROI and reviews marketing productivity to find areas for growth;

>> Reference detailed customer and referral partner survey reports at the loan officer level to identify specific points of feedback.

These features are in addition to Mortgage Returns’ Spring Purchase Program that was announced earlier this year and includes a 5-touch marketing campaign to promote new purchase business and referrals in the upcoming home buying season.

“These new features provide enhancements that enable lenders to drive profitability by strengthening their relationships with customers, prospects and referral partners in a purchase market with decreased loan production,” said Jim Blatt, president and chief executive officer of Mortgage Returns. “TRUE CRM allows lenders to effectively target their marketing and analyze its effectiveness on a granular level to ensure they capitalize opportunities found in their database.”

St. Louis-based Mortgage Returns provides a TRUE CRM and automated marketing solution that transcends traditional marketing by enabling originators to improve the effectiveness of their outreach programs and maximize profitability from clients, prospects and referral partners. Through its database management and marketing system, Mortgage Returns provides timely and relevant marketing for more than 9,000 mortgage originators nationwide. Mortgage Returns’ customized marketing solution also increases referrals and cross sell opportunities for more than 300 financial institutions.

About The Author

[author_bio]

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.
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Creative Down-Payment Assistance Plan

The Bay Area has some of the most expensive residential real estate in the country, which means even high-income families can feel challenged or uncomfortable committing to the required down payment. To this end, Some of Pacific Union’s Bay Area real estate clients are taking advantage of a whole new way to buy a home while saving cash in this current market of high prices by using REX HomeBuyer down-payment funding from San Francisco-based FirstREX.

Although well-paid technology, financial, and legal professionals often earn enough income to support the mortgage on a median- or higher-priced home, the down-payment requirement can keep them saving for years before buying. REX HomeBuyer lets these buyers clear the down-payment hurdle and purchase the home they really want today — without incurring additional debt – by providing funds for up to half of the required down payment on a home purchase. Because the funding is an equity investment and not a loan or a subsidy, there is no interest and the homeowner makes no monthly payments. Instead, FirstREX earns a return on its investment equal to a share of the home’s gain or loss in value when the owner decides to sell, up to 30 years in the future.

“Pacific Union has enjoyed consistent accelerated growth in the San Francisco Bay Area because we embrace innovation that increases buyer choice and satisfaction,” said Mark A. McLaughlin, CEO of Pacific Union. “FirstREX’s down-payment funding is an exceptional example of an equity solution that serves both our homebuyers and sellers.  It can remove the concerns of many homebuyers about the large down payment required to buy a home in Northern California.”

“We’re excited to introduce REX HomeBuyer to Pacific Union clients,” added Thomas Sponholtz, Co-CEO of FirstREX. “In today’s tight housing market, it can expand the range of home prices a buyer can consider without increasing the amount of cash they need for the down payment.”

REX HomeBuyer has already been a proven success for some Pacific Union clients. Pacific Union real estate professional Jason Hoffman just closed a condo purchase in San Francisco’s popular Noe Valley neighborhood for first-time buyers who leveraged the product. His clients, a professional couple, earn enough income to support the monthly mortgage payment on the property, but the down-payment requirement was proving insurmountable.

“My clients would not have been able to buy that home without the down-payment funding from FirstREX. They love the place they are getting into — it’s perfect for them,” said Hoffman. “I’ll be introducing REX HomeBuyer as a viable option to any of my clients with similar needs.”

REX HomeBuyer down-payment funding is offered in conjunction with mortgage loans from Mortgage Services Professionals (a joint venture owned in part by Pacific Union) and other participating lenders throughout California, Oregon, and Washington. Prospective homebuyers should contact a Pacific Union real estate agent, a loan consultant at Mortgage Services Professionals, or FirstREX directly for more information and to prequalify for the program.

Progress In Lending
The Place For Thought Leaders And Visionaries
marketanalysis

Here We Go

*Here We Go*
**By Tony Garritano**

TonyG***The purchase market has arrived. “In October 2013, the share of purchase loans climbed to 61%, the highest since we began tracking in August 2011. In October 2012, purchase loans represented only 31% of closed loans,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “This has been the ninth consecutive month that the purchase loan percentage has either increased or stayed steady.”

****To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the July 2013 applications) to calculate an overall closing rate of 51.4%, down from 52.3% in September 2013.

****“The average FICO scores for closed loans last month remained at 732, but this was significantly lower than the average of 750 in October 2012,” added Corr. “Similarly, debt-to-income ratios rose for the fourth month in a row, from 25/37 in September 2013 to 25/38 in October 2013.

****“HARP-related refinancing activity cooled significantly with conventional refinances at 95%-plus LTV dropping nearly in half: from 13.4% in August 2013 and 10.3% in September 2013 to 7.3% in October 2013,” Corr concluded.

****This data was reported by Ellie Mae in their October Origination Report. The report draws its data and insights from a robust sampling of the significant volume of loan applications—more than 20% of all originations in the United States.

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.
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Get Ready, It’s Here

*Get Ready, It’s Here*
**By Tony Garritano**

TonyG***New data from Ellie Mae tells us what we already know, the purchase market is coming back. “The share of purchase loans continued to grow in September 2013, climbing 1% to 58% of all loans even in the face of higher interest rates and seasonality,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “This was the eighth consecutive month that the purchase loan percentage has increased or stayed steady. In January 2013, purchases represented only 27% of closed loans.”

****The Ellie Mae Origination Insight Report draws its data and insights from a robust sampling of the significant volume of loan applications—more than 20% of all originations in the United States.

****“The credit standards also continued to ease in September with average FICO scores for closed loans dropping to 732 compared to 734 in August,” noted Corr. “September’s averages were 15 points below where they were at the beginning of the year (January 2013) and the lowest level since we began our tracking in August 2011,” noted Corr. “When you drill down farther, the change is even more apparent. For example, 31% of the closed loans in September 2013 had FICO scores under 700 compared to 17.46% of closed loans in September 2012.”

****To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the June 2013 applications) to calculate an overall closing rate of 52.3% in September 2013, down from 53.1% in August 2013.

****“Similarly, debt-to-income ratios rose again slightly last month,” Corr concluded. “DTIs went from 24/37 in August to 25/37 in September 2013.”

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.