Ellie Mae, a provider of enterprise-level, on-demand automated solutions for the residential mortgage industry, released its Origination Insight Report for January. The report draws its data and insights from a sampling (approximately 57 percent) of the loan applications that flow through Ellie Mae’s Encompass mortgage management software and the Ellie Mae Network.
Given the size of Ellie Mae’s sample, the company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.
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 percent in January, up slightly from 54.3 percent in December 2013.
“The purchase-to-refinance mix remained relatively steady in January, with just a 1 percent 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, down three points from 727 in December 2013. [In January], 32 percent of closed loans had FICO scores below 700, compared to 23 percent in January 2013.
“The percentage of ARM loans increased to 7.2 percent. This was the fourth month in a row that we have seen this shift and the highest level since August 2011 (8.3 percent). Typically, borrowers move to ARMs as a way of stretching their buying power.
“For a third consecutive month, HARP-related refinancing activity increased. Conventional refinances at 95 percent-plus LTV rose to 14.3 percent in January, the highest they’ve been since we began tracking this data in October 2011.”
“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,” Corr said.