Ellie Mae's Origination
Insight Report published on Wednesday by Ellie Mae shows there was a sharp
decline in the time it took to close a loan in February. Average closing timelines rose with the
introduction of new Truth-in-Lending (TRID) disclosure rules for loans applied
for on or after October 3. It took an
average of three or four days additional days to take a loan from application
to closing for all loans that closed in November than it did in October and
those timelines remained elevated through January. The drop in February brings most closing days
back to levels that prevailed before TRID became an issue.
Ellie Mae reports that the time to close all loans dropped
from 50 days in January to 46 in February, the shortest timeframe since last May. The average time to close a purchase decreased from 51 days
in January to 48 days in February, while time to close a refinance decreased
from 48 days to 44, the shortest period in exactly a year. FHA and VA loans also had shorter timelines
with the average for FHA decreasing by four days to 47 and the VA shortened
from 53 to 50 days.
percent of loans closed in February were refinances, down one percentage point
from January. Conventional loans had a
65 percent share of all loans, FHA had a 22 percent share, and VA loans 9
said closing rates across loan types were the highest since they began tracking
them in 2011. The average closing rate
for all loans increased 1.5 percentage points to 69.9 percent with 66 percent
of refinances closing and 74 percent of purchase loans. Closing rates for conventional purchase loans
have increased nearly every month for the last year and were at 74.3 percent in
February compared to 68.8 percent in February 2015.
"For the first time since
October 2015, we're seeing a substantial decrease in days to close from 50 days
in January to 46 days in February," said Jonathan Corr, president and CEO
of Ellie Mae. "This could be due to lenders becoming more familiar with the
new loan estimate and closing disclosure forms and business process around Know
Before You Owe. We're also seeing closing rates continue their upswing,
increasing one percentage point to 69 percent. This is the highest we've seen
closing rates since we began tracking data in August of 2011."
The Origination Insight Report mines
its application data from a sampling of approximately 75 percent of all
mortgage applications that were initiated on its mortgage management
system. To determine closing rates Ellie
Mae reviews a sample of loan applications initiated 90 days earlier, in this
case in November 2015.