Origination Report: Loan Processing Times on the Rise, Closing Rates Improve in September
the time to close a loan increased again in September, lenders are closing a
significantly higher portion of loans than they have in earlier months
according to the Origination
Insight Report released today by Ellie
Mae. It is now taking 50 days on average
to close a loan, a number that has increased steadily in the last year.
Sixty-five percent of closed loans in
September were for the purpose of refinancing compared to 61 percent the
previous month. FHA loans accounted to
19 percent of loans originated and conventional loans represented 72 percent. FHA loans accounted for 24 percent one year
ago and conventional loans 68 percent.
"In September, the share of conventional loans continued to outpace
FHA loans," said Jonathan Corr, chief operating officer of Ellie Mae. "During
the past six months, FHA loans have dropped from 28% to 19% while conventional
loans have risen from 64% to 72%. This is mostly likely the result of HARP 2.0
initiatives as well as increases in FHA insurance premiums that took effect in
"The percentage of conventional refinances
at 95%-plus LTV peaked at 11.0% in May 2012," Corr said, "and have been
drifting down slowly ever since. In September 2012, these loans, which are most
likely HARP 2.0 loans, had leveled off at 7.43%, down from 7.74% in August 2012.
While the average closing time for loans in
September was 50 days it was 53 days for a refinancing compared to 47 days for
a purchase. One year ago these figures
were 41 days and 39 days respectively.
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 applications) to calculate a closing rate for September 2012,
which was 50.5%, compared to 47.8% in August.
Purchase mortgages had a 60.1 percent closing rate, unchanged from
August but 4.8 percentage points higher than in November, the earliest date for
which this data is available. Refinancing
closings jumped significantly, from 47.1 percent last November and 47.8 percent
in August to 50.5 percent in September.
Loans that closed in September had an
average FICO score of 750 and a debt-to-income (DTI) ratio of 23/34, both unchanged
from August. The average loan to value
ratio declined to 78 from 79 in august and was down 4 percentage points from
its peak in May. Loan applications that
were denied had a FICO of 704, a DTI of 27/44, and an LTV of 88.
In 2011, the total volume of mortgages that
ran through Ellie Mae's mortgage management software was approximately two
million loan applications, or 20% of all U.S. mortgage originations. The Origination Insight Report mines its
application data from a sampling of approximately 33% of all mortgage
applications that were initiated on its origination platform.