Mortgage Daily

Published On: April 17, 2013

Average credit scores on closed-loan production fell last month, while loan-to-value ratios rose. Meanwhile, mortgage lenders cut five days off the amount of time it takes to close a loan.

Turnaround sped up to 46 days in March from 50 days a month earlier. Still, home loans are taking longer to process than in March 2012, when it took just 42 days to close a loan. The time to close was 47 days for refinances and 44 days for purchase transactions.

Of loan applications started during the prior 90-day cycle, 55 percent closed in March. The closing rate slipped from 57 percent the prior month but improved from 47 percent the same month in the prior year. The closing rate was 53 percent for refinances and 60 percent on purchase financing.

Mortgage technology provider Ellie Mae reported the activity in its Origination Insight Report. The findings reflect a 44 percent sampling of closed loans that were processed through the Pleasanton, Calif.-based company’s systems. Ellie says its Encompass360 mortgage management systems handled one-in-five loans originated last year.

On closed transactions, the average FICO score was 743, lower than 745 in February and 749 in March 2012. Last month’s average was the lowest since Ellie began tracking the data in August 2011.

Similarly, the average FICO score on denied applications fell to 702 from 705 in February. However, the average credit score on loans that were turned down increased from 699 in March 2012.

Also loosening was the average loan-to-value ratio, which rose to 81 percent in March from 80 percent. The average LTV was just 77 percent during the same month last year.

At 85 percent, the average LTV ratio on denied applications has been the same for four consecutive months and also didn’t change from one year prior.

There was no change from February in the average debt-to-income ratio, which came in at 23/35. A year prior, the average DTI was also 23/35.

On loans that were turned down, DTIs increased to 27/44 from 27/43 a month earlier and a year earlier.

Refinance share narrowed to 62 percent last month from 68 percent in February. But the share was wider than 61 percent a year prior.

The Federal Housing Administration insured 21 percent of March’s production, inching up from 20 percent the prior month but falling from 28 percent in March 2012.

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