Purchase Closing Rates and FHA Credit Scores Fall

Mortgage News

Mortgage Daily Staff

                                                 November 20, 2013

A smaller share of applications for purchase financing converted to closings last month, while turnaround for all loans slowed. Credit scores on government originations fell even as conventional scores moved higher on refinances.

Out of all home loan applications started in the previous 90-day cycle, 51.4 percent closed in the month of October.

The closing rate worsened from 52.3 percent in the previous month and 54.5 percent in the same month during 2012.

Ellie Mae provided the monthly statistics in its Origination Insight Report. The findings are based on data pulled from a 44 percent sampling of loans processed through the Ellie Mae Network and Encompass360 — which reportedly handled 20 percent of last year’s residential originations.

The deterioration in the closing rate was more pronounced for purchase financing, falling to 56.9 percent from 59.6 percent in September. Refinance closing rates slipped to 44.6 percent from 45.2 percent.

It took 45 days for the average loan to close in October, longer than the 42-day turnaround in the previous month. Still, closing times were better than a year prior, when turnaround was 54 days.

Refinance days to close rose to 43 days from 40 days in September, while purchase time frames also lengthened by three days to 46 days.

Borrowers who closed on a mortgage in October had an average FICO score of 732, the same as a month earlier. A year earlier, the average score was 750.

The report indicated that 28 percent of last month’s new borrowers had a FICO score that was less than 700 versus just 16 percent in October 2012.

Lenders appear to be trying harder to make loans work, cutting the average credit scores on denied applications to 689 from 696 in the prior month.

On refinance loans that were insured by the Federal Housing Administration, average scores fell to 683 from 687 in September, while FHA purchase loan scores were cut to 692 from 694.

At the same time, average credit scores on conventional refinances increased to 737 from 735.

Average loan-to-value ratios for all closed loans were unchanged from the previous month at 81 percent and have increased from 78 percent 12 months prior.

On denied applications, average LTV ratios were reduced to 83 percent from 84 percent in September.

FHA LTV ratios on refinances tightened up to 83 percent from the previous month’s 85 percent, and conventional refinance LTVs were trimmed to 70 percent from 72 percent.

An increase was reported for average debt-to-income ratios on all originations, which were 25/38 versus 25/37 in September and 23/34 in October 2012.

But average DTI ratios were trimmed to 27/44 from the prior month’s 28/45 on denied applications.

Refinance share thinned to 39 percent last month from 42 percent in September and hasn’t increased since January. The year-earlier share was 69 percent.

The latest refinance share was the lowest since Ellie began tracking the data in August 2011.

Ellie said that FHA share in October was 19 percent, unchanged from the previous report and the year-earlier report.

Mortgage Daily Staff

Related Posts

Third-Quarter 2012 Mortgage Litigation Index

Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Fannie Mae and Freddie Mac Orangeburg County, Richland County, South...

Net Branch Lawsuits

Litigation involving net branch operations. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story PHH Mortgage Corp. Mathews Supreme Court of Virginia na Court held that the term "branch office" includes not only...

Whistleblower Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure.   Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Bank of...

Mortgage Servicing Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story BAC Home Loan...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming paperwork has been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and furniture need to...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand-new mortgage loan can be a difficult task, especially for first-time homeowners.   After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first...

Newsletter

Don’t worry, we don’t spam