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Mortgage Closing Times Slow As TRID Implemented

Mortgage News

As mortgage firms implemented new integrated disclosures rules required under the Truth in Lending Act and the Real Estate Settlement Procedures Act, the amount of time it took to closed a home loans expanded by three days.

Of all residential loans closed during November, 64 percent were conventional mortgages, 23 percent were insured by the Federal Housing Administration and 10 percent were guaranteed by the Department of Veterans Affairs.

Market share for last month’s business was nearly identical to the prior month. But there was a shift from a year prior, with conventional share off from 68 percent, FHA share up from 17 percent and VA share slipping from 11 percent.

The numbers were part of the Origination Insight Report November 2015 from Ellie Mae Inc. The report was created based on a sample of closed-loan applications that flow through the Pleasanton, California-based company’s technology platform.

Of all loan applications started during the previous 90-day cycle, 68.4 percent had closed as of November 2015 — the highest closing rate since tracking started in August 2011. The closing rate improved from 66.8 percent a month earlier and 60.0 percent a year earlier.

On just refinances, the most-recent closing rate was 62.7 percent, while it was 72.2 percent on purchase financing.

The closing rate was 68.1 percent last month on conventional business, while loans insured by FHA had a rate of 63.8 percent, and mortgages guaranteed by VA had a 63.0 percent closing rate.

It
took 49 days to close a home loan in November 2015, three days longer than a month earlier and 10 days more than a year earlier.

“We are beginning to see the anticipated impacts of the Know Before You Owe changes that went into effect in October,” Ellie Mae President and Chief Executive Officer Jonathan Corr said in an accompanying announcement.

The latest loan cycle was the same for refinances and purchases.

Last month’s turnaround was 49 days on conventional and FHA-insured loans and 50 days on VA-guaranteed loans.

The report indicated that the average FICO score dipped from 722 in October to 721 —
lower each month since May and the lowest score since tracking started in August 2011.

FICO scores averaged 729 in November 2014.

Average conventional credit scores in November 2015 were 727 on refinance transactions and 754 on purchase financing. FICO scores were 648 on FHA refinances and 687 on FHA purchases, and they were 705 on VA refinances and 706 on VA purchases.

Overall loan-to-value ratios averaged 79 percent, slightly tighter than 80 percent in October and in November 2014.

At 69 percent, conventional LTV ratios last month were lower than the 80 percent on conventional purchase mortgages.

FHA refinance LTV ratios were 80 percent, and FHA purchase LTV ratios came in at 96 percent.

Refinance LTV ratios averaged 89 percent on VA-guaranteed loans and 98 percent on VA purchase financing.

November 2015’s average debt-to-income ratio was 25/39 percent, the same as in the previous report and looser than 24/37 percent in the year-previous report.

DTI ratios averaged 25/40 percent on conventional refinances and 23/35 percent on conventional purchases.

On just FHA refinances, the average DTI ratio was 30/47 percent, while FHA purchases had an average ratio of 28/42 percent.

The average DTI ratio on VA refinances was 24/40 percent last month, and it was 24/40 percent on VA purchases.

Ellie said refinance share was 46 percent, widening from 44 percent in October and 45 percent in November 2014. Last month’s refinance share was 55 percent on conventional mortgages, 26 percent on FHA business and a third on VA activity.

Corr explained that the increased refinance share was the result of a recent dip in interest rates since peaking in August.

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