Ellie Mae: Origination Insight Report for May

The average
loan to value ratio
of closed loans broke through 80 percent in May according
to the Origination Insight Report released today by Ellie Mae.  The average LTV was 81 percent, up from 80
percent in April and the highest level since Ellie Mae began tracking these
details in August of last year. 

Ellie
Mae reports detail of both closed loans and denied loan applications that flow
through its mortgage management software and network and represent more than 20
percent of U.S. mortgage origination volume.

“In May, the average loan-to-value (LTV) for closed loans broke the
80% mark for the first time since our tracking began in August 2011,” said
Jonathan Corr, chief operating officer of Ellie Mae. “The increase appeared to
be driven by an easing of LTVs on conventional refinances (the average LTV was
72% in May compared to 69% in April). Last month, closed conventional refinances
with LTVs of 95%-plus jumped to 11%, up from 7.1% in April and 3.6% in March,
which may be a sign that HARP 2.0 is helping more borrowers.

At the
same time the LTV of closed loans is rising so has the LTV of denied loans,
increasing steadily from 82 percent in August to 88 percent in May while debt
to income ratios (DTI) and FICO scores have remained relatively unchanged.  While more underwater borrowers have been
attracted by the publicity attending the changes in HARP apparently many have
not successfully refinanced.  

To get a meaningful view of lender “pull-through,”
Ellie Mae reviewed a sampling of loan applications initiated 90 days prior
(i.e., the February applications) to calculate a closing rate for May. Ellie
Mae found that 47.2% of all applications closed in May compared to 48.1% in
April.

Refinancing
represented 54 percent of closed loans in May, down 2 percentage points from
April.  FHA loans had a 25 percent share,
down 3 points while conventional loans increased 3 points to a 65 percent
share.  It took the average loan 46 days
to close, up one day from April. 
Refinancing loans required an average of 48 days and purchases 44.

In
addition to the 81 percent LTV, the average closed loan in May had a FICO score
of 744, one point higher than April, and a DTI of 24/35, a number that has
remained virtually unchanged since tracking began last August.  A loan that was denied had, in addition to
the 88 percent LTV, a FICO of 702, unchanged from April, and a DTI of 28/43, little
changed over the last ten months.

As might
be expected, there were substantial differences in the profiles of loans accepted
and denied by FHA and conventional lenders. 
What was surprising was the additional leeway FHA lenders appear to
grant to purchasers over refinancers.

May Loan Outcomes

Closed Loans

Denied Applications

Loan
Type

FICO

LTV

DTI

FICO

LTV

DTI

Conv.
Purchase

764

79

21/33

728

82

25/41

Conv.
Refi

766

69

23/33

721

87

27/42

FHA
Purchase

701

95

27/41

670

95

32/47

FHA
Refi

713

86

26/39

669

88

30/48

 

…(read more)

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