HARP-Related Refinancing Rises to Its Highest Levels and Credit Requirements Continue to Loosen as the New Year Begins
PLEASANTON, Calif. – February 19, 2014 – Ellie Mae® (NYSE: ELLI), a leading provider of enterprise-level, on-demand automated solutions for the residential mortgage industry, today released its Origination Insight Report for January 2014. The report draws its data and insights from a robust sampling of the significant volume of loan applications that flow through Ellie Mae’s Encompass® mortgage management software and the Ellie Mae Network™.
MONTHLY ORIGINATION OVERVIEW FOR JANUARY 2014
6 Months Ago (July 2013)*
1 Year Ago (January 2013)*
Days to Close
ARMs vs. Fixed, Length, Rate
15 Year %
30 Year – Note Rate
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR JANUARY 2014
To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the October 2013 applications) to calculate an overall closing rate of 54.9% in January 2014, up slightly from 54.3% in December 2013 (see full report).
“The purchase-to-refinance mix remained relatively steady in January 2014, with just a 1% change from December,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Credit requirements continued to loosen as we entered the new year. The average FICO score for all closed loans dropped to 724 in January 2014, down three points from 727 in December 2013. Last month, 32% of closed loans had FICO scores below 700, compared to 23% in January 2013.
“The percentage of ARM loans increased to 7.2%. This was the fourth month in a row that we have seen this shift and the highest level since August 2011 (8.3%). Typically, borrowers move to ARMs as a way of stretching their buying power.
“For a third consecutive month, HARP-related refinancing activity increased. Conventional refinances at 95%-plus LTV rose to 14.3% in January 2014, the highest they’ve been since we began tracking this data in October 2011,” Corr noted.
“Meanwhile, the average time to close a loan hit 45 days last month, up from 43 days in December 2013. This was
most likely due to the holiday season and lenders adjusting to the new Ability-to-Repay and Qualified Mortgage regulations that took effect Jan. 10, 2014.”
About Ellie Mae Origination Insight Report
In 2013, approximately 3.5 million loan applications ran through Ellie Mae’s Encompass mortgage management solution. The Origination Insight Report mines its application data from a robust sampling of approximately 57% of all mortgage applications that were initiated on the Encompass origination platform. Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.
The Origination Insight Report focuses on loans that closed or were denied in a specific month and compares their characteristics to similar loans that closed or were denied three and six months earlier. The closing rate is calculated on a 90-day cycle rather than on a monthly basis because most loan applications typically take one and a half to two months from application to closing. Loans that do not close could still be active applications or applications withdrawn by consumers or denied for incompleteness or nonqualification.
The Origination Insight Report details aggregated, anonymized data and does not disclose client-specific or proprietary information.
News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.
About Ellie Mae
Ellie Mae, Inc. (NYSE: ELLI) is a leading provider of on-demand automation solutions for the mortgage industry. The Company offers an end-to-end solution, delivered using a Software-as-a-Service model that serves as the core operating system for mortgage originators and spans customer relationship management, loan origination and business management. The Company also hosts the Ellie Mae Network™ that allows Encompass® users to electronically conduct business transactions with the lenders and settlement service providers they work with to process and fund loans. The Company’s offerings include the Encompass and DataTrac® mortgage management software systems.
Ellie Mae was founded in 1997 and is based in Pleasanton, California. To learn more about Ellie Mae, visit www.EllieMae.com or call 877.355.4362.