Post-TRID Closing Times Hold Steady; Purchases Pick Up

Loan closing timelines in April remained at the recent low levels established the previous month according to Ellie Mae's new Origination Insight Report although refinancing times increased. The time necessary to close residential transactions jumped to an average of 50 days in the months following the October implementation of new Truth-in Lending Disclosure (TRID) rules but began to retreat to normal levels in February.

The time to close all loans remained steady at 44 days in April with purchase loans taking 45 days, unchanged from March, and refi loans increased by three days to 44.

Purchase loans made up 59 percent of loans originated during the reporting period, up from 55 percent in March.  It was the highest share for purchase mortgages since last August.

The closing or pull-through rate for all loans decreased from the high of 71 percent set in March to 69 percent.  The closing rate for refinancing fell 1 point to 65 percent and purchase closings declined from 75 to 73 percent.  Ellie Mae bases the closing rate on a sampling of loan applications initiated 90 days earlier, in this case in January, and calculates the percentage that are ultimately funded.

Of loans that closed in April 68 percent of purchases and 69 percent of refinances had FICO score of 700 or higher.  Thirty-one percent of purchases had a FICO score between 600-699, while only 26 percent of refinances were in that range.  The FICO distribution of conventional loans shows 81 percent of loans with scores above 700 but only 39 percent of FHA loans.  Fifty-six percent of FHA loans had scores between 600 and 699.

Debt-to-Income (DTI) remained steady at 25/38 and Loan-to-Value (LTV) stayed at 80.

"Days to close a loan remained steady at 44 days in April," said Jonathan Corr, president and CEO of Ellie Mae. "Additionally, while our FICO distribution charts show that approximately 68 percent of average FICO scores for both refinances and purchases in April were above 700, we're seeing purchase credit availability with 31 percent of FICO scores in the 600-699 range."

The Origination Insight Report mines its application data from a sampling of approximately 66 percent of all mortgage applications that were initiated on its mortgage management software.  Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.