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Ellie Mae: Closing Rates, Time to Close Rise in December

Closing rates on all types of mortgage loans increased in December, according to data from ""Ellie Mae's"":http://www.elliemae.com/ ""_Origination Insight Report_"":http://www.elliemae.com/origination-insight-reports/EMOriginationInsightReportDecember2012.PDF for the month.

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The report draws its data from a sampling of loan applications that flow through Ellie Mae's network, which was about 20 percent of all applications in 2012. To get an idea of lender ""pull-through,"" the company reviews a sampling of applications initiated 90 days prior (September's applications, in this case).

According to the report, the overall closing rate for mortgage loans was 54.7 percent in December, up from 52.3 percent in November. The average monthly closing rate across 2012 was 49 percent.

Closing rates increased on both refinance and purchase loans, reaching 51.6 percent (from 48 percent) and 61.3 percent (from 60.8 percent), respectively. For all of 2012, the average monthly closing rate for a purchase loan was 58.8 percent, while the average rate for a refinance was 43.9 percent.

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The company also reported a marked increase in loans refinanced under the Home Affordable Refinance Program (HARP).

""Closed conventional refinances with [loan-to-value ratios] of 95 percent-plus, a strong indicator of HARP 2.0 activity, jumped up from 9.62 percent in November 2012 to 11.40 percent in December 2012, the highest it has been since we began tracking this data in October 2011,"" said Ellie Mae COO Jonathan Corr.

The rise in closing rates had an evident impact on time to close. According to Ellie Mae, the average refinance took 57 days to close in December, a full six days more than in November. The average purchase loan took 51 days to close, three days more than in November.

In terms of loan purpose, refinance loans gained a bit of ground, increasing to 69 percent of all closed loans in December, while purchase loans slid back to 31 percent.

The average FICO score for a closed loan in December was 748, while the average loan-to-value ratio was 79 percent. Those figures matched the average for 2012.

Meanwhile, December's average denied loan had a FICO score of 709 and a loan-to-value ratio of 85 percent.

Corr said 2012's data for closed and denied loans illustrates how high standards have become.

""To take advantage of the historic low interest rates last year, borrowers needed pristine credit and low debt ratios. In 2012, closed loans had an average FICO score of 748, an average [debt-to-income ratio] of 23/34 and an average interest rate of 3.908 percent,"" Corr said.

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