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Ellie Mae: FHA Loans Continue to Fall Off in September

FHA loans continued to recede in September as conventional loans gained popularity, Ellie Mae revealed in its September 2012 ""_Origination Insight Report_"":http://www.elliemae.com/origination-insight-reports/EMOriginationInsightReportSeptember2012.PDF.


The company reviewed a sampling of loan applications initiated in June to calculate September's closing rate: 50.5 percent, up from 47.8 percent in August.


FHA loan activity dropped from August, representing a 19 percent share of total loans. Meanwhile, conventional loans have picked up steam, rising to 72 percent.

""During the past six months, FHA loans have dropped from 28 percent to 19 percent while conventional loans have risen from 64 percent to 72 percent. This is most likely the result of HARP 2.0 initiatives as well as increases in FHA insurance premiums that took effect in April 2012.""

The percentage of conventional refinances at 95 percent or higher loan-to-value ratio (LTV) also fell, drifting down from 7.74 percent in August to 7.43 percent in September. Those are mostly likely HARP 2.0 loans, Corr said.

Sixty-five percent of closed loans were for refinances, leaving the other 35 percent for purchases. The closing rate on refinance loans almost five percentage points to 45.3 percent, while the closing rate on purchase loans inched up just under a full point to 61 percent.

The increase in closing rates was also reflected by an increase in time to close. Time to close overall increased one day to 50 days, while time to close for refinances increased two days to 53. Time to close on purchase loans stayed flat at 47 days.


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