Are record-low interest rates masking high-cost mortgage lending?

Are record-low interest rates masking high-cost mortgage lending?

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Ellie Mae: February mortgages had higher FICOs, flat LTVs

Loans closed in the month of February had relatively higher FICO scores than last fall while loan-to-value ratios remained flat, according to the most recent Ellie Mae (ELLI) origination insight report.

Ellie Mae said 67% of the loans moving through its Encompass360 mortgage management software were classified as refinancings in February, up from 64% when the report was last published in November.

Purchase applications, meanwhile, declined from 36% in November to 33% in February.

Ellie Mae's mortgage management software is able to track loan characteristics by studying the nearly 2 million loans that passed through its loan management software in 2011.

The latest report shows the percent of loans classified as Federal Housing Administration mortgages and conventional loans remaining flat at 25% and 67%, respectively, when comparing the month of February to November.  

On average, loans are closing at a faster pace, with closings taking just 44 days to complete in February, down from 46 days in November and 40 days in August of last year.

The profile of borrowers also changed in the past several months, with the average FICO score on loans closed in February rising over loans approved last fall and last summer.

They hit 750 in February, up from 748 in November and 741 in August. Loan-to-value ratios on closed loans remained the same at 76% in February.  

When studying denied mortgage applications, Ellie Mae found borrowers who did not qualify for loans had an average FICO score of 699 in February, compared to 704 in November and 696 in August 2011. Meanwhile, loan-to-value ratios on denied applications hit 83%, slightly up from 82% in November.

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