Borrower Behavior & Loan Stats Of Interest
Here are some interesting borrower and loan stats that have caught my eye lately…
(1) Ellie Mae released a report using a sample of loan application data from its database for March compared to February 2012 and September and December 2011. (Ellie Mae States that there were two million loan applications processed through its systems in 2011.) In March, 61% of originations were for refinancing, about the same as three and six months previous but down from 67% in February. FHA-backed loans accounted for 28% versus 64% for conventional. A typical loan regardless of its purpose took 42 days to close in March, about the same as in February but down three to five days from December. The majority of loans that went through Ellie Mae were 30-year fixed-rate loans but 20% were 15 year and about 4% were ARMs.
(2) In a stat of great interest to secondary marketing folks, Ellie Mae calculated a “pull-through” rate for a sampling of loans for which applications had been submitted 90 days earlier. The pull through for March was 47%: 56% for purchases and 42% for refi’s. The average loan closed in March had a FICO score of 749, an LTV of 77% and a DTI of 23/35. (Loans that were denied had an average FICO of 699, 85% LTV, and a DTI of 27/43.)
(3) According to NAR, investors purchased 1.23m existing and new homes, an increase of 64.5% from 2010, and investment home sales comprised 27% of all activity, an increase of 17%. Nearly half of investor purchases were made in cash, and half were distressed homes. The regions that saw the most activity were the South (41%) and West (23%), while purchases in the Midwest and Northeast made up 17% and 15% of the total, respectively.
(4) A recent study conducted by TransUnion has revealed that, when faced with credit card, auto loan, and mortgage debt, the typical troubled borrower is most likely to let their mortgage payments slip. Four million indebted borrowers were surveyed and a mere 9.5% of those were delinquent on auto loans, while 17.3% were delinquent on credit card payments. Nearly 40% of the borrowers polled were behind on their mortgage, opting instead to pay auto and credit card loans.
(5) January saw more short sales close nationally than foreclosures for the first time, meaning that banks were agreeing to more deals. Short sales accounted for almost 24% of home purchases in January versus about 20% for sales of foreclosed homes. (In January 2011 it was 16 and 23%, respectively.) Depository banks were never designed to be landlords, hold real estate, or voluntarily swallow losses on thousands or millions of homes. But they can process short sales in less time and at significantly less cost than foreclosures, leading to fewer foreclosures on the market, leading to fewer distressed properties on the market.