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Lenders Loosen up on FICO Scores

Lenders Loosen up on FICO Scores

The median FICO score for approved mortgages has fallen from 750 to 729 in the past 12 months and l30% of closed loans had an average FICO score below 700 in November 2013, compared to 22% in 2012.

Closing rates in November also improved significantly over October, according to Ellie Mae’s November 2013 Origination Insight Report.. To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the August 2013 applications) to calculate an overall closing rate of 53.1% in November, up from 51.4% in October 2013. The median purchase loan closed in 45 days.

Even as lending standards relaxed as a record rate, lenders increased the market share for refinancings as the home buying season slowed down for the winter months,

“Refinances increased by six percentage points in November, the first time in ten months refinance share increased on a month-over-month basis,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “This was probably attributable to the quarter of a point decline in the interest rates on the 30-year note in November, which declined to 4.526.

“HARP-related refinancing activity also increased, as conventional refinances at 95%-plus LTV rose to 8.30% in November from 7.30% in October.

“The average FICO score for all closed loans in November 2013 was 729, compared to 750 in November 2012. Also, 30% of closed loans had an average FICO score below 700 in November 2013, compared to 22% in 2012, ” Corr said.

“The average time to close a loan decreased to 42 days in November with refinances falling to 37 days, the lowest since we began tracking in August 2011.”

The Ellie Mae report draws its data and insights from a robust sampling of the significant volume of loan applications-more than 20% of all originations in the United States-that flow through Ellie Mae’s Encompass® mortgage management software and the Ellie Mae NetworkTM.


November 2013* October 2013* 6 Months Ago(May 2013)* 1 Year Ago(November 2012)*
Closed Loans
Refinance 45% 39% 58% 68%
Purchase 55% 61% 42% 32%
FHA 20% 19%


Conventional 69% 68% 72% 73%
Days to Close
All 42 45 44 50
Refinance 37 43 44 51
Purchase 45 46 45 48
ARMs vs. Fixed, Length, Rate
ARM % 5.8% 5.6% 3.1% 2.0%
15 Year % 14.5% 15.5% 16.4% 16.7%
30 Year - Note Rate 4.526 4.750 3.747 3.600

*All references to months should be read as month ended.



Closed First-Lien Loans (All Types) Denied Loans(All Types)
FICO Score (FICO) 729 694
Loan-to-Value (LTV) 81 82
Debt-to-Income (DTI) 25/38 28/44

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