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# Ellie Mae’s Report: Mortgage Banks Tightening Lending Standards
Ellie Mae, a software and network provider for the mortgage industry, has released a monthly report that outlines the state of the mortgage origination market. The report uses loan applications stored in their database to review and compare data. Ellie Mae analyzed loan applications from August and November of 2011 and February of 2012, taking a 33% sample of over two million applications processed through their systems.
The conclusion of the report states mortgage banks are tightening lending standards. Two-thirds of loans originated in February were used for refinancing, while the remaining third was for home purchases. Among these loans, 67% were conventional, and 25% were backed by FHA. The percentage of adjustable-rate mortgages dropped almost 50% from August 2011 to February 2012.
When the closing rate was reviewed, nearly 48% of loan applications closed in the prior 90 days, with 60% of these being for purchases and 42% for refinancing. Loans took, on average, 44 days to close. Borrowers with a successful loan closing had an average credit score of 750, compared to an average credit score of 699 for denied loans.
Reviewing loan to value (LTV) and debt-to-income (DTI) ratios, Ellie Mae found that the LTV ratio was at 76 for completed loans, while the DTI ratio was 23/34. For denied loans, the LTV ratio was at 83, and the DTI ratio was 28/44. Denied conventional loan applications had an average FICO of 720, an LTV of 77, and a DTI of 27/43 for refinancing offered similar numbers for purchase applications.
FICO scores for closed loans increased, while LTV ratios decreased, and DTI scores were lower. These dynamics suggest that mortgage banks are tightening lending standards.
If you are considering purchasing or refinancing a home, it is crucial to be aware of current lending standards. You may consider real estate investing strategies that do not involve banks.
Source: [REI Maverick](http://www.reimaverick.com/mortage-banks-tightening-lending-standards-according-to-ellie-maes-new-origination-report/)
Mortgage Payments Tightening Lending Standards – http://www.reimaverick.com/mortage-banks-tightening-lending-standards-according-to-ellie-maes-new-origination-report/
Ellie Mae has initiated a new monthly report detailing the state of the mortgage origination market. Ellie Mae is a company which focuses on providing a mortgage origination network and software to those in the industry. The report is designed to review and compare data collected from loan applications stored in their database. They looked at three months when compiling this report, August and November of 2011 and February of 2012, and took a 33% sample from the more than two million applications processed through their systems. They came to the conclusion that mortgage banks are tightening lending standards.
Mortgage Banks | Tightening Lending Standards
When the loans which originated in February were reviewed, it was found that two-thirds were used for refinancing with the remaining third used to purchase a home. Of these loans, 67% were conventional loans and 25% were mortgages backed by the FHA. A little less than 20% of loans were for a 15-year fixed-rate mortgage which remained consistent for the three months reviewed, but adjustable rate mortgages dropped almost 50% from August 2011 to February 2012. Other figures were looked at also for these time periods.
When closing rate was looked at, nearly 48% of loan applications closed in the previous 90 days with 60% of these being for purchases and 42% for refinancing. It took an average of 44 days for the loans to close and the average credit score (FICO) of borrowers who successfully closed a loan was 750. For loans which were denied, the average credit score was 699 which shows mortgage banks are tightening lending standards. When the loan to value (LTV) ratio was looked at, it was at 76 while the debt-to-income (DTI) ratio was at 23/34 for completed loans. For those which were denied the LTV ratio was 83 and the DTI ratio was 28/44. There were variations though.
For conventional loans, denied applications had an average FICO of 720, an LTV of 77 and a DTI of 27/43 for refinancing with similar numbers for purchase applications. For FHA refinancing the average FICO was 668, LTV of 87 and 29/46 for denied loans with similar numbers for purchases. FICO scores for closed loans went up, LTV ratios went down and DTI scores were lower. What this shows is mortgage banks are tightening lending standards. Be aware of this if you are looking to purchase or refinance a home.
If you are seeking to become a beginning real estate investor or looking to revamp your existing real estate investing business, then you may wish to consider real estate investing strategies that don’t involve the banks.
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http://youtu.be/NBBZXNSwE2UEllie Mae
