Nearly six months after the implementation of TRID and the market finally turned a corner as the time to close all loans decreased to 46 days, which is the shortest time to close since May 2015, the latest Origination Insight Report from Ellie Mae stated.
“In terms of Know Before You Owe, I think we’re in the second half of the game. We’ve gotten past the initial learning curve that comes from brand new regulation and we’ve figured out, as an industry, how these processes and these interactions happen. There are still some open areas and items that need to be worked out before we can say it is collectively behind us,” Jonathan Corr, president and CEO of Ellie Mae, told HousingWire.
This is a significant change from the January origination report that said the average time to close a loan was 50 days due to the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule last October.
“In terms of the market, the purchase market is healthy and the projections are that there are going to be more home purchases this year than in 2015, and even more in 2017. Have we gotten beyond the friction that makes the process take a little longer? We’re getting there. People are adapting and figuring out how to act in this new set of regulations and business processes.”
The report stated that the average time to close a purchase dropped from 51 days in January to 48 days in February, while time to close a refinance fell from 48 days in January to 44 days in February.
In addition, the average time to close FHA loans decreased from 51 days in January to 47 days in February, as the time to close VA loans decreased from 53 days to 50 days.
Average closing rates for all loans are the highest since Ellie Mae began tracking data in August 2011, with closing rates for all loans increasing 1.5 percentage points to 69.9%.
Conventional purchase closing rates increased to 74.5% in February, up from 73.8% in January. Refinance closing rates increased to nearly 66%, while purchase closing rates increased to just over 74%.
Purchases represented 52% of all closed loans while refinances as a percentage of lenders’ overall loan volume fell one percentage point to 46%.
Whether this new low-closing time will stick around, Corr said, “In the mid to long term, the shift toward more automation, which obviously we’re seeing more of due to Know Before You Owe, will drive the time to close down over time.”
“There is a constant stream of regulation that is being introduced into the process that could initially act in a way to extend the timeline, but I think the overall trend is that everything is being done electronically and with automation,” he said. “As lenders embrace that it should not only improve the experience, it should reduce the time to close.”
Looking ahead to this spring home-buying season, Corr said mortgage lenders are always ready. “I think that folks have gotten past the initial discomfort with the new processes from Know Before You Owe. They’re still sharpening their processes, but they are always ready to accommodate homebuyers,” he said.
