Conventional Share Soars to Highest Since 2016

Gain came at expense of FHA
By Sam Garcia

Last month’s conventional share of residential loan originations jumped to the widest level since 2016. The gain came at the expense of government-insured mortgages. Meanwhile, a record closing rate was recorded.

During June, conventional loans accounted for 68 percent of total U.S. mortgage production, according to data reported by Ellie Mae Inc. The share widened by 2 percentage points compared to the same month a year earlier. Conventional share hasn’t been this broad since November 2016.

But as non-government lending was stronger, the share of mortgages insured by the Federal Housing Administration thinned by 2 percentage points from June 2018 to 18 percent last month.

Lower reliance on FHA programs comes even as FHA is trying to entice home lenders back to its programs. But the efforts follow years of False Claims Act settlements reached between the Department of Justice and many of the largest mortgage lenders over alleged violations of FHA rules. Trade groups — including the Mortgage Bankers Association and the American Bankers Association — are calling on FHA to go further.

Ellie reported that the share of originations that was guaranteed by the Department of Veterans Affairs was unchanged from the same month a year ago at 10 percent. Also unchanged was the category of “other” at 4 percent in June 2019.

Last month’s closing rate was 76.8 percent, soaring from just 70.5 percent during June 2018.

“Closing rates have hit the highest percentage since we began tracking data in 2011,” Ellie Mae President and Chief Executive Officer Jonathan Corr said in an accompanying statement.

June 20, 2019

 

Sam Garcia

Sam Garcia is a 20-year mortgage news veteran who founded Mortgage Daily and served as its editor for two decades. Reach Sam at SamGarciaEmail@gmail.com