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TH E M R EP O RT | 39 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST Just Better Closings Pavaso's Digital Close Swap out stacks of paper for a better consumer experience • eDeliver, eClosing, eNotary, eVault • Epic consumer experience • Save hundreds per loan • Audit & QA reports for compliant closings • One secure portal for all parties • Automated status updates Get started pavaso.com/demo www.pavaso.com (866) 288-7051 | sales@pavaso.com ORIGINATION Market is Shifting Towards Investor, Refinance Loans This trend is also resulting in an increase in credit risk. C redit risk in Q 3 2017 increased due to a shift in the purchase loan mix to more investor loans and a shift in the refinance loan mix to bor - rowers with lower credit scores and higher debt-to-income (DTI) ratio, according to CoreLogic's Q 3 2017 Housing Credit Index (HCI). In Q 3, the HCI increased to 111.1, up 18 points from 93.1 in Q 3 2016, remaining within the HCI benchmark range of 90-121. The HCI measures trends in six home mortgage credit risk attributes and indicates the relative increase or decrease in credit risk for new home loan originations compared to prior periods. The six attributes include borrower credit score, DTI, loan-to-value ratio (LTV), investor-owned status, condo/co-op share, and documenta - tion level. "The CoreLogic HCI is up compared to a year ago, in part reflect - ing a shift in the mix of loans to the purchase market, which typically exhibit higher risk. Looking forward to 2018, with continuing economic and home price growth, we ex - pect credit-risk metrics to rise moderately," Dr. Frank Nothaft, Chief Economist for CoreLogic, said. The report noted that while credit score for homebuyers increased seven points year- over-year between Q 3 2016 and Q 3 2017, rising from 739 to 746, the share of home - buyers with credit scores under 640 was 2 percent compared with 25 percent in 2001, indicating that the Q 3 2017 share was less than one-tenth of the share in 2001. In terms of DTI, the report said that the average DTI for homebuyers in Q 3 2017 was unchanged from Q 3 2016 at 36. In Q 3 2017, the share of homebuyers with DTIs greater than or equal to 43 percent was 22 percent, down slightly from 24 percent in Q 3 2016, but up from 18 percent in 2001. The LTV for homebuyers dropped by almost 2 percentage points year-over- year from 86.4 percent in Q 3 2016 to 84.9 percent in Q 3 2017 according to the report which also indicated that the share of homebuyers with an LTV greater than or equal to 95 percent had increased by almost one-third in 2017 compared with 2001. While the investor share of home pur - chase loans increased to 4.4 percent in Q 3 2017 from 4 percent in the year-ago period, the share of home purchase loans secured by condominiums or co-op buildings increased to 11.5 percent in Q 3 2017 from 10 percent in the year-ago period. The report noted that low or no-docu - mentation loans remained a small part of the mortgage market in 2017. "Looking forward to 2018, with continuing economic and home price growth, we expect credit-risk metrics to rise moderately." —Dr. Frank Nothaft, Chief Economist, CoreLogic