The amount of household debt increased in the third quarter and is now greater than the level consumers held at the bottom of the post-financial crisis. Household debt increased by $219 billion (1.6%) to $13.51 trillion in the third quarter of 2018.

Furthermore, overall household debt is 21.2% above the post-financial-crisis trough reached during the second quarter of 2013, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve.

“Older borrowers now hold a larger share of total outstanding debt balances, while the shares held by younger borrowers have contracted and shifted toward auto loans and student loans,” said Donghoon Lee, research officer at the Fed. It was the 17^th consecutive quarter with an increase and the total is now $837 billion higher than the previous peak of $12.68 trillion in the third quarter of 2008.

Among other trends from the report are the following:

Housing Debt

• Mortgage originations increased to $445 billion from $437 billion in the second quarter.
• Mortgage delinquencies were roughly flat, with 1.1% of mortgage balances 90 or more days delinquent in the third quarter.

Non-Housing Debt

• Outstanding student loan debt increased by $37 billion and stood at $1.44 trillion as of September 30.
• Auto loan balances increased by $27 billion to $1.27 trillion in 2018Q3.
• Credit card balances rose by $15 billion to $844 billion.

Delinquencies, Collection Accounts, and Credit Inquiries

• Mortgage delinquency transition rates increased slightly with about 1.2% of current balances transitioning into delinquency.
• The number of credit inquiries within the past six months--an indicator of consumer credit demand--increased slightly--but remains among the lowest seen in the history of the data.

eOriginal Inc. and LendingQB have completed an integration that supports the generation, execution and management of eNotes. In October, eOriginal began an eNotes program with Wells Fargo Home Lending and joined with MERSCorp Holdings to offer MERS eNote Solutions.

“LendingQB’s work with eOriginal is another milestone in the creation of an open ecosystem for technology and service providers working together to benefit originators,” said Simon Moir, senior vice president and general manager of digital mortgage of eOriginal. “This integration continues eOriginal’s commitment to innovative solutions for the industry that focus on capital efficiency and market execution, while minimizing impact to our client’s business and technology operations.”

Interest in the production of electronic promissory notes, or e-notes, continues to grow as consumers and lenders recognize the value of moving toward a more streamlined, digital process. Through the automated integration into eOriginal’s eNote technology, LendingQB is providing originators of all sizes with accelerated entry into the digital mortgage ecosystem, while gaining process efficiencies and improving quality control by eliminating manual entries and reviews through LendingQB’s loan origination system.

“With growing adoption and demand for more transparency, digital mortgage is delivering a competitive advantage and operational efficiencies that cannot be obtained through paper processes. eOriginal’s technology is designed to provide clients with an enhanced experience, bringing greater scale, efficiency, and accuracy,” said David Colwell, vice president of LendingQB Strategy. “The solution delivers a fully digital mortgage that meets regulatory requirements and is accepted by top lenders, the government-sponsored enterprises, and other stakeholders across the mortgage ecosystem.”

In the wake of Fannie Mae and Freddie Mac’s increasing acceptance of e-notes, this partnership is the latest in the expansion of the digital mortgage ecosystem. LendingQB will begin offering this integration to a select group of lenders in 2018, which will be followed by a broader offering in 2019.

The mortgage marketplace is doing a better job of serving once underserved borrowers and has been effective at  mitigating risk from that effort, according to a review of The Department of Housing and Urban Development's Annual Report to Congress Regarding the Financial Status of the FHA Mutual Mortgage Insurance Fund.
"The continued growth of the Capital Reserve Ratio is welcome news,  and indicates that FHA is effectively serving its core mission in the single-family market, providing safe and affordable credit to qualified first time and low-and moderate-income borrowers, while appropriately managing its risk and protecting taxpayers, said Robert Broeksmit, president and CEO of the Mortgage Bankers Association.

An increase in the MMIF capital ratio to 2.76 percent in fiscal year 2018 means the program has proceeded. To move past the above the 2 percent statutory minimum. In addition, the forward book of continued to perform well, with significant increases in key indicators such as serious delinquencies, early payment defaults, claims payments, and loss rates.

"We are glad to see that FHA is closely monitoring the increasing risk in the forward portfolio, indicated by rising debt-to-income ratios, declining credit scores, and the increasing use of downpayment assistance programs,” said Broeksmit. “While current FHA delinquencies are quite low, it is prudent to keep an eye on these trends to ensure the program does not face undue challenges if, and when, the economy and job market cool.”

Nonetheless, it was not a perfect report; Reverse mortgages  were a source of concern. The HECM program remains a drain on the fund, continuing a trend that MBA has identified as cause of angst. “Reverse mortgages are an important financial tool that, if used properly, can allow the growing number of retirees to age in place,” said Broeksmit. “MBA applauds the recent steps FHA has taken to stabilize and improve the HECM program, and policymakers should continue considering ways to insulate the forward program from the volatility in the reverse program."