Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (July 2021)
43 slides from Enact's investor presentation, July 2021
Slide 1: Liabilities – Calculating and Modifying the DTI
Liabilities – Calculating and Modifying the DTI Suggested Best Practices and Reminders July 2021 Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina ©2021 Genworth Mortgage Insurance Corporation. All rights reserved.
Slide 2: Genworth MI is now Enact
Genworth MI is now Enact We’re changing to remain focused on you. As part of our evolution, we are now known as Enact. We’re building on our trusted reputation for quality service and success with an increased focus on providing responsive solutions and insightful expertise for you. Learn more at ht
Slide 3: Objective
Objective Today’s session will provide reminders and refresh attendees on the requirements for understanding and calculating the DTI for Fannie Mae and Freddie Mac Review
Slide 4: Understanding Ratios
Understanding Ratios ‘snog020 Desitop UnderunterFinaings| Feedback Certificate Summary of Findings =a ee =e = a Ga eS ¢—s—e ———E Casafile ID Recommendation <r peneemenoe urna 1486996048 Approve/Eligible ae. a Borrower 1 John Homeowner Submission 1 tote” “sccrr “uae | grew "yoree | "Nor | lumber == =
Slide 5: Housing Ratio
Housing Ratio • HOW TO CALCULATE THE HOUSING RATIO In order to calculate the housing ratio, divide the total monthly housing payment by the borrower’s stable gross monthly • income. For a manually underwritten conventional loan, a normally acceptable range may be 28%-33% depending on the loan type,
Slide 6: Practice Exercise:
Practice Exercise: Principal and Interest $954.00 Homeowner’s Insurance $65.00 Association Due NA Mortgage Insurance $80.00 Flood Insurance NA Real Estate Taxes $333.00 Assessments NA Total Housing Expense $1,432.00 Stable Gross Monthly Income $4,390.00 Total Housing Expense/ Stable Gross Monthly Ho
Slide 7: Practice Exercise: Answers
Practice Exercise: Answers Total Housing Expense/ Housing Ratio Gross Monthly Income = 32.61 % $954.00 $65.00 $80.00 $333.00 $1,432.00 Total PITI / $4,390 GMI =
Slide 8: Total Debt Ratio (DTI)
Total Debt Ratio (DTI) • HOW TO CALCULATE THE DEBT RATIO ALSO DTI (DEBT TO INCOME) In order to calculate the debt ratio, divide the total monthly debt payment by the borrower’s gross monthly income. • • For a manually underwritten conventional loan, a normally acceptable range may be up to 36% depen
Slide 9: Practice Exercise:
Practice Exercise: Principal and Interest, Taxes and Insurances (including $ 1,432.00 any assessments, HOA, Flood) Credit Card Payments 350.00 Car Loan 457.00 Total Fixed Monthly Obligation $2,239.00 Stable Gross Monthly Income $4,390.00 Fixed Monthly Expense/Stable Gross Debt Ratio Monthly Income =
Slide 10: Practice Exercise: Answers
Practice Exercise: Answers Fixed Monthly Expense/ Debt Ratio Gross Monthly Income = 51.00 % $1,432.00 $350.00 $457.00 $2,239.00 Total Debt / $4,390.00 GMI
Slide 11: Income
Income PITI Debt Income Principal and Interest, Taxes and Insurances $ 1,432.00 Credit Card Payments 350.00 Car Loan 457.00 Total Fixed Monthly Obligation $2,239.00 Gross Monthly Income $4,390.00 Fixed Monthly Expense/ Gross Debt Ratio Monthly Income = %
Slide 12: Income
1b. Current Employment/Self Employment and Income D1 Does not apply Employer or Business Name Phone (___)__- (Gross Monthly income Address Base s$___/month City state__2J zip. Overtime month Bonus s. /month Position or Title Check if this statement applies: commission ¢ “month paar Dlamempioyedby at
Slide 13: Income PITI
Income PITI Based on a $200,000 loan amount @ 4% 30yr fixed. Annual RE Taxes of $4,000. 90% LTV with Monthly MI @ 700 credit score
Slide 14: What If The Borrower Had $5,000…
What If The Borrower Had $5,000…
Slide 15: Income PITI
Income PITI Let’s- Lower the loan amount $5,000 That’s Only $26 reduction per month in P&I & PITI! Based on a $195,000 loan amount @ 4% 30yr fixed. Annual RE Taxes of $4,000. 90% LTV with Monthly MI @ 700 credit score
Slide 16: Income PITI
Income PITI Let’s- Lower the loan amount $5,000 Only $24 reduction per month P&I! Principal and Interest, Taxes and $ 1,406.00 Insurances Credit Card Payments 350.00 Car Loan 457.00 Total Fixed Monthly Obligation $2,213.00 Gross Monthly Income $4,390.00 Fixed Monthly Expense/ Debt Ratio Gross Monthl
Slide 17: Income PITI
Income PITI Let’s- Buy down the Rate with 2 points @$4,000 $32 per month P&I and PITI with $1,000 in reserves! Based on a $200,000 loan amount @ 3.5% 30yr fixed. Annual RE Taxes of $4,000. 90% LTV with Monthly MI @ 700 credit score
Slide 18: Income PITI
Income PITI Let’s- Buy down the Rate with 2 points @$4,000 Principal and Interest, Taxes and $ 1,376.00 Insurances Credit Card Payments 350.00 Car Loan 457.00 Total Fixed Monthly Obligation $2,183.00 Gross Monthly Income $4,390.00 Fixed Monthly Expense/ Debt Ratio Gross Monthly Income = 49.72 % Base
Slide 19: Income PITI
Income PITI Let’s- Change the MI Type from monthly to Single Premium That’s $80 per month in the PITI and they have $1,700 in reserves! Based on a $200,000 loan amount @ 4% 30yr fixed. Annual RE Taxes of $4,000. 90% LTV with Monthly MI @ 700 credit score
Slide 20: Income PITI
Income PITI Let’s- Change the MI Type from monthly to Single Premium Principal and Interest, Taxes and $ 1,352.00 Insurances Credit Card Payments 350.00 Car Loan 457.00 Total Fixed Monthly Obligation $2,159.00 Gross Monthly Income $4,390.00 Fixed Monthly Expense/ Debt Ratio Gross Monthly Income = 49
Slide 21: Income PITI Debt
Income PITI Debt Let’s- Propose the borrower pays down the auto loan balance by $5,000 Verify your company policy regarding paying liabilities off or down to qualify. Never instruct the borrower to do so without the approval from Underwriting. $9100 030 $457 $9,100-$5,000= $4,100/$457= 8.97 months p
Slide 22: Income PITI Debt
Income PITI Debt Let’s- Propose the borrower pays down the auto loan balance by $5,000 Principal and Interest, Taxes and $ 1,432.00 Insurances Credit Card Payments 350.00 Car Loan Less than 10 mon Total Fixed Monthly Obligation $1,782.00 Gross Monthly Income $4,390.00 That’s $457 per month in the DT
Slide 23: Fannie Mae Selling Guide
Fannie Mae Selling Guide https://selling-guide.fanniemae.com/
Slide 24: Freddie Mac Selling Guide
Freddie Mac Selling Guide https://guide.freddiemac.com/app/guide/section/5401.2
Slide 25: Liabilities and the Credit Report
Liabilities and the Credit Report Best Practices: • Review the 1003 section, don’t assume it was completed properly • Review credit report, ensure all liabilities populated correctly (i.e. leases, mortgages) • Any judgements or tax liens • Review pay stubs for additional debt (undisclosed debt) • Re
Slide 26: Loan Application
Loan Application Now review with Applicant and ask questions: • Any additional? • Any errors? Payments incorrect? • Is someone else’s debt appearing on the credit report/1003 in error? • Is someone else or a business paying a debt that could be documented? • Common Error: Debts omitted without prope
Slide 27: Documentation Matrix – Freddie Mac
Documentation Matrix – Freddie Mac • Documentation Matrix- Check for latest version • Assists with processing and documenting loan files • Be mindful of Product Overlays https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf
Slide 28: Debts Included in the DTI – Fannie Mae
Debts Included in the DTI – Fannie Mae The total monthly obligation is the sum of the following Selling Guide B3-6-05: Monthly housing expense (PITIA) and • Revolving: Indicate both the balance and monthly payment on all revolving accounts. Do not “omit” the debt even when 10 or fewer payments remai
Slide 29: Debts Included in the DTI – Fannie Mae
Debts Included in the DTI – Fannie Mae The total monthly obligation….cont. (B3-6-05) • Alimony/Child Support: Indicate both the balance and monthly payment on all support accounts. If less than 10 payments remain, the payment should not be included in the applicant’s debt ratio. • Or the alimony may
Slide 30: Debts Included in the DTI – Freddie Mac
Debts Included in the DTI – Freddie Mac The total monthly obligation is the sum of the following Selling Guide B3-6-05: Monthly housing expense (PITIA) and • Revolving: Indicate both the balance and monthly payment on all revolving accounts. Do not “omit” the debt even when 10 or fewer payments rema
Slide 31: Debts Included in the DTI – Freddie Mac
Debts Included in the DTI – Freddie Mac The total monthly obligation is the sum of the following Selling Guide B3-6-05: Monthly housing expense (PITIA) and • Child Support: Indicate both the balance and monthly payment on all support accounts. If less than 10 payments remain, the payment should not
Slide 32: Common Liability Errors
Common Liability Errors Avoid These Errors: • Student loans excluded because of CARES ACT – this is not acceptable per Fannie Mae and Freddie Mac Guidelines. • Taxes, insurance and HOA payments excluded for properties owned free and clear • Inquires not cleared and resulted in a new loan before clos
Slide 33: Fannie Mae Website
Fannie Mae Website https://singlefamily.fanniemae.com/originating-underwriting
Slide 34: Fannie Mae Job Aids/FAQs
Fannie Mae Job Aids/FAQs https://singlefamily.fanniemae.com/learning-center/originating-and-underwriting
Slide 35: Fannie Mae Top Trending Questions
Fannie Mae Top Trending Questions https://singlefamily.fanniemae.com/faq-top-trending-selling-faqs
Slide 36: FreddieMac
FreddieMac Home — Working with Us Tos Leeming News & Insights Helping every business iy housing value chain thr Freddie Mac Single-Family offers unmatched risk analysis, sophisticated data mode process automation along with the industry’s bestegarded client support borrowers succaed in a changing ho
Slide 37: Enact Rate Express®
Enact Rate Express® Enact" MI&RATES | UNDERWRITING & GUIDES | LOS& CONNECTIONS | ENACT TOOLKIT | TRAINING ouRBLoG =| ABOUTUS Je’ve changed to Temain focused on you. Genworth MI is now Enact. ° Rate Express (0) Find Rates Quick GETA QUOTE Now Underwriting Innovate Underwriting Know More & 800 444.566
Slide 38: Enact Underwriting Guidelines
Enact Underwriting Guidelines 38
Slide 39: Enact Training Resources
Enact Training Resources Genworth Ml is now Enact MI&RATES | UNDERWRITING & GUIDES | LOS & CONNECTIONS | ENACT TOOLKIT TRAINING =| ~ 6 & 800.444.5664 | | me We've changed to emain focused on you. Genworth MI is now Enact. ee fe & Training Boost Your Knowledge LEARN Now Underwriting Op Rate Express I
Slide 40: Enact Training Resources
Enact Training Resources 40 Enact Self-Employed Borrower Tools by Enact MI ‘We get it, mental math is hard. That’s why Enact provides a collection of downloadable calculators and reference guides to help you analyze a self-employed borrower's average monthly income and expenses. Please note that the
Slide 41: Your Enact Resources
Your Enact Resources • ActionCenter® : 800 444.5664 • Your Local Enact Regional Underwriter • Your Enact Sales Representative 41
Slide 42: Legal Disclaimer
Legal Disclaimer Enact Mortgage Insurance is happy to provide you with these training materials. While we strive for accuracy, we also know that any discussion of laws and their application to particular facts is subject to individual interpretation, change, and other uncertainties. Our training is
Slide 43: Thank You!
Thank You!