Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (April 2018)
91 slides from Enact's investor presentation, April 2018
Slide 1: Self-Employed Borrower: Fannie Mae Cash Flow Form 1084 Part I
Self-Employed Borrower Fannie Mae Cash Flow Form 1084 Part I The Personal Tax Returns April 2018 Genworth Mortgage Insurance Corporation ©2018 Genworth Financial, Inc. All rights reserved.
Slide 2: Lender Responsibility
Lender Responsibility Investors (Fannie Mae, Freddie Mac, Private Investors) require it to be determined that self-employed borrowers demonstrate the financial ability to repay the mortgage. – History – Income calculation – Continuance / Stability of income Fannie Mae Cash Flow Analysis Form (Fo
Slide 3: Objective
Objective Learn to use the Fannie Mae Cash Flow Analysis (Form 1084) and data from tax returns to calculate supportable self-employed borrower income. – W-2 wages from a business owned by the borrower – Income from a Schedule C (Sole Proprietor) – Consideration of Capital Gains & Losses Schedule
Slide 4: Self-Employment Fannie Mae
Self-Employment Fannie Mae www.fanniemae.com Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 6
Slide 5: Self-Employment Fannie Mae
Self-Employment Fannie Mae Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 7
Slide 6: Written Analysis of Income-Fannie Mae
Written Analysis of Income-Fannie Mae Fannie Mae 2018 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (10/24/2016) Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 8
Slide 7: Form 1088 Trend Analysis
Form 1088 Trend Analysis Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 9
Slide 8: Written Analysis of Income-Fannie Mae
Written Analysis of Income-Fannie Mae Fannie Mae 2018 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (10/24/2016) Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 10
Slide 9: Requirements for Use of Business Assets
Requirements for Use of Business Assets Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 11
Slide 10: Does Borrower Own 25% Or More Of A Business?
Does Borrower Own 25% Or More Of A Business? Can checking the Self Employed Indicator to “Yes” increase the risk of the loan when evaluated by DU? No Yes Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 13
Slide 11: DU/DO Release Notes DU Version 10.0 - Appendix A
DU/DO Release Notes DU Version 10.0- Appendix A Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 14
Slide 12: Capacity: Self-Employed Borrower Income
Capacity: Self-Employed Borrower Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 15
Slide 13: Capacity: Self-Employed Borrower Income
Capacity: Self-Employed Borrower Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 16
Slide 14: Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I
Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 17
Slide 15: Tax Forms
Tax Forms Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I
Slide 16: Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I
Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 19
Slide 17: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 20
Slide 18: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 21
Slide 19: You'll Need Calculators
You’ll Need Calculators- Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 22
Slide 20: Fannie Mae's 1084
Fannie Mae’s 1084 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 23
Slide 21: You'll Need
You’ll Need Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 24
Slide 22: The Case Study
The Case Study You will be working with John and Mary Homeowner who: – Own a Schedule C business called Impressive Images (John) – Have capital gains/loss activity reported on a Schedule D – Own an existing rental property shown on a Schedule E – Own 33.33% of an LLC called Street Art Design Com
Slide 23: Form 1040
Form 1040 Review for: – Identifiers • Name • Address • Social Security Number – All pages and schedules – Any Red Flags – Date • Most recent – Signatures Page 3 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 26
Slide 24: Calculator and Quick Reference Guide
Calculator and Quick Reference Guide Access your Quick Reference Guide 1084 Form and Case Study Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 27
Slide 25: Do Our Applicants Have Ownership?
Do Our Applicants Have Ownership? Is this W-2 wage for Self-Employed or Salary income? Page 1 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 28
Slide 26: Do Our Applicants Have Ownership?
Do Our Applicants Have Ownership? Is this W-2 wage for Self-Employed or Salary income? Page 2 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 29
Slide 27: Schedule E to Validate Ownership
Schedule E to Validate Ownership Page 12 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 30
Slide 28: 1120S K-1
1120S K-1 Both receive a W2, but Mary is 100% owner Page 31 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 31
Slide 29: Any Other W-2 Wages?
Any Other W-2 Wages? Review Form 1040, Line 7 for any additional W-2 Wages – Review each W-2 – Determine if applicant owns 25% or more of the business • If yes, it is considered self-employed income • If no, calculate that income on a different form or separately * *Use of the W-2 wages is subje
Slide 30: Form 1040
Form 1040 Schedule A: – Review Page 2 of 1040 Line 40 Page 4 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 33
Slide 31: Form 1040
Form 1040 Schedule A: – Line 21 Page 5 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 34
Slide 32: Interest Income From S Corps/Partnerships
Interest Income From S Corps/Partnerships Page 3 All Dividend And Interest Income Appears On 1040 Lines 8 And 9 Review Schedule B For Specific Sources, Before Using To Qualify Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 35
Slide 33: Interest and Dividends
Interest and Dividends Don’t use unless needed for qualifying – Two year history of stable receipt and likelihood of continuance required – Only use when earned from assets owned by “a business only” – Typically will say “From K-1” or from the business the borrower owns – Check investor overlays
Slide 34: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 37
Slide 35: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 38
Slide 36: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 39
Slide 37: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 40
Slide 38: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 41
Slide 39: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 42
Slide 40: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 43
Slide 41: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 44
Slide 42: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 45
Slide 43: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 46
Slide 44: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 47
Slide 45: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 48
Slide 46: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 49
Slide 47: Schedule C
Schedule C Only the $977 amortization is added back on the form or calculator. Page 8 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 50
Slide 48: Schedule C Line 9 - Car and Truck Expenses
Schedule C Line 9 - Car and Truck Expenses Use This Depreciation Adjustment Option Only When Investor Policy Allows And The Adjustment Is Needed To Qualify Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 51
Slide 49: Schedule C
Schedule C Additional depreciation can be found by multiplying business miles on 44a x IRS depreciation factor for that year. Page 8 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 52
Slide 50: Schedule C
Schedule C Use This Depreciation Option Only When Investor Policy Allows And The Adjustment Is Needed To Qualify Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 53
Slide 51: Schedule C
Schedule C Verify 4562 is for the Schedule C Page 13 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 54
Slide 52: Schedule C
Schedule C Page 14 Business miles of 8109 x .25 cents = $2,027 in additional depreciation that could be added back Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 55
Slide 53: IRS Publication 463
IRS Publication 463 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 56
Slide 54: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 57
Slide 55: Schedule C - Other
Schedule C - Other Car & Truck Expenses Worksheet $5,780 Interest that could be added to income to Pages 17 & 18 support the payment in the DTI Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 58
Slide 56: Schedule D - Capital Gains
Schedule D - Capital Gains Don’t use unless needed for qualifying – Two year history, stable receipt and likely to continue – Check investor overlays before using – Only enter on the worksheet if coming from a self-employed source – Let’s Review the 1040 Line 13 Pages 3, 9, 10 Fannie Mae Cash Fl
Slide 57: Schedule D
Schedule D Where Did The $16,544 Loss On Line 6 Come From? The 1040 Showed A $3,000 Loss. Page 9 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 60
Slide 58: Schedule D
Schedule D Page 10 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 61
Slide 59: Schedule E – Part I Royalty Payments
Schedule E – Part I Royalty Payments Use Section 5 for Royalty Payments only (If applicable) – Follow Investor guidelines for documentation and continuance – Use only if needed Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 62
Slide 60: Genworth Rental Income Calculator
Genworth Rental Income Calculator – Locate Calculator and Quick Reference Guide for Rental Income – Turn to Schedule E, Part I, Rentals – Rental Income has been removed from the Cash Flow Analysis Form Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 63
Slide 61: Fannie Mae Form 1038
Fannie Mae Form 1038 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 64
Slide 62: Mortgage Statement/Payment Coupon
Mortgage Statement/Payment Coupon A mortgage statement/payment coupon can verify: – If loan is impounded or escrowed – What property is associated with the mortgage payment – Current tax and insurance information – Current HOA dues: most investors want verification PUD, Condo or Coop Fannie Mae
Slide 63: Mortgage Statement/Payment Coupon
Mortgage Statement/Payment Coupon Payment information below is from a Borrower provided Mortgage Statement and HOA Coupon. – Taxes, Insurance and HOA Dues are impounded $1,594 HOA DUES $310 For Non-Impounded Loans: Obtain Tax And Insurance Information Fannie Mae Cash Flow Analysis Form (Form 108
Slide 64: Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I
Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 67
Slide 65: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 68
Slide 66: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 69
Slide 67: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 70
Slide 68: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 71
Slide 69: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 72
Slide 70: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 73
Slide 71: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 74
Slide 72: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 75
Slide 73: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 76
Slide 74: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 77
Slide 75: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 78
Slide 76: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 79
Slide 77: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 80
Slide 78: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 81
Slide 79: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 82
Slide 80: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 83
Slide 81: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 84
Slide 82: Net Rental Income
Net Rental Income Compare “rental income” figure with loan application (Fannie Mae Form 1003) – Most systems calculate rental income from the REO section of the 1003 – Review the 1003 to verify what appears as rental income/rental loss – If the number is different, override your -4.00 system to
Slide 83: Net Rental Income
Net Rental Income Do not use leases; Use the “Cash Flow” from the property. – Flag the mortgage payment in your system as a rental property lien, so that it will NOT count it in the debt ratio – You may need to override your REO Section R 225,000 180,400 3,500 2,500 875 -4 44 Renters Way $1,594
Slide 84: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 87
Slide 85: Genworth Rate Express®
Genworth Rate Express® Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 88
Slide 86: LOS Connections
LOS Connections Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 89
Slide 87: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 90
Slide 88: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 91
Slide 89: Additional MI Site Information
Additional MI Site Information Fannie Mae Cash Flow Analysis Form (Form 1084) Pt III 9292
Slide 90: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Fannie Mae Cash Flow Analysis Form (Form 1084) Pt I 93
Slide 91: Legal Disclaimer
Legal Disclaimer Genworth 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 train