Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (June 2019)
73 slides from Enact's investor presentation, June 2019
Slide 1: Asset Review
Asset Review June 2019 Genworth Mortgage Insurance Corporation ©2019 Genworth Financial, Inc. All rights reserved.
Slide 2: Agenda
Agenda What we will cover – What are the Required Funds – Earnest Money – Different Down payment sources – Reserves – Large Deposits – Multiple Financed Properties – General Documentation Requirements – Genworth website Only Conventional Loans Are Covered In Today’s Session; HARP Or High Refinance L
Slide 3: What Are The Required Funds
What Are The Required Funds Purchase Price (or refinance of all debt to be paid off) - Earnest Money Deposit (only if verified) - Other Financing (if applicable) - Loan Amount Applied for + Closing Costs + Prepaids and escrows + Judgments, collections, garnishments and debt to be brought current, pa
Slide 4: Earnest Money Verification
Earnest Money Verification Review Purchase Agreement for Amounts Paid – What is the source of the Earnest Money or “Deposit”? – Do you have a copy of the check? – Is it from an account you have verified? – Is it cancelled or cleared? – Did the borrower explain it was a gift? If so, gift documentatio
Slide 5: Down Payment Source
Down Payment Source Review the 1003 Property Information Section – What is the indicated source(s) of down payment? – Are those sources properly documented in your file? – If you are originating, indicate to the Underwriter what funds will be used! Asset and Reserves 5
Slide 6: Down Payment Source
Down Payment Source Establish assets were not borrowed from an unacceptable source – Such as a cash advance on a credit card or cash on hand* – Gift from a friend – Unsecured personal loan Document that the borrower has the minimum contribution needed for the transaction – Certain loan progr
Slide 7: Fannie Mae
Fannie Mae Desktop Underwriter® Asset and Reserve Requirements Asset and Reserves 7
Slide 8: Minimum Borrower Contribution
Minimum Borrower Contribution 1. If the borrower receives a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contribution requi
Slide 9: The Use of Gift Funds
The Use of Gift Funds A borrower of a mortgage loan secured by a principal residence or second home may use funds received as a personal gift from an acceptable donor. Gift funds may fund all or part of the down payment, closing costs, or financial reserves, subject to the minimum borrower contr
Slide 10: Gift Funds - Acceptable Donor
Gift Funds - Acceptable Donor A gift can be provided by: – a relative, defined as the borrower’s spouse, child, or other dependent, or by any other individual who is related to the borrower by blood, marriage, adoption, or legal guardianship; or – a fiancé, fiancée, or domestic partner. The dono
Slide 11: Gift Funds - Documentation Requirement
Gift Funds - Documentation Requirement Gifts must be evidenced by a letter signed by the donor, called a gift letter. The gift letter must: – specify the dollar amount of the gift; – specify the date the funds were transferred; – include the donor’s statement that no repayment is expected; and –
Slide 12: Gift Funds - Availability & Transfer of Funds
Gift Funds - Availability & Transfer of Funds The lender must verify that sufficient funds to cover the gift are either in the donor’s account or have been transferred to the borrower’s account. Acceptable documentation includes the following: – a copy of the donor’s check and the borrower’s dep
Slide 13: Sample DU Findings Report
Sample DU Findings Report Verification Messages Broken out by Topic: –Assets and Reserves •Amount to verify, liquidation and documentation requirements Asset and Reserves 13
Slide 14: Sample DU Findings Report
Sample DU Findings Report Verification Messages Broken out by Topic: Asset and Reserves 14
Slide 15: Asset Types
Asset Types • Types of Assets used for closing/reserves: – Checking/Savings: Amount held in applicant’s account as of the most recent bank statement – Stocks: Number of shares and current price or amount of evaluation as per Brokerage account balance – Gift Deposited: Amount of Gift received from an
Slide 16: Asset Types
Asset Types • Types of Assets used for closing/reserves – Trust Funds: Evidence of ownership, value and evidence of withdrawal – Other Liquid Assets Cash Value of Life Insurance – Savings Bonds: Evidence of ownership and liquidation value – Funds to be Saved: From payroll or Tax Refund if documented
Slide 17: IRA or Retirement Funds
IRA or Retirement Funds Look for indication the account is an IRA or retirement account - borrowers do not always tell you. – Many investment accounts can be retirement accounts so carefully review for evidence of the account type – Look for any loans taken out again the account as you must subtract
Slide 18: Proof Of Liquidation
Proof Of Liquidation When used for the down payment or closing costs, if the value of the asset is at least 20% more than the amount of funds needed for the down payment and closing costs, no documentation of the borrower’s actual receipt of funds realized from the sale or liquidation is require
Slide 19: Proof Of Liquidation Example
Proof Of Liquidation Example Applicable for loans submitted to DU® and manually underwritten loans; Applies to – Stocks, Bonds, Mutual funds and retirement accounts in the form of stocks, bonds and mutual funds. Asset and Reserves 19
Slide 20: Pending Sale
Pending Sale Review purchase and sale agreement for existing home to determine estimated net proceeds; When will transaction close? Sales Price minus commissions, repairs, mortgage balances (from credit report). Asset and Reserves 20
Slide 21: Pending Sale
Pending Sale Review purchase and sale agreement for existing home to determine estimated net proceeds; When will transaction close? Sales Price minus commissions, repairs, mortgage balances (from credit report). Will borrower net sufficient funds? Will transaction close in time?? Asset and Reserves
Slide 22: Pending Sale
Pending Sale Your Borrower Property being sold Asset and Reserves 22
Slide 23: Pending Sale
Pending Sale What did the seller (your borrower) net? Is it sufficient for the transaction? Are they using other sources of funds as well? Do you see an existing mortgage paid off? $50,000 Asset and Reserves 23
Slide 24: What Are Reserves?
What Are Reserves? • Reserves are defined as: – Principal and Interest – Hazard, flood and/or mortgage insurance premiums (as applicable) – Real Estate Taxes – Ground rent and/or special assessments – Owner’s association dues or monthly coop corporation fees – Any subordinate financing payments Asse
Slide 25: Unacceptable sources of reserves
Asset and Reserves • Unacceptable sources of reserves – Funds that are not vested – Funds that cannot be withdrawn under circumstances other than the account owner’s retirement, employment termination, or death – Stock held in an unlisted corporation – Non-vested stock options and non-vested restric
Slide 26: Assets and Reserves
Assets and Reserves • Funds Section – Summary of “Funds” section found on Underwriting Analysis Section – Submit only assets to cover “required” to be verified or $16,613 in this example Review The “Asset Section” Of The DU Findings Report For Additional Messages Asset and Reserves 26
Slide 27: Assets and Reserves
Assets and Reserves If reserves are required, document that the borrower has sufficient reserves from acceptable sources. – Reserves are dependent on: • Risk of the loan file and how many properties the borrower owns • Property and occupancy type • Product and underwriting Type Always verify you
Slide 28: Large Deposits
Large Deposits Indications of Borrowed Funds… – A large deposit and any deposit that is 50% or more of the total qualifying income being used to qualify – If using the funds, lenders must obtain borrower’s written explanation and documentation of the source of large deposits that are reflected o
Slide 29: Additional Guidance on Large Deposits
Additional Guidance on Large Deposits Asset and Reserves 29
Slide 30: Additional Guidance on Large Deposits
Additional Guidance on Large Deposits Asset and Reserves 30
Slide 31: Borrowers with Multiple Financed Properties
Borrowers with Multiple Financed Properties DU Version 10.0 reflects a simplified policy that applies to loans for borrowers with multiple financed properties. The policy requires fewer eligibility overlays and updated reserve requirements, which are automated by DU. – A new field “Number of Fin
Slide 32: Calculations of Reserves for Multiple Financed Properties
Calculations of Reserves for Multiple Financed Properties DU determines the reserves required for the other residential financed properties (excluding the borrower’s principal residence and the subject property). The reserve amount is determined by applying a specific percentage to the aggregate of
Slide 33: Borrowers with Multiple Financed Properties
Borrowers with Multiple Financed Properties Asset and Reserves 33
Slide 34: Reserves
Reserves Read The Findings Report for What Needs To Be Verified
Slide 35: Freddie Mac
Freddie Mac Loan Product Advisor® Asset and Reserve Requirements Asset and Reserves 35
Slide 36: Bulletin 2018-10
Bulletin 2018-10 Selling Updates-Effective August 20 – Increasing number of financed properties to 10 when subject is a second home or investment. When 7-10 range loan must have: • 720 credit score required • 8 months reserves for each second home or investment property borrower owns/obligated o
Slide 37: Bulletin 2015-20
Bulletin 2015-20 Loan Product Advisor Updated Dec 14, 2015 – No requirement for evidence of liquidation of stocks, bonds, mutual funds or other securities, when value of these assets is 20% greater than total amount needed – No longer limiting value of retirement accounts that are available to j
Slide 38: Total Funds To Be Verified-Job Aid
Total Funds To Be Verified-Job Aid Asset and Reserves 38
Slide 39: Asset Information
Asset Information (1) TOTAL EUGIBLE ASSETS (2) $43,000.00 —> TOTAL FUNDS TO BE VERIFIED $45,600.00 C REQUIRED BORROWER FUNDS $42,500.00 + + + $3,000.00 $0.00 Asset Information Section Results Field Brief Description Total Eligible Assets The total amount of assets that are eligible sources of borrow
Slide 40: Additional Amounts on Top of Loan Product Advisor Feedback
Additional Amounts on Top of Loan Product Advisor Feedback Asset and Reserves 40
Slide 41: Types of Assets Eligible and Ineligible
Types of Assets Eligible and Ineligible Asset and Reserves 41
Slide 42: Assets Breakdown Page
Assets Breakdown Page-YOUR LOS Has Something Similar Asset and Reserves 42
Slide 43: New Asset/Reserve Messages
New Asset/Reserve Messages Asset and Reserves 43
Slide 44: Documentation Matrix
Documentation Matrix – Updated June 2019 – Assists with processing and documenting loan files – Be mindful of Product Overlays Asset and Reserves 44
Slide 45: Asset and Reserve Requirements
Asset and Reserve Requirements Use to validate basic asset and reserve requirements – Most recent matrix dated June 2019 Page 19 & 20 of matrix Asset and Reserves 45
Slide 46: Gifts
Gifts Page 23 of matrix Much more detailed information regarding gift funds Asset and Reserves 46
Slide 47: Asset Requirements
Asset Requirements Updated “Liquidation Requirements” See next slide for example Pages 20 & 24 of matrix Note: NOT all investors will follow this Freddie Mac policy Asset and Reserves 47
Slide 48: Proof Of Liquidation Example
Proof Of Liquidation Example Applicable for loans submitted to Loan Product Advisor and manually underwritten loans; Applies to – Stocks, Bonds, Mutual funds, U.S. government Securities, retirement accounts and other securities needed for closing Answer is proof of liquidation of the non-liquid asse
Slide 49: Asset Requirements
Asset Requirements Page 20 of matrix Asset and Reserves 49
Slide 50: Multiple Financed Property Reserve Policy
Multiple Financed Property Reserve Policy Effective August 20, 2018, maximum number of financed properties is 10 when the subject is a second home or investment, reserves of eight months are required for each second home or investment property owned or obligated on by borrower Asset and Reserves 50
Slide 51: General Assets and Reserves
General Assets and Reserves Asset Documentation Reminders, Best Practices, Genworth Website and Guidelines Asset and Reserves 51
Slide 52: Asset Documentation Requirements
Asset Documentation Requirements Originator must view the “Original” documents – Copies made from copies are NOT acceptable. – Asset statements provided by anyone other than the applicant are typically NOT acceptable. – A bank generated print out can be acceptable but it must be signed and stamp
Slide 53: Asset Documentation Requirements
Asset Documentation Requirements Fannie Mae Asset Documentation Requirements Asset and Reserves 53
Slide 54: Asset Documentation Requirements
Asset Documentation Requirements Freddie Mac Documentation Requirements Asset and Reserves 54
Slide 55: Asset Documentation Requirements
Asset Documentation Requirements When reviewing bank statements look for the following: – The bank statement: is the borrower’s name, account #, and address consistent with 1003? – Verify statement includes an account number – Did the applicant provide the most recent one or two months statements? –
Slide 56: Sample bank statement
Primary account number: 9297 178799m March 9, 2017- Apri 8,2017 =Page 9of 10 et All American Bank Way2Save® Savings Activity summary ‘Account number: 3193125748 Beginring balance on 9 $205029 DeposiAdsone 25003 Vehirandettctons 000 Tewsiitanmsacceur lems and conditions aesty Ending balance on 4 "$31
Slide 57: Asset Documentation- VOD
Asset Documentation- VOD Asset and Reserves 57
Slide 58: Asset and Reserve Best Practices
Asset and Reserve Best Practices Some Reminders: – Enter each asset separately according to account type – Verify you have all pages to the asset statement – Review for large deposits and remove any unsourced funds that are not needed – Do you need one or two months statements? – Do you have consecu
Slide 59: Top MI Decision Errors
Top MI Decision Errors https://new.mi.genworth.com/underwriting-tips-and-credit-policy Asset and Reserves 59
Slide 60: Fannie Mae originating and underwriting site
https://www.fanniemae.com/singlefamily/originating-underwriting Asset and Reserves 60
Slide 61: General Requirements For Freddie Mac
General Requirements For Freddie Mac Asset and Reserves 61
Slide 62: General Requirements For Freddie Mac
General Requirements For Freddie Mac Asset and Reserves 62
Slide 63: Asset Qualification For Freddie Mac
Asset Qualification For Freddie Mac Asset and Reserves 63
Slide 64: Asset Qualification For Freddie Mac
Asset Qualification For Freddie Mac Asset and Reserves 64
Slide 65: General Requirements For Freddie Mac
General Requirements For Freddie Mac Asset and Reserves 65
Slide 66: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Asset and Reserves 66
Slide 67: Genworth Rate Express
Genworth Rate Express® Asset and Reserves 67
Slide 68: LOS Connections
LOS Connections Asset and Reserves 68
Slide 69: Training Tools and Information
Training Tools and Information Asset and Reserves 69
Slide 70: Training Tools and Information
Training Tools and Information Asset and Reserves 70
Slide 71: Additional MI Site Information
Additional MI Site Information Asset and Reserves 71
Slide 72: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative Asset and Reserves 72
Slide 73: 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