Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (July 2020)
103 slides from Enact's investor presentation, July 2020
Slide 1: Best Practices In Loan Processing: Suggested Best Practices and Reminders
Best Practices In Loan Processing: Suggested Best Practices and Reminders July 2020 Customer Education Brought to you by: Genworth Customer Development and Process Consulting ©2020 Genworth Financial, Inc. All rights reserved. Best Practices In Loan Processing 0
Slide 2: Agenda
Agenda Objective for today is to provide basic file review before passing a file off to underwriting. – COVID-19 Overview – 1003 or URLA (Uniform Residential Loan Application) Review – Purchase and Sale Agreement Review – Liability and Credit Report Review – Income Review – Assets review – Credit re
Slide 3: Fannie Mae COVID-19 Resources
Fannie Mae COVID-19 Resources Fannie Mae Updates, FAQs, Fannie Mae’s COVID 19 webpage https://singlefamily.fanniemae.com/ Best Practices In Loan Processing 2
Slide 4: Fannie Mae COVID-19 Resources
Fannie Mae COVID-19 Resources Fannie Mae Updates, FAQs, Fannie Mae’s COVID 19 webpage https://singlefamily.fanniemae.com/originating-underwriting#selling-promo Best Practices In Loan Processing 3
Slide 5: COVID-19 Updates!!
COVID-19 Updates!! Freddie Mac released Selling Updates and Appraisal Flexibilities in Bulletin 2020-05 on 3/23/20 and Bulletin 2020-08 on 3/31/20 & 2020-11 on 4/14/2020 and 2020-23 on June 11 https://guide.freddiemac.com/app/guide/content/a_id/1003723 https://guide.freddiemac.com/app/guide/bulletin
Slide 6: New URLA
New URLA Use Of The New Uniform Residential Loan Application Or URLA Is Mandatory March 1, 2021 Best Practices In Loan Processing 5
Slide 7: URLA
URLA Review Entire URLA – Property address in USPS format – Is property a manufactured home? Do you do manufactured homes? Possible it is modular? Verify – Purpose of refinance – Ask the source of down payment? List on cover letter or notes to file – Complete two year residence and employment histor
Slide 8: Declarations and signatures
1003 Declarations and signatures – Permanent resident alien marked? Proper documentation in file? – Note: The New URLA citizenship is found on the first page under personal information – Question a - make sure this section is correct. If a refi, clearly there has been ownership before Occupancy - ta
Slide 9: Purchase Agreement
Purchase Agreement Carefully Review Purchase Agreement for: – Sales Price, verify correct in LOS/ Feedback Results – Stay on top of the loan commit date and estimated closing date! Prioritize. Best Practices In Loan Processing 8
Slide 10: Purchase Agreement
Purchase Agreement Carefully Review Purchase Agreement for: – All pages, exhibits, attachment addendums and signed by all parties – Look for anything “to be repaired” – Condition issues that affect safety, soundness and habitability – Any HOA or condo dues listed in agreement? Include in housing rat
Slide 11: Purchase Agreement
Purchase Agreement Earnest Money and the Purchase Agreement: – Earnest money, does it match the LE? Was it drawn from an account listed on the 1003? – Did the borrower explain it was a gift? If so, gift documentation applies. – Does the check amount match the contract amount? – Has the earnest money
Slide 12: Liabilities
Liabilities Best Practices for Review Best Practices In Loan Processing 11
Slide 13: Fannie Mae LL-2020-03 Effective June 2, 2020
Fannie Mae LL-2020-03 Effective June 2, 2020 And Remains Effective Until Further Notice Updated Policy for new Purchase and refinance transactions – Lenders must review borrower’s credit report to determine the status of all mortgage loans. In addition, lenders must apply due diligence for each mort
Slide 14: Bulletin 2020-17
Bulletin 2020-17 TEMPORARY PURCHASE AND REFINANCE ELIGIBILITY REQUIREMENTS FOR BORROWERS WITH EXISTING MORTGAGES These temporary requirements are effective for Mortgages with Application Received on and after June 2, 2020 and until further notice. It is encouraged to implement these requirements to
Slide 15: Documentation Matrix – Freddie Mac
Documentation Matrix – Freddie Mac – Documentation Matrix- June 2020 – Assists with processing and documenting loan files – Be mindful of Product Overlays https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf Best Practices In Loan Processing 14
Slide 16: 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) –
Slide 17: Debts Included in the DTI - Freddie Mac
Debts Included in the DTI - Freddie Mac Page 27 doc matrix Did You Verify Taxes, Insurance And HOA For Properties Owned? Even For Properties Owned Free And Clear, They Should Be Included Best Practices In Loan Processing 16
Slide 18: Freddie Mac and Student Loans
Freddie Mac and Student Loans https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf Best Practices In Loan Processing 17
Slide 19: Debts Included in the DTI – Fannie Mae
Debts Included in the DTI – Fannie Mae The total monthly obligation is the sum of the following: – Monthly housing expense (PITIA) – Monthly payments on installment debts and other mortgage debts that extend beyond ten months (including deferred installment loans); – Monthly payments on revolving de
Slide 20: Debts Included in the DTI – Fannie Mae
Debts Included in the DTI – Fannie Mae The total monthly obligation….cont. (B3-6-05) – 30 Day charge accounts - monthly balance will not be calculated in the DTI, but included as reserves in the “required funds to be verified” – Do not omit or mark paid by close • Verify MOP is “O” on credit report
Slide 21: Fannie Mae Student Loan Policy
Fannie Mae Student Loan Policy Student Loans – Is it Deferred or in Repayment? B3-6-05 Best Practices In Loan Processing 20
Slide 22: Employment and Income
Employment and Income Best Practices for Review Best Practices In Loan Processing 21
Slide 23: COVID Updates: Lender Letter 2020-03
COVID Updates: Lender Letter 2020-03 Continuity of Income: Best Practices In Loan Processing 22
Slide 24: COVID Updates: Lender Letter 2020-03
COVID Updates: Lender Letter 2020-03 Continuity of Income Policies extended to July 31, 2020*: – Verbal VOE •Lenders may obtain a written VOE confirming the borrower’s current employment status within the same timeframe as the verbal VOE requirements. An email directly from the employer’s work email
Slide 25: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Effective for applications taken April 14, 2020 through July 31, 2020 – Age of Documents • For most income and asset documents, age requirements is reduced from four months to two months or 60 days from the note date. If an asset statement is issued quarterly, lenders must obta
Slide 26: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Reminders and Suspension of Employment Validation Service – Reminder that unemployment may only be used if it clearly is associated with seasonal employment reported on the signed federal tax returns and lenders verified the income by following B3-3.1-09 of the Selling Guide. •
Slide 27: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Effective for applications taken April 14, 2020 through July 31, 2020 unless noted – Self-Employment • Lenders must confirm that the borrower’s business is open and operating within 10 business days of the note date (or after closing but prior to delivery). See LL 2020-03 for e
Slide 28: Fannie Mae LL-2020-03 Effective June 11, 2020
Fannie Mae LL-2020-03 Effective June 11, 2020 And Remains Effective Until Further Notice Due to the pandemic’s continuing impact on businesses throughout the country, lenders are now required to obtain the following additional documentation to support the decision that the self-employed income meets
Slide 29: COVID Updates: Bulletin 2020-5
COVID Updates: Bulletin 2020-5 Guidance Related to Covid-19 https://guide.freddiemac.com/app/guide/content/a_id/1003723 Best Practices In Loan Processing 28
Slide 30: COVID Updates: Bulletin 2020-5
COVID Updates: Bulletin 2020-5 Credit Underwriting, Policies extended to July 31, 2020: – Employed Income – 10 day pre-closing verification (PCV), Sellers may obtain one of the following in lieu of the10 day PCV: • An email directly from the employer’s work email address that identifies the name and
Slide 31: Bulletin 2020-8
Bulletin 2020-8 The temporary credit underwriting requirements below are effective for Mortgages with Application Received Dates on or after April 14, 2020, and remain in place for Mortgages with Application Received Dates on or before July 31, 2020; however, Sellers are encouraged to apply these up
Slide 32: Bulletin 2020-8
Bulletin 2020-8 The temporary credit underwriting requirements below are effective for Mortgages with Application Received Dates on or after April 14, 2020, and remain in place for Mortgages with Application Received Dates on or before July 31, 2020; however, Sellers are encouraged to apply these up
Slide 33: Bulletin 2020-14
Bulletin 2020-14 The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020. GUIDANCE AND REMINDERS Furloughs and layoffs Freddie Mac provides requirements for income while on temporary leave in Secti
Slide 34: Bulletin 2020-14
Bulletin 2020-14 The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020. Unemployment compensation While we recognize that many individuals have become eligible for assistance and compensation ava
Slide 35: Bulletin 2020-14
Bulletin 2020-14 The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020. Automated income assessment with Loan Product Advisor® using tax return data To align with the IRS federal tax filing exten
Slide 36: Bulletin 2020-19
Bulletin 2020-19 These temporary requirements are effective for Mortgages with Application Received on and after June 11, 2020 and until further notice. It is encouraged to implement these requirements to loans in process. Due to the pandemic’s continuing impact on businesses throughout the country,
Slide 37: Documenting Employment and Income
Documenting Employment and Income Two Year History is Required on the URLA for All Applicants Freddie Mac Documentation Matrix Borrowers Who Experienced Recent Employment Gaps (e.g. 30 Days), A Letter Of Explanation Is Not Required, But The Seller Remains Responsible For Establishing The Employment
Slide 38: Documenting Employment and Income
Documenting Employment and Income Is Your borrower self employed? Do Not Lump Income Types Together Break Out Income Type For Proper AUS Results Best Practices In Loan Processing 37
Slide 39: Pay Stubs
Pay Stubs Reminders: – The borrower’s name and SSN# must be consistent with the application (Spelling, middle initial or a JR or III). – Computer generated? – If paid hourly, the number of hours must be noted on the paystub – Dated within 30 days of application; if stale dated, obtain a more recent
Slide 40: Review Pay Stub W-2 Any Problems?
Review Pay Stub W-2 Any Problems? Best Practices In Loan Processing 39
Slide 41: Any Problem With This Paystub?
Any Problem With This Paystub? Julie Jewell 999-44-4545 Best Practices In Loan Processing 40
Slide 42: Examining W-2s
Examining W-2s W-2 Review Reminders: – Name and SSN# must match the application and also the paystub – Applicant’s address should also match the 1003 and bank statement mailing address – W-2s should be the most recent one or two (if required) – read the AUS feedback – Is the yearly income /12 consis
Slide 43: Review the W-2 - Any Problems Here?
Review the W-2 - Any Problems Here? Best Practices In Loan Processing 42
Slide 44: Written Verification of Employment
Written Verification of Employment Review the VOE When It Comes Back In: – Forms should be signed, dated with signature and printed name of employer – If faxed, note the origin of the faxed document - Is it coming from the employer? – Income consistent with application? – Is bonus or overtime likely
Slide 45: Best Practices In Loan Processing
Best Practices In Loan Processing 44
Slide 46: Freddie Mac Long Term Rental Income
Freddie Mac Long Term Rental Income One-year management history or ownership of a primary home income (Section 5306.19c)(ii) March 1, 2019 – The borrower must own a Primary Residence to use rental income to qualify when purchasing a new rental property in the current calendar year; and – Whether pur
Slide 47: Fannie Mae Selling Announcement SEL 2019-08
Fannie Mae Selling Announcement SEL 2019-08 Best Practices In Loan Processing 46
Slide 48: Fannie Mae Selling Guide
Fannie Mae Selling Guide Best Practices In Loan Processing 47
Slide 49: Fannie Mae Selling Guide
Fannie Mae Selling Guide General Guidelines and Rental Income Forms – Borrowers that have a history of renting the subject or another property, typically income is reported on IRS Form 1040 Schedule E – Properties owned by businesses, such as an LLC or S Corp or Partnership, rental income is found o
Slide 50: Assets and Reserves
Assets and Reserves Asset Documentation Reminders and Best Practices Best Practices In Loan Processing 49
Slide 51: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Effective for applications taken April 14, 2020 through July 31, 2020 unless noted – Market-based assets • When using stocks, stock options or mutual funds for down payment or closing costs, evidence of the borrower’s actual receipt of funds from the sale or liquidation must be
Slide 52: Bulletin 2020-8
Bulletin 2020-8 The temporary credit underwriting requirements below are effective for Mortgages with Application Received Dates on or after April 14, 2020, and remain in place for Mortgages with Application Received Dates on or before July 31, 2020; however, Sellers are encouraged to apply these up
Slide 53: Asset Documentation
Asset Documentation Review the URLA – Review total assets listed on URLA with total funds to be verified on AUS – Do you have enough funds verified? – If not, contact borrower for source of additional funds. Where will they come from…gift? Best Practices In Loan Processing 52
Slide 54: 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 your ap
Slide 55: New URLA
New URLA Gifts and the URLA – Separate section for gifts and grants – Be sure to always enter gifts separately so AUS can do proper eligibility check Best Practices In Loan Processing 54
Slide 56: Gift Funds - Documentation Requirement
Gift Funds - Documentation Requirement 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
Slide 57: 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 deposit
Slide 58: Gifts – Freddie Mac
Gifts – Freddie Mac https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf Best Practices In Loan Processing 57
Slide 59: Large Deposits and Recently Opened Accounts
Large Deposits and Recently Opened Accounts The lender must investigate any indication of borrowed funds. These must be identified differently, based upon how the asset account was verified… – A large deposit is any single deposit that is 50% or more of the total income being used to qualify – If us
Slide 60: Guidance on Large Deposits
Guidance on Large Deposits Fannie Mae Selling Guide Chapter B3-4.2-02 Depository Accounts (12/06/2016) Best Practices In Loan Processing 59
Slide 61: Additional Guidance on Large Deposits
Additional Guidance on Large Deposits Fannie Mae Selling Guide Chapter B3-4.2-02 Depository Accounts (12/06/2016) Best Practices In Loan Processing 60
Slide 62: Large Deposits & Recently Opened Accounts
Large Deposits & Recently Opened Accounts Freddie Max Documentation Matrix April 2020 Page 20 Best Practices In Loan Processing 61
Slide 63: Asset Documentation Review
Asset Documentation Review 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 (it can be truncated to four digits) – Did the applicant provide the most recent
Slide 64: Review the VOD
Review the VOD If Using a VOD, Review….. – Who completed it; Name, Title, Date…can you read it? – Current balance vs. average balance? Large increase? Did you check? • If large increases, that large increase must be addressed or sourced – The date the account was opened: • If opened in the last 90 d
Slide 65: VOD Review
VOD Review SAMPLE Best Practices In Loan Processing 64
Slide 66: Reserves
Reserves Guide Impacts: 5501.2(b) – Max number of financed properties is 10 when subject is second home or investment property – 720 Credit score required when 7-10 financed properties and loan must be submitted to Loan Product Advisor with Accept/Eligible Recommendation – Loan Product Advisor will
Slide 67: Multiple Financed Property Reserve Policy
Multiple Financed Property Reserve Policy Maximum number of financed properties is 10 when the subject is a second home or investment- 7-10 required eight months reserves Best Practices In Loan Processing 66
Slide 68: Fannie Mae Reserve Requirements
Borrowers with Multiple Financed Properties – Fannie Mae Reserve Requirements 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
Slide 69: AUS Findings and Feedback Review
AUS Findings and Feedback Review Best Practices for Review, 1008/1003/DU/LPA Messages Best Practices In Loan Processing 68
Slide 70: Loan Product Advisor Feedback Certificate
Loan Product Advisor Feedback Certificate • Review: – Recommendation – Eligibility – Most recent submission – Documentation level • Standard • Streamlined – Appraisal requirement – Read ALL messages on the Feedback results Review The Feedback Certificate Best Practices In Loan Processing 69
Slide 71: Loan Product Advisor Feedback Certificate
Loan Product Advisor Feedback Certificate • Review: – Verify with 1008, does it match Best Practices In Loan Processing 70
Slide 72: Income/Employment Messages
Income/Employment Messages • Documentation “Level” determines the documentation required – Note: Many messages say “if”, so they apply only “if”…. Best Practices In Loan Processing 71
Slide 73: Loan Product Advisor Feedback Certificate
Loan Product Advisor Feedback Certificate • Verify and review: – Read ALL messages on the Feedback results – Do you have the supporting document? – Did you look at the supporting document? – Document to the results (i.e. one year W-2 required, verify only one is included in the submission package to
Slide 74: The Checklist
The Checklist Best Practices In Loan Processing 73
Slide 75: Easy To Read Funds To Verify
Easy To Read Funds To Verify Best Practices In Loan Processing 74
Slide 76: Desktop Underwriter Findings
Desktop Underwriter Findings Best Practices for Review Best Practices In Loan Processing 75
Slide 77: DU Findings Report
DU Findings Report Risk/Eligibility – Why NOT eligible – How underwritten (specific product/program) – Potential inaccuracies Potential Red Flag Messages: – Social Security alerts – Valuation concerns Best Practices In Loan Processing 76
Slide 78: Sample DU Findings Report
Sample DU Findings Report MI Message Verify Premium Amount Included in DTI For DU or Loan Product Advisor for that matter –Genworth Rate Quote in file to support MI premium used? Best Practices In Loan Processing 77
Slide 79: DU Findings Report
DU Findings Report Verification Messages Broken Out By Topic: –Credit and Liabilities • Bankruptcy, foreclosures, charge offs, omitted accounts-do you have proper documentation • What accounts were indicated as “to be paid off” • Mortgage that need additional attention Best Practices In Loan Process
Slide 80: DU Findings Report
DU Findings Report Read Funds Section and Verify No Additional Funds are Needed – Submit only statements that needed for the transaction; It takes time for underwriters to review documents that are not needed. Best Practices In Loan Processing 79
Slide 81: Fannie Mae Website
Fannie Mae Website https://singlefamily.fanniemae.com/originating-underwriting Best Practices In Loan Processing 80
Slide 82: Fannie Mae Job Aids/FAQs
Fannie Mae Job Aids/FAQs https://singlefamily.fanniemae.com/learning-center/originating-and-underwriting Best Practices In Loan Processing 81
Slide 83: Fannie Mae Top Trending Questions
Fannie Mae Top Trending Questions https://singlefamily.fanniemae.com/faq-top-trending Best Practices In Loan Processing 82
Slide 84: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Best Practices In Loan Processing 83
Slide 85: Genworth MI Top Decision Errors
Genworth MI Top Decision Errors https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf Best Practices In Loan Processing 84
Slide 86: https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf
https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf Best Practices In Loan Processing 85
Slide 87: https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf
https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf Best Practices In Loan Processing 86
Slide 88: Genworth MI Decision Tips Updated Every Quarter
https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf Genworth MI Decision Tips Updated Every Quarter Best Practices In Loan Processing 87
Slide 89: https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf
https://new-content.mortgageinsurance.genworth.com/2020-05/MI.Decision%20Tips.0420.pdf Best Practices In Loan Processing 88
Slide 90: Contract Underwriting Submission Tips
Contract Underwriting Submission Tips https://new-content.mortgageinsurance.genworth.com/documents/investor-underwriting/00329.Contract.Svc.Tip.Sheet.0719%20FINAL.pdf Best Practices In Loan Processing 89
Slide 91: Contract Underwriting Submission Tips
Contract Underwriting Submission Tips Best Practices In Loan Processing 90
Slide 92: Freddie Mac website
https://sf.freddiemac.com/ Best Practices In Loan Processing 91
Slide 93: Freddie Mac mortgage products resources
https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/mortgage_products_resources.pdf Best Practices In Loan Processing 92
Slide 94: Freddie Mac LPA resources
https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/lpa_resources.pdf Best Practices In Loan Processing 93
Slide 95: Documentation and Rental Income Matrix
Documentation and Rental Income Matrix – Documentation Matrix Updated June 2020 – Rental Income Matrix Updated December 2019 Best Practices In Loan Processing 94
Slide 96: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Best Practices In Loan Processing 95
Slide 97: Genworth Rate Express
Genworth Rate Express® Best Practices In Loan Processing 96
Slide 98: LOS Connections
LOS Connections Best Practices In Loan Processing 97
Slide 99: Training Tools and Information
Training Tools and Information Best Practices In Loan Processing 98
Slide 100: Training Tools and Information
Training Tools and Information Best Practices In Loan Processing 99
Slide 101: Additional MI Site Information
Additional MI Site Information Best Practices In Loan Processing 10 0
Slide 102: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Best Practices In Loan Processing 10 1
Slide 103: 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