Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (June 2020)
40 slides from Enact's investor presentation, June 2020
Slide 1: Understanding Adjustable Rate Mortgages (ARMs)
Understanding Adjustable Rate Mortgages (ARMs) June 2020 Customer Education Brought to you by: Genworth Customer Development and Process Consulting NOTICE: This document contains confidential, non-public company information. Further distribution of this document is strictly prohibited. ©2019 Genwort
Slide 2: ARM Characteristics
ARM Characteristics Adjustable Rate Mortgages, or ARM’s, have an interest rate that • increases or decreases over the life of the loan, based upon the interest rate environment. • Characteristics of an ARM include: • A starting interest rate that is generally lower than the rate offered on a fixed r
Slide 3: ARM Components
ARM Components Index Changes in the interest rate are governed by a financial index. The lender chooses an index for each ARM product that is out of their influence. Common indexes include: Treasury Securities, Costs of Funds or the LIBOR index. Margin This is a predetermined amount that is added to
Slide 4: ARM Features
ARM Features Conversion Clause – A provision in some ARM’s that allows the consumer to change the ARM to a fixed-rate loan at some point during the term. Conversion is usually allowed at the end of the first adjustment period. At the time of the conversion, the new fixed rate is generally set at one
Slide 5: ARM Indexes
ARM Indexes • One-Year Treasury Index – H15 – Federal Reserve The One Year Treasury Bill is one of the primary borrowing or debt instruments of the Treasury Department • of the United States. This Bill is used for short term borrowing or financing by the Treasury Department for the United States Gov
Slide 6: ARM Indexes
ARM Indexes Adjustable Rate Mortgages 5
Slide 7: Fannie Mae ARM Plan Matrix
Fannie Mae ARM Plan Matrix https://singlefamily.fanniemae.com/media/6951/display Adjustable Rate Mortgages 6
Slide 8: LL 2020-01
LL 2020-01 https://singlefamily.fanniemae.com/media/21831/display Adjustable Rate Mortgages 7
Slide 9: Fannie Mae Selling Announcement 2020-02
Fannie Mae Selling Announcement 2020-02 Fannie Mae released the attached Selling Notice. Highlights include the following: Secured Overnight Financing Rate (SOFR) ARMs: Provides additional details for SOFR ARM products Fannie Mae will begin to accept as of Aug. 3, 2020 file:///C:/Users/213024593/D
Slide 10: Bulletin 2020-13
Bulletin 2020-13 https://guide.freddiemac.com/ci/okcsFattach/get/1003793_7 Adjustable Rate Mortgages 9
Slide 11: Bulletin 2020-9
Bulletin 2020-9 https://guide.freddiemac.com/ci/okcsFattach/get/1003760_7 Adjustable Rate Mortgages 10
Slide 12: ARM Indexes
ARM Indexes • COFI – Cost of Funds Index The Eleventh District Cost of Funds is the most prevalent index in the Western U.S. The COFI • index, which is a weighted monthly average, has been published since 1981 by the San Francisco Federal Home Bank (The Eleventh District). The funds used for the cal
Slide 13: ARM Indexes
ARM Indexes • 1 Year MTA This index is an average of the monthly one-year treasury adjusted to constant maturity for the • past 12 months. Yields on Treasury Securities at constant maturity are determined by the U.S. Treasury from the daily yield curve, which is based on the closing market-bid yield
Slide 14: ARM Indexes
ARM Indexes http://www.armindexes.com/ Adjustable Rate Mortgages 13 13
Slide 15: The Adjustment Period
The Adjustment Period Depending on the type of ARM loan, the interest rate and monthly payment will change based on the type. The period between rate changes is called the adjustment period. – A 1-Year ARM that adjusts every year – A 3/3 ARM in which the initial interest rate lasts for three years a
Slide 16: Hybrid ARMs
Hybrid ARMs A Hybrid ARM – This loan is a hybrid of a fixed-rate period and an adjustable-rate period – The interest rate is fixed for a short-term period, then the rate may adjust annually – A 3/1 ARM will have a 3-year fixed rate period, after that may adjust annually for the remaining term – A 3/
Slide 17: ARM Caps
ARM Caps Adjustable-rate mortgages (ARM’s) typically include several kinds of caps that control how your interest rate can adjust. There are three kinds of caps: – Initial adjustment cap: This cap says how much the interest rate can increase the first time it adjusts, after the fixed-rate period exp
Slide 18: ARM Caps
ARM Caps Adjustable-rate mortgages (ARM’s) typically include several kinds of caps that control how your interest rate can adjust. An ARM may have different cap structures. A 10/1 ARM has a 10-year fixed rate period, after that may adjust annually for the remaining term and different lenders may off
Slide 19: Example Of A 10/1 ARM With 2/6 Caps
Example Of A 10/1 ARM With 2/6 Caps • Index 1 Year MTA : 1.375% • Annual Adjustment Cap: 2.00% • Discount: 1.00% • Lifetime Adjustment Cap 6.00% • Margin: 2.75% *11th year Index: 2.25% • A. Calculate the Fully Indexed Rate: • • Index 1.375 • +Margin 2.75 Fully Indexed Rate 4.125% • B. Calculate the
Slide 20: Example Of A 10/1 ARM With 2/6 Caps
Example Of A 10/1 ARM With 2/6 Caps • Index 1 Year MTA : 1.375% • Annual Adjustment Cap: 2.00% • Discount: 1.00% • Lifetime Adjustment Cap 6.00% • Margin: 2.75% *11th year Index: 2.25% • • C. Calculate Maximum 11th Year Rate: • • Starter Rate 3.125% • +Annual Adj. Cap 2.00% • Max 1st Year Rate 5.125
Slide 21: Example Of A 10/1 ARM With 5/2/6 Caps
Example Of A 10/1 ARM With 5/2/6 Caps Index: .750% Annual Adjustment Cap: 2.000% Discount: 1.00% Initial Adjustment Cap: 5.000% Lifetime Adjustment Cap: 6.000% Margin: 2.750% 11th year Index: 2.25% • A. Calculate the Fully Indexed Rate: • • Index 1.375 • +Margin 2.75 Fully Indexed Rate 4.125% • B. C
Slide 22: Example Of A 10/1 ARM With 5/2/6 Caps
Example Of A 10/1 ARM With 5/2/6 Caps Index: .750% Annual Adjustment Cap: 2.000% Discount: 1.00% Initial Adjustment Cap: 5.000% Lifetime Adjustment Cap: 6.000% Margin: • 2.750% 11th year Index: 2.25% • •C. Calculate Maximum 11th Year Rate: • Starter Rate 3.125% • +Annual Adj. Cap 5.00% • Max 1st Yea
Slide 23: ARM Loan Estimate (LE)
ARM Loan Estimate (LE) Adjustable Rate Mortgages 22 22
Slide 24: ARM Disclosure
ARM Disclosure Adjustable Rate Mortgages 23
Slide 25: CFPB Disclosures
CFPB Disclosures https://files.consumerfinance.gov/f/201401_cfpb_booklet_charm.pdf Adjustable Rate Mortgages 24
Slide 26: Agency Guidelines
Agency Guidelines For Adjustable Rate Mortgages Adjustable Rate Mortgages 25
Slide 27: Fannie Mae ARM’s
Fannie Mae ARM’s https://www.fanniemae.com/content/guide/selling/b2/1.3/02.html#Initial.20Note.20Rate.20Limitations Adjustable Rate Mortgages 26 26
Slide 28: Fannie Mae ARM’s
Fannie Mae ARM’s https://www.fanniemae.com/content/guide/selling/b2/1.3/02.html#Initial.20Note.20Rate.20Limitations Adjustable Rate Mortgages 27 27
Slide 29: Freddie Mac ARM’s
Freddie Mac ARM’s https://guide.freddiemac.com/app/guide/chapter/4401 Adjustable Rate Mortgages 28
Slide 30: Freddie Mac Qualifying Requirements
Freddie Mac Qualifying Requirements https://guide.freddiemac.com/app/guide/content/a_id/1000523 Adjustable Rate Mortgages 29
Slide 31: ARM Quiz
ARM Quiz Index: .750% Annual Adjustment Cap: 2.000% Discount: 1.250% Initial Adjustment Cap: 5.000% Lifetime Adjustment Cap: 6.000% Margin: 2.750% 6th year Index: 3.000% 1. What is the initial Fully Indexed Accrual Rate (FIAR)? 2. What is the start/teaser rate? 3. What is the Qua
Slide 32: ARM Quiz
ARM Quiz Answers 1. What is the initial Fully Indexed Accrual Rate (FIAR)? Index .75 + Margin 2.75= FIAR 3.5 2. What is the start/teaser rate? FIAR 3.5 – Discount 1.25 = Starter Rate 2.25% 3. What is the Qualifying Rate? 3.5 or 2.25 + 2= (*4.25) Requirement on ARM’s with adjustment periods of 6 mont
Slide 33: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines
Slide 34: Genworth Rate Express®
Genworth Rate Express® & 800 444.5664 | 4 | Search Q @ ORDERM UNDERWRITING & GUIDES | LOS & CONNECTIONS | GENWORTH TOOLKIT | TRAINING OUR BLOG | ABOUT US Genworth = a, Mortgage Insurance Rate Express ITIONS THAT MATTER Genworth Mortgage Insurance Rate Cards GenRATE ga YOU year! ttf,.: Quote Sweepsta
Slide 35: LOS Connections
LOS Connections NA & 800 444.5664 |G | Q Genworth == Ayre Mortgage Insurance mR Search Q S caaiecal @ VIEW ACCOUNT MI & RATES | UNDERWRITING & GUIDES LOS & CONNECTIONS | GENWORTH TOOLKIT | TRAINING OUR BLOG ABOUT US YOU-CENTRIC SOLUTIONS THAT MAT submit on Our Site Genworth Mortgage Insurance LOS Co
Slide 36: Training Tools and Information
Training Tools and Information
Slide 37: Training Tools and Information
Training Tools and Information 36
Slide 38: Additional MI Site Information
Additional MI Site Information
Slide 39: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative
Slide 40: 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