Enact Holdings, Inc. · NASDAQ:ACT
Enact — Reg A Offering (November 2019)
40 slides from Enact's offering presentation, November 2019
Slide 1: Everyone is Talking About ATR & QM
Everyone is Talking About ATR & QM November 2019 These training materials are not legal advice or a legal opinion. Your legal counsel should be consulted regarding the requirements of Dodd-Frank and the CFPB Rules. ©2019 Genworth Financial, Inc. All rights reserved.
Slide 2: Agenda
Agenda In Today’s Session we will cover the ATR & QM Story – The Who & Why • Dodd-Frank Wall Street Reform & Consumer Protection Act – The Enforcer • Consumer Financial Protection Bureau (CFPB) – The Basic Rule • Ability-to-Repay (ATR) Rule – The Agencies Reaction • Fannie Mae Release Notes 9.1 • Fr
Slide 3: The Who
The Who Dodd-Frank Wall Street Reform & Consumer Protection Act The Dodd-Frank Bill – Massive piece of legislation intended to address countless problem areas that are believed to have caused the financial crisis – More than 2,300 pages long and includes 16 titles – Dodd-Frank calls for many regulat
Slide 4: The Action
The Action Dodd Frank In July 2010, Congress passed and President Obama signed the Dodd- Frank Wall Street Reform and Consumer Protection Act. – Title X -Created the Consumer Financial Protection Bureau (CFPB) – Title XIV (The Mortgage Reform and Anti-Predatory Lending Act) The CFPB: – Consolidates
Slide 5: The Enforcer- CFPB
The Enforcer- CFPB As of July 2011, the Consumer Financial Protection Bureau, created with the passage of the Dodd-Frank Act, is the principal federal agency responsible for enforcement of RESPA laws and regulations. – State attorneys general, state insurance commissioners and other state agencies a
Slide 6: CFPB Functions
CFPB Functions Oversees rule-making for federal consumer financial protection laws. Supervises large banks and most non-banks for compliance with federal consumer financial laws. Restricts unfair, deceptive, or abusive acts or practices. Enforces laws that outlaw discrimination and other unfair trea
Slide 7: The Rule
The Rule CFPB’s Ability-to-Repay (ATR) Rule Final CFPB rule, January 10, 2014, requires mortgage lenders to consider consumers’ ability to repay loans before extending credit – Excludes open-end credit, timeshare plans, reverse mortgages and certain temporary loans ATR & QM 6
Slide 8: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Key concepts of the new rule: – The creditor must make a reasonable and good faith determination that the consumer has the ability to repay the loan. • Mortgage borrowers must provide ample financial documentation; lenders must verify the documents. • In order to be appro
Slide 9: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule At minimum, creditors must consider: 1. Current or reasonably expected income or assets 2. Current employment status 3. Monthly payment on the covered transaction 4. Monthly payment on any simultaneous loan 5. Monthly payment for mortgage-related obligations 6. Current de
Slide 10: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Borrowers must be able to repay the mortgage: – Lenders must make a reasonable and good faith determination – Lender must review the borrower’s available income and assets Applicant must provide certain documents that show income and assets. These documents include, but a
Slide 11: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Deceptive ‘teaser rates’ are prohibited – The mortgage rate shown to a borrower cannot mask the true cost of the loan Mortgage lenders cannot measure the borrower’s ability to repay the loan based on a teaser rate – (A teaser rate is an introductory interest rate that is
Slide 12: Agency Reaction
Agency Reaction ATR & QM 11
Slide 13: Fannie Mae SEL 2013-06
Fannie Mae SEL 2013-06 Ability to Repay or ATR and Qualified Mortgages – Max loan term 30 years – Must be fully amortizing – Total fees/points not to exceed 3% of the loan amount (note there are some exceptions) https://www.consumerfinance.gov/eregulations/ 1026-32/2013-12125#1026-32-b ATR & QM 12
Slide 14: Fannie Mae
Fannie Mae Updates ARM Qualifying Ratio in DU ATR & QM 13
Slide 15: Freddie Mac Bulletin 2013-16
Freddie Mac Bulletin 2013-16 Updates in Response to CFPB final rule on ATR (ability to repay) – Retiring Mortgages with original maturities >30 years – Retiring Prepayment Penalty Mortgages – New Points & Fees Thresholds to replace the existing 5% threshold – Updates requirements for HPML’s on Relie
Slide 16: Additional Guidance
Additional Guidance https://www.consumerfinance.gov/eregulations/1026-32/2013-12125#1026-32-b ATR & QM 15
Slide 17: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Exemptions for refinance loans: –There is an exception to the ATR rule for homeowners who are trying to refinance out of a risky mortgage and into a more stable loan. Per the ATR rule, nonstandard loans with interest-only payments or negative amortization features can be
Slide 18: Qualified Mortgages (QM)
Qualified Mortgages (QM) A Qualified Mortgage is a home loan that meets certain standards set forth by CFPB Lenders that generate such loans will be presumed to have also met the ATR Rule mandated by the Dodd-Frank Act The QM Rule, as defined by CFPB, is designed to create safer loans by prohibiting
Slide 19: Qualified Mortgages (QM)
Qualified Mortgages (QM) Qualified Mortgages have different legal protections for a lender depending on whether the loan is a higher-priced transaction (APR exceeds the average prime offer rate for a comparable transaction by 1.5 percentage points or more). – A higher-priced loan that is a QM has a
Slide 20: Qualified Mortgages (QM)
Qualified Mortgages (QM) Generally, a QM loan has: (i) substantially equal monthly payments, (ii) a loan term <= 30 years, (iii) points and fees that do not exceed 3%, (iv) been underwritten using the maximum interest rate that may apply during the first 5 years (and with amortizing monthly payments
Slide 21: Qualified Mortgages (QM)
Qualified Mortgages (QM) (v) the creditor considers and verifies the borrower’s income, assets and debts in accordance with Appendix Q, and (vi) a DTI that does not exceed 43%. However, for a transitional period, loans that are eligible for purchase by Fannie or Freddie, FHA, VA, USDA, Rural Housing
Slide 22: GSE Patch
GSE Patch https://www.consumerfinance.gov/about-us/newsroom/bureau-releases-qualified-mortgage-anpr/ ATR & QM 21
Slide 23: HPML & HPCT
HPML & HPCT HIGHER-PRICED MORTGAGE LOAN (HPML) The Guide glossary A first-lien Mortgage secured by a Primary Residence that has an annual percentage rate (APR) of 1.5% or more above the average prime offer rate (APOR) for a comparable transaction as of the rate lock date. APR and APOR are both defin
Slide 24: Qualified Mortgages (QM)
Qualified Mortgages (QM) In the lead up to the crisis, too many consumers took on risky loans that they didn’t understand. They didn’t realize their debt or payments could increase, or that they weren’t building any equity in the home. Before the crisis, many consumers took on mortgages that raised
Slide 25: Qualified Mortgages (QM)
Qualified Mortgages (QM) Appendix Q Provides additional guidance for determining Monthly Debt & Income https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/Q/ ATR & QM 24
Slide 26: Qualified Mortgages (QM)
Qualified Mortgages (QM) Liability Exposure –General TIL Damages –Statutory Damages •damages as set forth in TILA –Foreclosure Provision • a defense to a foreclosure action regardless of any statute of limitations on a private cause of action ATR & QM 25
Slide 27: http://www.consumerfinance.gov/regulations
http://www.consumerfinance.gov/regulations ATR & QM 26
Slide 28: http://www.consumerfinance.gov/regulations
http://www.consumerfinance.gov/regulations ATR & QM 27
Slide 29: http://www.consumerfinance.gov/regulations
http://www.consumerfinance.gov/regulations https://www.congress.gov/bill/115th-congress/senate- bill/2155/text#toc- id85fe90d9cb9347b5be06fbbf343b0cdf ATR & QM 28
Slide 30: S 2155
S 2155 https://www.aba.com/Compliance/Documents/Executive https://www.nafcu.org/compliance-blog/s-2155-setting- -Summary-S2155-Enacted.pdf record-straight ATR & QM 29
Slide 31: Genworth's QM Resources & Tools
Genworth’s QM Resources & Tools https://new.mortgageinsurance.genworth.com/regulatory-resources ATR & QM 30
Slide 32: Product Positioning & Points & Fees Considerations
Product Positioning & Points & Fees Considerations Product positioning and marketing is focused on products that have limited to no implementation and Points and Fees impacts for customers. ATR & QM 31
Slide 33: Genworth Rate Express®
Genworth Rate Express® mi.genworth.com ATR & QM 32
Slide 34: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines mi.genworth.com ATR & QM 33
Slide 35: LOS Connections
LOS Connections mi.genworth.com ATR & QM 34
Slide 36: Training Tools and Information
Training Tools and Information mi.genworth.com ATR & QM 35
Slide 37: Training Tools and Information
Training Tools and Information mi.genworth.com ATR & QM 36
Slide 38: Additional MI Site Information
Additional MI Site Information mi.genworth.com ATR & QM 37
Slide 39: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative ATR & QM 38
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