Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (October 2018)
109 slides from Enact's investor presentation, October 2018
Slide 1: Desktop Underwriter Training
® Desktop Underwriter Training Understanding the Underwriting Findings Report October 2018 Genworth Mortgage Insurance Corporation ©2018 Genworth Financial, Inc. All rights reserved.
Slide 2: Agenda
Agenda In Today’s Session – Fannie Mae Website – Understanding Recommendations – Understanding DU Risk Analysis – Credit, Income and Asset and Appraisal Messages – Data Integrity Reminders – Genworth Website Today’s Session Addresses Only Conventional Loans And Excludes DU Refi Plus™ Loan Requir
Slide 3: Fannie Mae Website
Fannie Mae Website http://fanniemae.com/portal/index.html Desktop Underwriter 3
Slide 4: Fannie Mae Website
Fannie Mae Website https://www.fanniemae.com/singlefamily/desktop-underwriter Desktop Underwriter 4
Slide 5: Selling Guide
Selling Guide https://www.fanniemae.com/content/guide/selling/index.html Desktop Underwriter 5
Slide 6: Selling Guide SEL 2018-07
Selling Guide SEL 2018-07 Selling Guide Updates ▪ Renaming of Property Inspection Waivers (PIW) and Property Fieldwork Waiver (PFW) to “appraisal waivers” ▪ Rural High-Needs Appraisal Waivers (NEW) ▪ Loan casefiles that receive Approve/Eligible ▪ Purchases only ▪ One-unit (excluded manufactured home
Slide 7: SEL 2018-06 & 10.2 Release Notes
SEL 2018-06 & 10.2 Release Notes Selling Guide Updates ▪ High Loan-to Value Refinance Option which replaces the current DU Refi PlusTM and Refi PlusTM (Applications may be taken November 1, 2018) ▪ Discontinuance of the Form 1004MC effective immediately ▪ Clarifying policy for disbursement of funds
Slide 8: Lender Letter LL-2018-03
Lender Letter LL-2018-03 MI Termination Changes – Fannie Mae For borrower-initiated cancellations based on original value, allow servicers to use Fannie’s Automated Property Service™ (APS) to verify the current value of the property so they no longer have to warrant the property value; For b
Slide 9: Selling Guide SEL 2018-05
Selling Guide SEL 2018-05 Selling Guide Updates Included in the announcement were the following: ▪ MH Advantage™ Properties ▪ Inspection of MH with structural modifications ▪ Flash Settlements for MBS ▪ DU Bankruptcy and delinquency assessment ® ▪ HomeStyle Energy in DU ® ▪ HomeStyle Renovation
Slide 10: Selling Guide SEL 2018-04
Selling Guide SEL 2018-04 Selling Guide Updates – Native American tribes and their instrumentalities as eligible providers for Community Second Mortgages – Property Inspection Waiver Updates for Disaster Areas • Loans in process where an appraisal as been ordered and submitted and the property is in
Slide 11: DU 10.2 June Updates
DU 10.2 June Updates DU Updates Effective June 23, 2018 – Bankruptcy and Mortgage Delinquency Assessment updates – HomeStyle Energy Updates (anything entered in these new fields, the casefile will be underwritten as a HomeStyle Energy Mortgage) • Two new fields added to DU – Energy Improvement Amoun
Slide 12: Selling Guide SEL 2018-01
Selling Guide SEL 2018-01 Selling Guide Updates – Federal income tax repayments may be included in DTI instead of payoff – Waive project reviews for all detached condo units (excluding manufactured homes) and allow use of C- T-P financing for detached condo units – Expands project-related minor liti
Slide 13: Selling Guide Announcement SEL-2017-10
Selling Guide Announcement SEL-2017-10 • Allow lenders to underwrite loans (either with DU or through manual underwriting) for borrowers who have frozen credit at only one of the three national credit repositories. • Provided a definition and additional guidance on premium pricing. • Updates related
Slide 14: Selling Guide SEL 2017-09
Selling Guide SEL 2017-09 Selling Guide Updates – Exception made for Inter Vivos Revocable Trusts – Clarification of Mortgages Paid by Others • The full PITIA may be excluded from the DTI provided no rental income is being used from that property • The mortgaged property must still be included in th
Slide 15: DU 10.0 and 10.1 November Updates
DU 10.0 and 10.1 November Updates Borrowers with Credit Freeze - Updated weekend of November 18 – DU will underwrite if only one repository is frozen • A warning message will be issued by DU reminding lenders of their responsibility – If two repositories are frozen DU will issue an error message – I
Slide 16: Credit Freeze FAQ's
Credit Freeze FAQ’s https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs Desktop Underwriter 16
Slide 17: Day 1 Certainty
Day 1 Certainty TM https://www.fanniemae.com/singlefamily/desktop-underwriter-validation-service Desktop Underwriter 17
Slide 18: DU Validation Service
DU Validation Service Optional Service via DU – Lenders Must Activate to use – Execute contract with vendor(s), then execute contract/agreements with Fannie Mae – Validation Options for Income, Assets and Employment verified by Third Party Data Vendor (i.e. The Work Number® from Equifax®) – Tax
Slide 19: DU Validation Service
DU Validation Service – Lenders obtain borrower consent then orders the “verification report(s)” – Lender reviews report for any discrepancies with borrower – Lender enters details into DU and submits – DU obtains a “duplicate” report from the vendor using loan number or reference number. (Lender lo
Slide 20: How It Works-Income Example
How It Works-Income Example Desktop Underwriter 20
Slide 21: DU and Trended Credit - FAQ's
DU 10 and Trended Credit - FAQ’s Desktop Underwriter 21
Slide 22: Fannie Mae HomeReady
Fannie Mae HomeReady® HomeReady – Designed for Low-to moderate income borrowers – See HomeReady webpage for more details – See Genworth Training on this specific product for further information https://www.fanniemae.com/singlefamily/homeready?cmpid=sln082515 Desktop Underwriter 22
Slide 23: General Lender Requirements
General Lender Requirements When underwriting loans with DU, the lender must: – Employ prudent underwriting judgment – Confirm the accuracy of the data it submits – Ensure that the loan complies with all of the verification messages and approval conditions – Apply due diligence when reviewing th
Slide 24: DU/DO Release Notes August 2018
DU/DO Release Notes August 2018 DU Underwriting Findings Report Updates to the DU findings report include: ▪ Emphasis, bolding and coloring to certain information in the summary sections ▪ Track changes functionality added to enable users to identify what messages have been changed, added, or de
Slide 25: Sample Existing DU Findings Report
Sample Existing DU Findings Report Review of the Different Findings Report Sections Desktop Underwriter 25
Slide 26: Sample Summary Section
Sample Summary Section Existing and New Summary Section of DU Findings Report New Desktop Underwriter 26
Slide 27: Sample Messages
Sample Messages New Enhanced Coloring of Messages Added, Changed or Removed Existing Messages New Desktop Underwriter 27
Slide 28: Sample Messages
Sample Messages Filtering Options of Messages New Enhanced Coloring of Messages Added, Changed or Removed Existing Messages New Desktop Underwriter 28
Slide 29: Sample Messages
Sample Messages New Bolded and Bulleted Message Format Existing Messages New Desktop Underwriter 29
Slide 30: Analyzing Reports
Analyzing Reports SUMMARY: Contains “DU” Recommendation and Purchase Eligibility FINDINGS SECTION: Indicates strengths in the file/loan application VERIFICATION MESSAGE/APPROVAL CONDITIONS SECTION: Contains minimum DU requirements for documentation and potential red flag messages OBSERVATIONS SECTIO
Slide 31: Sample DU Findings Report
Sample DU Findings Report Summary Section –Contains “Recommendation Desktop Underwriter 31
Slide 32: Recommendations
Recommendations All other Recommendations have been discontinued Desktop Underwriter 32
Slide 33: Recommendations - Eligible
Recommendations - Eligible Desktop Underwriter 33
Slide 34: Recommendations - Ineligible
Recommendations - Ineligible Desktop Underwriter 34
Slide 35: Recommendations - Refer with Caution
Recommendations - Refer with Caution Desktop Underwriter 35
Slide 36: Recommendations - Out of Scope
Recommendations - Out of Scope DU Out of Scope Recommendation – DU is unable to underwrite the particular product, mortgage, or borrower described in the submission • Cash Out, Purchase and construction loans with a CLTV > 105% • Balloon Terms greater than 30 years Mortgages that receives an Out
Slide 37: Underwriting Borrowers Without Traditional Credit
Underwriting Borrowers Without Traditional Credit DU Version 10.0 includes the ability to underwrite loan casefiles where no borrowers have a credit score. A tri-merged credit report must be requested for all borrowers on the loan application. – If the credit report indicates a credit score
Slide 38: Underwriting Borrowers Without Traditional Credit – Eligibility Guidelines
Underwriting Borrowers Without Traditional Credit – Eligibility Guidelines For loan files where no borrowers have established traditional credit, DU will apply the following additional guidelines: – Principal residence where all the borrowers will occupy the property – One-unit property (not a m
Slide 39: Verifying Housing Payments
Verifying Housing Payments B3-5.4-03: Verification and Documentation of Alternative Credit Desktop Underwriter 39 39
Slide 40: Sample DU Findings Report
Sample DU Findings Report Summary Section –Mortgage Information Desktop Underwriter 40
Slide 41: ARM Qualifying Rate
ARM Qualifying Rate Always Enter The Index And Margin On ARM Loans Desktop Underwriter 41
Slide 42: Sample DU Findings Report
Sample DU Findings Report Risk/Eligibility – Why NOT eligible – How underwritten (specific product/program) – Potential inaccuracies Desktop Underwriter 42
Slide 43: Sample DU Findings Report
Sample DU Findings Report Verification Message/Approval Conditions – “Heart “of the Findings Report – Provides minimum documentation – Refer to the Selling Guide for more information – Follow specific investor overlays, if applicable – Genworth MI Simply Underwrite for your DU Approve/Eligible l
Slide 44: Sample DU Findings Report
Sample DU Findings Report Verification Messages Broken out by Topic: –General messages •Potential Red Flag Messages •Document Expiration date •MI requirements –Credit and Liabilities •Bankruptcy, foreclosures, charge offs •Late pays –Employment and Income •Documentation requirements –Assets and
Slide 45: Desktop Underwriter Potential Red Flag Messages - Updated
Desktop Underwriter Potential Red Flag Messages - Updated Messages Must Be Cleared –Provides message text –Why message appeared –Possible ways to clear or resolve https://www.fanniemae.com/content/tool/du-potential-red-flag-message-matrix.pdf Desktop Underwriter 45
Slide 46: Sample DU Findings Report
Sample DU Findings Report Verification Messages Broken out by Topic: –Sample Potential Red Flag message •Social Security Alerts Desktop Underwriter 46
Slide 47: Sample DU Findings Report
Sample DU Findings Report Verification Messages Broken out by Topic: –Sample general messages •Document Expiration date (Note it is four months, not 120 days) •MI coverage requirements would be found under “Verification Messages”, if applicable Desktop Underwriter 47
Slide 48: Credit and Liability Messages
Credit and Liability Messages Verification Messages Broken out by Topic: –Credit and Liabilities •Bankruptcy, foreclosures, charge offs, late pays, omitted accounts •What accounts were indicated as “to be paid off” •Mortgage that need additional attention Desktop Underwriter 48
Slide 49: Significant Derogatory Credit Events
Significant Derogatory Credit Events B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re- establishing Credit (07/29/2014) Not ALL Lenders Allow For Extenuating Circumstances Desktop Underwriter 49
Slide 50: Selling Guide B3-5.3-09: DU Credit Report Analysis
Selling Guide B3-5.3-09: DU Credit Report Analysis (03/31/2015) Desktop Underwriter 50
Slide 51: Selling Guide
Selling Guide (Remember DU Does NOT Know The Disbursement Date) Desktop Underwriter 51
Slide 52: Bankruptcy And Mortgage Delinquency June Updates
Bankruptcy And Mortgage DelinquencyJune Updates 23, 2018 Updated DU 10.2 – With 10.2 lenders will have the ability to instruct DU to disregard bankruptcy information in the eligibility assessment that is incorrect or due to extenuating circumstances, or disregard excessive mortgage delinquency i
Slide 53: Bankruptcy And Mortgage Delinquency June Updates
Bankruptcy And Mortgage DelinquencyJune Updates 23, 2018 Updated DU 10.2 Sample Data Entry – Check your specific policy if you are able to override DU with these options Desktop Underwriter 53
Slide 54: Credit Update
Credit Update July 2017 Civil Judgements and Tax Liens on Credit Reports – Most civil judgements and tax liens will not appear on the credit report – Minimal impact to credit scores – DU does NOT use credit scores – The Selling Guide defines lender responsibilities and requirements for payoff of
Slide 55: Disputed Tradelines and DU 10.1
Disputed Tradelines and DU 10.1 DU 10.1 – When DU issues “Approve/Eligible” using the disputed trade lines: • Include the payment, if any, in the DTI but no further documentation is required. – When loan casefile does not receive Approve recommendation including the disputed trade line, risk will be
Slide 56: Authorized Users
Authorized Users Credit Processing Continued.. – Authorized User Accounts: DU considers authorized user accounts in it’s credit risk assessment. FICO scores may be impacted but DU’s risk engine looks at the trade lines and makes a credit recommendation. – Lenders should underwrite without the be
Slide 57: Credit and Liabilities
Credit and Liabilities For loan casefiles underwritten through DU – DU determines the maximum allowable debt-to income ratio based on the overall risk assessment of the loan casefile – DU will apply a maximum allowable total expense ratio of 50% for non-HARP loans DU 10.1 & 10.2 Desktop Underwri
Slide 58: Credit and Liabilities
Credit and Liabilities The total monthly obligation is the sum of the following: – Monthly housing expense (PITI) – Monthly payments on installment debts and other mortgage debts that extend beyond ten months (including deferred installment loans); – Monthly payments on revolving debts (unless e
Slide 59: Credit and Liabilities...cont
Credit and Liabilities...cont The total monthly obligation….cont – 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 and mapped correct
Slide 60: Credit and Liabilities...cont
Credit and Liabilities...cont Student Loans – Is it Deferred or in Repayment? – Student Loans in repayment: • Use the actual payment documented from credit report; If no payment listed – Use verified loan terms from student loan lender – Documentation supplied by the borrower or – 1% of the outs
Slide 61: Credit and Liabilities ...cont
Credit and Liabilities ...cont The total monthly obligation is the sum of the following: – Monthly alimony, child support, or maintenance payments that extend beyond ten months SEL 2017-06 allows option to reduce income by the monthly Alimony obligation in lieu of a liability – Business debt in
Slide 62: Credit and Liabilities...cont
Credit and Liabilities...cont The total monthly obligation is the sum of the following: SEL 2018-01 allows option to include a payment in the DTI if certain requirements are met – Selling Guide requirements are: Desktop Underwriter 62
Slide 63: Read The Verification Messages
Read The Verification Messages Income Verification Messages Desktop Underwriter 63
Slide 64: Fannie Mae Selling Guide
Fannie Mae Selling Guide Continuance of Income See B3-3.1-01, General Income Information (07/25/2017) Desktop Underwriter 64
Slide 65: Income and Employment
Income and Employment Most recent two years tax returns required when the borrower: – Earns 25% or more of his or her income from commissions; – Is employed by family members; – Is employed by interested parties to the property sale or purchase; – Receives rental income from an investment proper
Slide 66: Income and Employment
Income and Employment • General Levels of Documentation: Base Earnings – Recent pay stub dated within 30 days of application and previous one or two years W-2s – Verbal verification of employment within 10 business days of closing or after closing but prior to loan delivery – Or a written verificati
Slide 67: Income and Employment
Income and Employment • General Levels of Documentation: Bonus and Overtime – Recent pay stub dated within 30 days of application and W-2’s for past two years and a verbal verification of employment – Or a written verification of employment (Written VOE 1005) can be used in place of either of the ab
Slide 68: Income and Employment
Income and Employment Commission income less than 25% of borrower’s total annual employment income – One recent pay stub, or – recent pay stub and the previous two years W-2 – Or a written verification of employment (Written VOE 1005) can be used in place of either of the above documentation as
Slide 69: Income and Employment
Income and Employment • General Levels of Documentation: Self-Employment – Most recent one year personal and federal business tax returns (Only one year required for certain cases but borrowers still must be self-employed for two years) OR – Most recent two years personal and two years federal busin
Slide 70: Self-Employed Messages & Documentation
Self-Employed Messages & Documentaton • General Levels of Documentation: Self-Employment – Business returns can be waived if certain requirements are met – Borrower has been self employed in the same business for at least five years – Borrower’s individual tax returns show an increase in self-employ
Slide 71: Income and Employment
Income and Employment • General Levels of Documentation: Retirement Income – If a monthly distribution is received from 401(k), IRA, SEP or Keogh account the borrower must have unrestricted access too the accounts without penalty – When funds are drawn from assets, stocks, bonds or mutual funds, you
Slide 72: Employment Offer Message
Employment Offer Message • DU 10.1 Effective July 29, 2017 Desktop Underwriter 72
Slide 73: Income and Employment
Income and Employment • General Underwriting Requirements – Lenders must review the “type” of income earned and entered in DU; income used for qualifying must be reasonably stable and likely to continue at the current levels. RED FLAG: Declining income – Bonus and Overtime must be annualized or not
Slide 74: Sample DU Findings Report
Sample DU Findings Report Verification Messages Broken out by Topic: –Assets and Reserves •Amount to verify, liquidation, discounting of value, documentation requirements Desktop Underwriter 74
Slide 75: Asset And Funds Sections
Asset And Funds Sections Summary Section Lists Total Assets Entered Additional Reserves May Need To Be Verified If Paying Off Accounts, Collections Or Owns Multiple Properties Desktop Underwriter 75
Slide 76: Assets and Reserves
Assets and Reserves Fannie Mae Borrower Contribution Policy – Allows for personal gifts, and in some cases gifts or grants from an entity, employer assistance, and Community Seconds as minimum borrower contribution for certain transactions – Gift funds are never allowed on Investment – Gift letters
Slide 77: Assets and Reserves
Assets and Reserves High Balance Loans DO NOT Require Minimum Borrower Contribution For One Unit Properties Desktop Underwriter 77
Slide 78: Assets and Reserves
Assets and Reserves Stocks, bonds and mutual funds for reserves Desktop Underwriter 78
Slide 79: Assets and Reserves
Assets and Reserves Retirement accounts (401k or IRA) – The vested amount may be used for reserves – If these assets are needed to support the amount of funds required for closing and reserves, the available account balance must be documented with a recent depository or brokerage account stateme
Slide 80: Selling Guide SEL 2014-06
Selling Guide SEL 2014-06 Desktop Underwriter 80
Slide 81: Asset and Reserves
Asset and Reserves Updates – Truncated Accounts Numbers Desktop Underwriter 81
Slide 82: IPC Updates in DU
IPC Updates in DU Updates – Sales Concessions Field or IPC is being removed from DU and lenders must make the adjustment to the purchase price manually Desktop Underwriter 82
Slide 83: Borrowers with Multiple Financed Properties
Borrowers with Multiple Financed Properties DU uses the number of financed properties to apply the following eligibility guidelines: – A minimum credit score of 720 is required for borrowers with 7-10 financed properties – Borrowers are limited to a maximum of 10 financed properties Desktop Unde
Slide 84: 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 85: Borrowers with Multiple Financed Properties – Reserve Requirements
Borrowers with Multiple Financed Properties – 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 to the aggr
Slide 86: Borrowers with Multiple Financed Properties
Borrowers with Multiple Financed Properties If The Loan Casefile Does Not Meet The Reserve Requirements, DU Will Issue An Ineligible Recommendation And A Message Will Be Issued. Desktop Underwriter 86
Slide 87: Property and Appraisal
Property and Appraisal An Interior/Exterior Appraisal Is Always Required, Regardless Of The DU Appraisal Option, When The Last Sale Was An REO Or Foreclosure Sale Desktop Underwriter 87
Slide 88: DU Version 10.2 March 2018
DU Version 10.2 March 2018 Updated DU Property Messages Desktop Underwriter 88
Slide 89: DU Version 10.0 Dec 2016
DU Version 10.0 Dec 2016 Appraisal Waivers – Updates to appraisal waivers, f/k/a Property Inspection Waiver (PIW) – Enforcement Relief for Reps/Warrants for Property Value for certain transactions – Disclosure of Information to Appraisers (2016-09) Desktop Underwriter 89
Slide 90: FAQs
FAQs Appraisal Waivers F/K/A Property Inspection Waivers (PIW) Desktop Underwriter 90
Slide 91: Appraisal Waiver Updates
Appraisal Waiver Updates Available for Certain Purchase and Refinance DU Casefiles – When a casefile is eligible for an appraisal waiver, Fannie Mae accepts the “submitted” value estimate as the market value. – Fannie Mae provides relief of reps and warranties on the value, condition and marketa
Slide 92: Appraisal Waivers-Ineligible Transactions
Appraisal Waivers-Ineligible Transactions Desktop Underwriter 92
Slide 93: Property Value Enforcement Relief
Property Value Enforcement Relief Fannie offers enforcement relief on reps/warranties related to property value on certain loan casefiles when: – Appraisal received a CU Risk Score of 2.5 or below, and – Property type is a one-unit detached, attached or condominium property The following fields
Slide 94: Sample CU Message That May Appear On DU Findings
Sample CU Message That May Appear On DU Findings If A CU Doc File ID Is Entered; Score And Different Risk Messages Desktop Underwriter 94
Slide 95: Property and Appraisal-Condos
Property and Appraisal-Condos If Property Type Condominium, Project Review Type Message Will Appear: 2018-01 detached condos no longer require project approval (excluded manufactured homes) Desktop Underwriter 95
Slide 96: Condo Project Manager 8.2 Release Notes
Condo Project Manager 8.2 Release Notes On Aug. 18th Condo Project Manager™ (CPM™) will be updated to align with the changes related to condo policies communicated in Selling Guide Announcement SEL- 2018-05. Desktop Underwriter 96
Slide 97: Observations
Observations FYI information Desktop Underwriter 97
Slide 98: Underwriting Analysis
Underwriting Analysis Validate the details Desktop Underwriter 98
Slide 99: Data Integrity Reminders
Data Integrity Reminders • Lenders are responsible for integrity of the data submitted to DU – Do you have all pages to the bank statement and are all large deposits addressed and sourced? – Retirement accounts? Access verified if required? Fully vested? Did you subtract any outstanding loans and is
Slide 100: Data Integrity Reminders
Data Integrity Reminders • Lenders are responsible for integrity of the data submitted to DU – Deferred loans must always be included in the debt ratio; Use amount on credit report, 1% of unpaid balance or actual verified payment – Student loans in repayment use actual payment per credit report or s
Slide 101: www.FannieMae.com
www.FannieMae.com Desktop Underwriter 10 1
Slide 102: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Desktop Underwriter 10 2
Slide 103: Genworth Rate Express
Genworth Rate Express® Desktop Underwriter 10 3
Slide 104: LOS Connections
LOS Connections Desktop Underwriter 104
Slide 105: Training Tools and Information
Training Tools and Information Desktop Underwriter 105
Slide 106: Training Tools and Information
Training Tools and Information Desktop Underwriter 106
Slide 107: Additional MI Site Information
Additional MI Site Information Desktop Underwriter 10 7
Slide 108: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Desktop Underwriter 108
Slide 109: 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
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