Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (June 2019)
73 slides from Enact's investor presentation, June 2019
Slide 1: Calculating Income
Calculating Income Presented by Genworth Mortgage Insurance June 2019 Genworth Mortgage Insurance Corporation ©2019 Genworth Financial, Inc. All rights reserved.
Slide 2: Agenda
Agenda What we will cover – General Income Requirements – Documentation Requirements – Fannie Mae – Freddie Mac – Practice Cases – Genworth Website – Helpful tools We Are Covering Conventional Loans Only In Today’s Session Calculating Income 2
Slide 3: Let’s Take A Quiz
Let’s Take A Quiz True or False: W-2 wages are always considered salary income and never self-employed income for Fannie Mae or Freddie Mac? True or False: All income types used for a mortgage for Fannie Mae or • Freddie Mac must continue for at least three years? See Fannie Mae Seller Guide or
Slide 4: Income Requirements
Income Requirements Establish that income is: – Steady, Stable or increasing. – Likely to continue into the future – Must be able to document the income as per investor guidelines (Are they reporting it on their tax returns??) – Income from other Non-Employed Sources such as Child Support, Inter
Slide 5: Income Document Requirements
Income Document Requirements Documentation Requirements – Manual Underwrite: Typically requires two year history to be received and documented – Automated underwriting (Loan Product Advisor® or Desktop Underwriter®): • Typically follow the findings report or feedback certificate • Often document
Slide 6: Resources
Resources To access the Fannie Mae Seller Guide: – Go to http://www.fanniemae.com – Click on “Single Family”, “Guides” and then “Allregs” – Allregs covers both manual and DU underwriting requirements – Chapter B3-3 Income Assessment of the Seller Guide discusses Income Underwriting requirements
Slide 7: Documenting Employment and Income
Documenting Employment and Income Two Year History is Required on the 1003 for all applicants For Freddie Mac, Gaps Greater Than 30 Days Should Be Addressed By The Applicant Calculating Income 7
Slide 8: Documenting Employment and Income
Documenting Employment and Income Break Out Income Type For Proper AUS Results Calculating Income 8
Slide 9: IRS Form 4506-t
IRS Form 4506-t www.irs.gov Calculating Income 9
Slide 10: IRS Form 4506-t
IRS Form 4506-t The IRS Form 4506-T – IRS document used to retrieve past federal tax return transcripts, 1065, 1120S, 1120, or W-2 and 1099 transcripts that are on file with the IRS. – Gives permission for a third party to retrieve the tax payer’s data. – Each applicant must sign a separate form
Slide 11: Fannie Mae Guidelines- 4506T
Fannie Mae Guidelines- 4506T 4506-t Must Be signed Once During The Application Process – The timing is at the lender’s discretion but it must be signed on or before the closing of the mortgage loan – The Lender must document the requirement to obtain an executed IRS Form 4506-T with the IRS in t
Slide 12: Freddie Mac Guidelines- 4506T
Freddie Mac Guidelines- 4506T All Borrowers, whose income is used to qualify or whose assets are used as a basis for repayment of obligations in accordance with the requirements in Section 5307.1, must sign Internal Revenue Service (IRS) Form 4506-T (or an alternate form acceptable to the IRS th
Slide 13: Fannie Mae
Fannie Mae Updates, Policies and Fannie Mae’s Form 1084 Calculating Income 13
Slide 14: Fannie Mae Selling Guide Self-Employment
Fannie Mae Selling Guide Self-Employment Calculating Income 14
Slide 15: Fannie Mae Selling Guide
Fannie Mae Selling Guide Calculating Income 15
Slide 16: Fannie Mae Selling Guide
Fannie Mae Selling Guide See B3-3.1-01, General Income Information (12/04/2018) Calculating Income 16
Slide 17: Fannie Mae Selling Guide
Fannie Mae Selling Guide Trends of Income – Verify trends of income before using to qualify for a mortgage – Income used must be likely to continue See B3-3.1-01, General Income Information (12/04/2018) Calculating Income 17
Slide 18: Commission Income and 2106 Expenses
Commission Income and 2106 Expenses Updated Policy For Commission Income & 2106 Expenses – No longer required to obtain tax returns for commission income – Automobile allowance change Calculating Income 18
Slide 19: See B3-3.1-04, Commission Income Requirements
See B3-3.1-04, Commission Income Requirements (12/04/2018) Calculating Income 19
Slide 20: Documentation Fannie Mae Selling Guide
Documentation Fannie Mae Selling Guide Calculating Income 20
Slide 21: See B3-3.1-03, Base Pay, Bonus and Overtime Income
See B3-3.1-03, Base Pay (Salary or Hourly), Bonus and Overtime Income (05/15/2012) Calculating Income 21
Slide 22: Fannie Mae Selling Guide
Fannie Mae Selling Guide Highlights – Core principles of prudent underwriting must be followed when considering income for qualifying purposes • Source, amount, history of receipt and likelihood of continued receipt – Income that does not have a defined expiration date (long term disability, int
Slide 23: Fannie Mae Selling Guide
Fannie Mae Selling Guide Continuance of Income See B3-3.1-01, General Income Information (12/04/2018) Calculating Income 23
Slide 24: Documentation Fannie Mae Selling Guide
Documentation Fannie Mae Selling Guide Verbal Verifications – Verbal verifications of employment for employed borrowers are required to be completed within 10 business days of closing or, if lenders choose, a VVOE can be completed prior to loan delivery – Verbal verifications of employment for s
Slide 25: Fannie Mae “Optional” VOE fields
Fannie Mae “Optional” VOE fields Calculating Income 25
Slide 26: Fannie Mae Selling Guide
Fannie Mae Selling Guide Calculating Income 26
Slide 27: Fannie Mae Job Aids/FAQs
Fannie Mae Job Aids/FAQs https://www.fanniemae.com/singlefamily/originating-underwriting-training Calculating Income 27
Slide 28: Fannie Mae Underwriting FAQs
Fannie Mae Underwriting FAQs Answers Common Lender Income Questions – https://www.fanniemae.com/content/faq/borro wer-income-verification-faqs.pdf Calculating Income 28
Slide 29: Fannie Mae Underwriting FAQs
Fannie Mae Underwriting FAQs Answers Common Lender Income Questions – https://www.fanniemae.com/content/faq/u nderwriting-faqs.pdf Calculating Income 29
Slide 30: Fannie Mae Top Trending Questions
Fannie Mae Top Trending Questions https://www.fanniemae.com/singlefamily/trending-questions?taskId=task-47 Calculating Income 30
Slide 31: Freddie Mac
Freddie Mac Bulletins, Documentation and Rental Income Matrix and Freddie Mac Form 91 Calculating Income 31
Slide 32: General Requirements For Freddie Mac
General Requirements For Freddie Mac Calculating Income 32
Slide 33: General Requirements For Freddie Mac
General Requirements For Freddie Mac Calculating Income 33
Slide 34: General Requirements For Freddie Mac
General Requirements For Freddie Mac Calculating Income 34
Slide 35: General Requirements For Freddie Mac
General Requirements For Freddie Mac Calculating Income 35
Slide 36: Income Continuance Requirements
Income Continuance Requirements Calculating Income 36
Slide 37: Freddie Mac Documentation Matrix
Freddie Mac Documentation Matrix Documentation Matrix – Assists in underwriting and documenting loans for Freddie Mac – Lenders may have overlays – Check specific program requirements – Updated June 2019 http://freddiemac.com/learn Calculating Income 37
Slide 38: Freddie Mac Monthly Income
Freddie Mac Monthly Income Calculating Income 38
Slide 39: Income Documentation Requirements
Income Documentation Requirements Calculating Income 39
Slide 40: Freddie Mac Income Documentation
Freddie Mac Income Documentation Calculating Income 40
Slide 41: Freddie Mac Form 91
Freddie Mac Form 91 Freddie Mac Income Calculation Form 91 – Sellers are required to analyze self employed borrowers using Freddie Mac Form 91 or a similar form • Updates include removal of Rental income, 2106 expenses, 4797 and 6252 – The form should be maintained in the loan file – Form can be
Slide 42: Freddie Mac Self-Employed Documentation
Freddie Mac Self-Employed Documentation Calculating Income 42
Slide 43: Freddie Mac Self-Employed Documentation
Freddie Mac Self-Employed Documentation Calculating Income 43
Slide 44: Freddie Mac Form 91 link
http://www.freddiemac.com/singlefamily/forms/sell/pdf/91.pdf Calculating Income 44
Slide 45: Freddie Mac Form 92
Freddie Mac Form 92 Available Now!! Calculating Income 45
Slide 46: Freddie Mac Form 92
Freddie Mac Form 92 Genworth MI Form 92 Rental Income Calculator mi.genworth.com/self-employed-borrower-calculators Calculating Income 46
Slide 47: Genworth Income Calculation Worksheet
Genworth Income Calculation Worksheet Genworth Income Calculation Worksheet mi.genworth.com/self-employed-borrower-calculators Calculating Income 47
Slide 48: Document Review
Document Review Pay Stubs, W-2s, Written VOEs Calculating Income 48
Slide 49: Income Conversion Exercises
Income Conversion Exercises $60,000 $750 $1,000 $1,250 $20/ hour, 40 hours weekly Calculate the monthly income for each pay scenario above. Calculating Income 49
Slide 50: Practice Exercise
Practice Exercise Annual: – $60,000 / 12 = • Weekly: – ($750 x 52) = $39,000 / 12 = • Bi-Weekly: – ($1,000 x 26)= $26,000 / 12 = • Semi-Monthly: – ($1,250 x 24) =$30000/12 = • Hourly: – Must know how many hours worked per week!!!! – ($20 x 40 x 52) = $41,600 / 12 = Calculating Income 50
Slide 51: 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 ask applicant for more
Slide 52: Paystub
Paystub Calculating Income 52
Slide 53: Examining W-2s
Examining W-2s W-2 Reminders: – Name and SSN# match application and also the pay stub – Applicant’s address should also match the 1003 and bank statement mailing address – Should be the most recent one or two (if required) – Is the ytd income consistent with monthly income, if not obtain explana
Slide 54: Examining W-2-Any questions on this W-2?
Examining W-2-Any questions on this W-2? Calculating Income 54
Slide 55: Written Verification of Employment
Written Verification of Employment Pay close attention to- Calculating Income 55
Slide 56: Written Verification of Employment
Written Verification of Employment VOE Reminders: – Independently verify address to which you are sending – Do not put “Attention to” on the form – 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 em
Slide 57: Exercises
Exercises Calculating Income 57
Slide 58: Income Calculation Exercises
Income Calculation Exercises Keep in Mind: Sometimes there are several ways to calculate income! Calculating Income 58
Slide 59: Calculation W2’s & Paystub and 1099
Calculation W2’s & Paystub and 1099 Local Iron Workers Union W2’s from various jobs Income 17 ’18 `19 – W2 $52,399 $61,555 *Y-T-D paystub As of 09-30-19 $59,765 John is unemployed seasonally. What is the qualifying monthly income? Gross Monthly Income Borrower Base Income Self Employed Overt
Slide 60: Calculation from W2’s & Paystub
Calculation from W2’s & Paystub - Sam’s current salary is $35,400 ’17 ’18 ’19 W-2 $28,897 $30,250 * See pay stub * YTD pay stub as of 12/15/19 - $33,925 - Sally works as a school nurse and works from Sept 1st- June 30th earning $802 every two weeks. - - She also receives child support for $500 per m
Slide 61: Pay Stub with Prior Year W-2
Pay Stub with Prior Year W-2 Calculating Income 61
Slide 62: Calculation from Tax Returns
Calculation from Tax Returns Eli receives $35,000 in taxable social security income as per his 2018 tax returns. His application states he is 42 years old with no dependents. Calculate the monthly social security income ONLY for Eli. Do you have to do anything special? 0 Calculating Income 6
Slide 63: Calculation from VOE
Calculation from VOE Income ‘17 ‘18 ’19ytd * – Base $50,000 $53,000 $12,500 – Commission $0 $0 $35,000 *Y-T-D-2018 through 6/30/18 – Assume it is currently 6/30/19! Donovan’s pay structure changed 1/1/19 to base plus commission-New Annual Salary is $25000 What is the qualifying monthly incom
Slide 64: Fannie Mae Website
Fannie Mae Website http://fanniemae.com/portal/index.html Calculating Income 64
Slide 65: Fannie Mae Selling Guide
Fannie Mae Selling Guide Calculating Income 65
Slide 66: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Calculating Income
Slide 67: Genworth Rate Express®
Genworth Rate Express® Calculating Income
Slide 68: LOS Connections
LOS Connections Calculating Income
Slide 69: Training Tools and Information
Training Tools and Information Calculating Income
Slide 70: Training Tools and Information
Training Tools and Information Calculating Income 70
Slide 71: Additional MI Site Information
Additional MI Site Information Calculating Income
Slide 72: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative Calculating Income 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