Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (March 2021)
42 slides from Enact's investor presentation, March 2021
Slide 1: Fannie Mae and Freddie Mac: Understanding Your Options
Fannie Mae and Freddie Mac: Understanding Your Options March 2021 Customer Education Brought to you by: Genworth Customer Development and Process Consulting Fannie Mae and Freddie Mac: Understanding Your Options 0
Slide 2: Course Objectives
Course Objectives – Learn how to properly structure a loan to your advantage, by understanding differences between Fannie Mae and Freddie Mac qualifying guidelines – Save time up front by knowing which GSE to select, when both are an option NOTE: This is NOT a comprehensive list of all differences,
Slide 3: Agenda
Agenda – LTV Differences – Credit and liabilities – Assets and Reserves – Income – Multiple Financed Properties – Interested Party Contributions – Appraisal – General Reminders on Updates – Genworth MI Website – Helpful Tools Fannie Mae and Freddie Mac: Understanding Your Options 2
Slide 4: LTV Differences Primary and Second Home
LTV Differences Primary and Second Home Fannie Mae (Fixed Rate/ARMS**) Freddie Mac (Fixed Rate/ARMS) – Maximum LTV/CLTV/HCLTV – Maximum LTV/TLTV/HTLTV Purchase and Limited Cash-Out Refi Purchase and No Cash-Out Refi – 1-unit Primary 97 (Fixed Only)* – 1-unit Primary 97 (Fixed only)* – 2-unit Primary
Slide 5: LTV Differences Investment Properties
LTV Differences Investment Properties Fannie Mae (Fixed Rate/ARMS) Freddie Mac (Fixed Rate/ARMS) – Maximum LTV/CLTV/HCLTV – Maximum LTV/TLTV/HTLTV Purchase Purchase and No Cash-out Refi – 1-unit 85% – 1-unit 85%( One unit refi has the – 2-4 unit 75% advantage) Limited Cash-Out Refinance – 2-4 unit 7
Slide 6: No Cash and Limited Cash Out Amounts
No Cash and Limited Cash Out Amounts Fannie Mae Freddie Mac (Effective for – Limited cash-out is defined as Mortgages with Settlement dates on allowing cash back up to lessor of 2% and after October 27, 2018) of the Mortgage amount or $2000 – No cash out is defined as allowing cash back up to the gr
Slide 7: Credit and Liabilities
Credit and Liabilities Fannie Mae Freddie Mac – Maximum DTI is 50% – No published maximum DTI • Updated to not require additional compensating factors from 45% to 50% • Fine-tuned in Jan. 2018 – DU® carries out DTI to two decimal – Rounds down on the DTI places – 20.49% = 20% – 50.25% = 50.25% Fanni
Slide 8: Credit and Liabilities
Credit and Liabilities Fannie Mae Freddie Mac – 30 Day Charge Accounts or Open – 30 Day Charge Accounts or Open Ended Accounts Ended Accounts • Must be omitted and funds verified to • Can be omitted and funds verified to pay off (reserves); or pay off (reserves); or • Verify employer reimburses borr
Slide 9: Credit and Liabilities
Credit and Liabilities Fannie Mae Freddie Mac – Disputed tradelines DU tries to – Disputed tradelines Loan Product assess risk with the tradeline - if Advisor tries to qualify with disputed Approve, no additional action needed tradeline • DU will re-assess the risk without • Will receive “Invalid” i
Slide 10: Credit and Liabilities
Credit and Liabilities Fannie Mae Freddie Mac – Alimony may be included as a – Alimony and maintenance payments liability or subtracted from income* must be subtracted from income (Effective immediately with 2019-05) – Mortgage payment history NOT reported on the credit report – DU will – Mortgage u
Slide 11: Credit and Liabilities
Credit and Liabilities Fannie Mae Freddie Mac: Repayment, – Student Loan debt lender may use for Deferment or Forbearance deferred loans: – *If the monthly payment amount is • Payment on credit report if one is listed greater than zero, use the monthly • Monthly payment from student loan payment amo
Slide 12: Credit and Liabilities
Freddie Mac – *Student Loan in Forgiveness, Credit and Liabilities cancellation, discharge and employment Fannie Mae contingent repayment programs – Monthly payment amount may be excluded from DTI, if file contains evidence • Student loans have less than 10 months payments; or • Payments are deferre
Slide 13: Fannie Mae Student Loan Cash-Out Refinance
Fannie Mae Student Loan Cash-Out Refinance Priced as Limited Cash Out – Subject to Cash-out LTV limits Fannie Mae and Freddie Mac: Understanding Your Options 12
Slide 14: ALL Borrowers Without Credit Scores
ALL Borrowers Without Credit Scores Fannie Mae DU Freddie Mac Loan Product Advisor – Max LTV/CLTV/HCLTV 90% – Max LTV/TLTV/HTLTV 95% – 1-unit non-manufactured home – 1-unit (can be manufactured home if – Conforming only; no high balance loan has a settlement April 1, 2020 or – Owner occupied only af
Slide 15: Credit and Liabilities
Credit and Liabilities Fannie Mae Freddie Mac – Federal Income Tax Installment – Federal Income Tax Installment Agreements Agreements – Allowed to include the payment due under a – No policy to allow for payments federal income tax installment agreement in the DTI, instead of payment in full • Lende
Slide 16: Significant Derogatory Credit
Significant Derogatory Credit Fannie Mae Freddie Mac – Approve/Eligible – Accept/Eligible • Lenders must review the waiting period • Loan Product Advisor has determined before origination of the new loan the credit reputation is acceptable • Extenuating circumstances – Caution: Lenders must follow •
Slide 17: Assets and Reserves
Assets and Reserves Fannie Mae Freddie Mac – Sale of Personal Assets – Sale of Personal Assets • Document borrower’s ownership of • A signed bill of sale documenting the assets that are titled asset and transfer of ownership • Value of the asset, as determined by an • Evidence of receipt of the proc
Slide 18: Assets and Reserves
Assets and Reserves Fannie Mae Freddie Mac – Use of business assets for closing – Use of business assets for closing • NO specific policy on review of large • Policy allows to document two months deposits on business statements business account statements • Deposits must make sense for the • Are lar
Slide 19: Assets and Reserves
Assets and Reserves Fannie Mae Freddie Mac – Gifts from wedding, allowed to – Gifts from wedding, allowed but funds address large deposits; Weddings are must be deposited within 90 days of the NOT an acceptable gift donor marriage license or certificate; Weddings are used to address large deposits;
Slide 20: Assets and Reserves
Assets and Reserves Fannie Mae Freddie Mac – Two months asset statements for – Streamlined Accept One month asset depository accounts for ALL DU loans statements – Standard Documentation Two months asset statements Today’s Presentation Covers Non-HARP Loans And Guidelines Applicable To Loans Submitt
Slide 21: Self-Employment
Freddie Mac SEB Documentation Self-Employment – Must be self-employed in the same business > 5 years to only obtain 1 year Fannie Mae SEB Documentation personal and business tax return – One or two years, based on DU findings • All other cases require 2 years message – SEB income Secondary Source: S
Slide 22: Self-Employment
Freddie Mac SEB Documentation Self-Employment – Must be self-employed > 5 years to only obtain 1 year personal and Fannie Mae SEB Documentation business tax return – One or two years, based on DU findings • All other cases require 2 years message – SEB income If primary Source of – Business returns
Slide 23: Rental Income
Fannie Mae Rental Income Rental Income – Allows borrowers to have a primary housing expense (rent or OWN) before rental income can be used to offset a payment, applies for both purchase and refinance transactions Freddie Mac Rental Income – Requires borrowers to OWN a primary home before rental inco
Slide 24: Second Homes (Must always be One Unit)
Second Homes (Must always be One Unit) Fannie Mae Freddie Mac Bulletin 2019-07 – Must be occupied by the borrower for – Permits second homes with seasonal some portion of the year limitations on year-round occupancy – Must be suitable for year-round (i.e. lack of winter accessibility) if occupancy a
Slide 25: Income Commencing After The Note Date
Income Commencing After The Note Date Fannie Mae Option Two – Purchase Only – Primary – One Unit – Income must start within 90 days of the note date No requirement income must start by a certain timeframe under Option 1 and no additional reserves Fannie Mae and Freddie Mac: Understanding Your Option
Slide 26: Income Commencing After The Note Date
Income Commencing After The Note Date Freddie Mac – Freddie Mac allows use of a “future salary increase – Option 1 is the Option where income must start within 90 days of the note date – Option 1 is 1 unit Primary Only – Option 2 difference loan purpose and property types Fannie Mae and Freddie Mac:
Slide 27: Income Commencing After The Note Date
Income Commencing After The Note Date Freddie Mac – Option 2 allows for reduction of additional funds Fannie Mae and Freddie Mac: Understanding Your Options 26
Slide 28: Income
Income Fannie Mae Freddie Mac – Restricted Stock and Restricted Stock – Restricted Stock and Restricted Stock Units Units may be considered, under • No policy for the use as income certain conditions • Two year consecutive history of receipt • To be considered for history of receipt, RS and RSU used
Slide 29: Income
Income Fannie Mae (No change to Freddie Mac policy) – When borrower’s income is derived from – Variable Income (All income fluctuating hourly employment earnings, calculated by averaging method), under no circumstances may the requires history of receipt of two employment history be less than 12 mon
Slide 30: Assets As Basis For Repayment
Assets As Basis For Repayment Fannie Mae Freddie Mac – Allows if a non self-employed – Chapter 5307.1 Allows for use for severance package or non self- most asset types including IRA, employed lump sum retirement 401k,lump sum distributions of funds package (a lump sum distribution) – not yet deposi
Slide 31: Assets As Basis For Repayment
Assets As Basis For Repayment Fannie Mae Freddie Mac (Effective July 3,2019) – If employment-related assets are in – Freddie Mac Sellers must use the net the form of stocks, bonds and mutual eligible assets (as descripted in Chapter funds, 70% of the value (remaining 5307.01) and divide by 240 to de
Slide 32: Multiple Financed Properties
Multiple Financed Properties Fannie Mae Freddie Mac – Maximum number is 10 – Maximum number is 10 – Reserves based on UPB for each – Reserves based on PITIA for each financed second home or investment financed second home or investment property borrower owns and is property borrower owns and is obli
Slide 33: Interested Party Contributions
Interested Party Contributions Fannie Mae Freddie Mac – Calculates from the sales price – Calculates from the “value*” – Freddie Mac definition of value is lesser of sales price or appraised value, as of note date Percentages Are The Same For Both Fannie Mae And Freddie Mac They Just Calculate Them
Slide 34: Appraisal Waiver Eligible & ACE Differences
Appraisal Waiver Eligible & ACE Differences Fannie Mae Freddie Mac – Appraisal Waiver Eligible – Automated Collateral Evaluation • One Unit, including Condos (ACE) • Primary and second homes • One Unit, including Condos • investment property refinances • Primary and second homes • Purchases primary
Slide 35: Rural High-Needs Appraisal Waiver
Rural High-Needs Appraisal Waiver Fannie Mae – Rural High-Needs Appraisal Waiver • Loan must receive an Approve/Eligible • Purchase transactions • One Unit principal residence (no manufactured homes) located in a designated rural high-needs area • Borrowers with income at or below 100% of AMI • LTV
Slide 36: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Fannie Mae and Freddie Mac: Understanding Your Options 35
Slide 37: Genworth Rate Express
Genworth Rate Express® Fannie Mae and Freddie Mac: Understanding Your Options 36
Slide 38: Training Tools and Information
Training Tools and Information Fannie Mae and Freddie Mac: Understanding Your Options 37
Slide 39: Training Tools and Information
Training Tools and Information Fannie Mae and Freddie Mac: Understanding Your Options 38
Slide 40: Additional MI Site Information
Additional MI Site Information 39 Fannie Mae and Freddie Mac: Understanding Your Options
Slide 41: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Fannie Mae and Freddie Mac: Understanding Your Options 40
Slide 42: 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