Enact Holdings, Inc. · NASDAQ:ACT
Enact — Genworth Mortgage Insurance — Investor Presentation (April 2019)
99 slides from Enact's investor presentation, April 2019
Slide 1: Self-Employed Borrower Freddie Mac Form 91 Part II
Self-Employed Borrower Freddie Mac Form 91 Part II - Business Tax Returns April 2019 Genworth Mortgage Insurance Corporation ©2019 Genworth Financial, Inc. All rights reserved.
Slide 2: Lender Responsibility
Lender Responsibility Investors (Fannie Mae, Freddie Mac, Private Investors) require it be determined that self-employed borrowers demonstrate the financial ability to repay the mortgage. – History – Income calculation – Continuance / Stability of income Today’s Session Covers Conventional Loans
Slide 3: Objective
Objective Learn to use the Freddie Mac Income Analysis Form (Form 91) and data from tax returns to calculate supportable Self-Employed Borrower income. – Calculate Partnership Income and Expenses from K-1s and Form 1065 – Calculate S Corp (Sub-Chapter S) Income and Expenses from K-1s and Form 11
Slide 4: Freddie Mac Self-Employed Guidelines
Freddie Mac Self-Employed Guidelines Freddie Mac Form 91 Part II Review 4
Slide 5: 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 April 2019 http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf Freddie Mac Form 91 Part II Review 5
Slide 6: Documentation Matrix
Documentation Matrix Page 12 of Matrix Freddie Mac Form 91 Part II Review 6
Slide 7: Documentation Matrix
Documentation Matrix Page 13 of Matrix Freddie Mac Form 91 Part II Review 7
Slide 8: Documentation Matrix
Documentation Matrix Page 13 of Matrix Freddie Mac Form 91 Part II Review 8
Slide 9: Documentation Matrix
Documentation Matrix Page 14 of Matrix Freddie Mac Form 91 Part II Review 9
Slide 10: Documentation Matrix
Documentation Matrix Page 27 of Matrix Chapter 5304 of the Guide Freddie Mac Form 91 Part II Review 10
Slide 11: Chapter 5304.1(d) Business and Income Analysis
Chapter 5304.1(d) Business and Income Analysis Freddie Mac Form 91 Part II Review 11
Slide 12: Chapter 5304.1(d) Business and Income Analysis
Chapter 5304.1(d) Business and Income Analysis Freddie Mac Form 91 Part II Review 12
Slide 13: Chapter 5304.1(d) Business and Income Analysis
Chapter 5304.1(d) Business and Income Analysis Freddie Mac Form 91 Part II Review 13
Slide 14: Chapter 5304.1(d) Business and Income Analysis
Chapter 5304.1(d) Business and Income Analysis Freddie Mac Form 91 Part II Review 14
Slide 15: Genworth Has Forms 91 And 92 Income Calculation Tools Posted
http://www.freddiemac.com/singlefamily/forms/sell/pdf/91.pdf Genworth Has Forms 91 And 92 Income Calculation Tools Posted To Our Website Freddie Mac Form 91 Part II Review 15
Slide 16: Training Tools and Information
Training Tools and Information www.new.mi.Genworth.com
Slide 17: Training Tools and Information
Training Tools and Information Freddie Mac Form 91 Part II Review 17
Slide 18: Multiple Businesses: Separate Worksheet For Each
When Borrowers Own Multiple Partnerships, S Corps Or Corporations, Do A Separate Worksheet For Each Business; Do A Separate Worksheet For Each Borrower Freddie Mac Form 91 Part II Review 18
Slide 19: Does Borrower Own > 25% of a Business?
Does Borrower Own > 25% of a Business? Can checking the Self-Employed Indicator to “Yes” increase the risk of the loan when evaluated by Loan Product ® Advisor ? No Yes Freddie Mac Form 91 Part II Review 19
Slide 20: You'll Need
You’ll Need Freddie Mac Form 91 Part II Review 20
Slide 21: The Case Study
The Case Study You will be working with John and Mary Homeowner who: – Own a Schedule C business called Impressive Images (John) – Have schedule B interest income earned from personal assets – Have capital gain/loss activity reported on a Schedule D – Own an existing rental property shown on a S
Slide 22: 2018 Forms
2018 Forms Freddie Mac Form 91 Part II Review 22
Slide 23: Calculator and Quick Reference Guide
Calculator and Quick Reference Guide In Case Study Part I We Completed Sections 1-7 With The Personal Tax Returns Freddie Mac Form 91 Part II Review 23
Slide 24: Business Classifications
Business Classifications Partnership (General or Limited) – Two or more Partners – Business Income reported on Form 1065 – Personal Income reported on Schedule E and K-1 – Income taxed at Personal Rate – All owners are issued a K-1s which are attached to the business tax return (IRS Form 1065) A
Slide 25: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 25
Slide 26: Partnerships
Partnerships Check for trends or changes – Date business started – Gross Receipts – Cost of Good Sold – Gross Profit – Bottom line “Ordinary Income” – Guaranteed Payments • Payments “paid out” to all partners, review the K-1 to see how much was paid to your partner Page 19 Freddie Mac Form 91 Pa
Slide 27: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 27
Slide 28: Partnership K-1
Partnership K-1 Page 17 Freddie Mac Form 91 Part II Review 28
Slide 29: Rental Income - Partnership or S Corps
Rental Income - Partnership or S Corps No Example Freddie Mac Form 91 Part II Review 29
Slide 30: Partnership K-1
Partnership K-1 Page 17 Freddie Mac Form 91 Part II Review 30
Slide 31: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 31
Slide 32: Schedule E Partnerships and S Corps
Schedule E Partnerships and S Corps Page 12 Freddie Mac Form 91 Part II Review 32
Slide 33: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 33
Slide 34: Page 2 and 3
Page 2 and 3 Freddie Mac Form 91 Part II Review 34
Slide 35: Freddie Mac Does Not Have a Written Policy Mandating Distributions
Freddie Mac Does Not Have a Written Policy Mandating Distributions However, Fannie Mae Does - Freddie Mac Form 91 Part II Review 35
Slide 36: Freddie Mac Income Guidelines
Freddie Mac Income Guidelines Freddie Mac Form 91 Part II Review 36
Slide 37: Balance Sheet
Balance Sheet Page 23 Freddie Mac Form 91 Part II Review 37
Slide 38: Training Tools and Information
Training Tools and Information
Slide 39: Liquidity Calculators
Liquidity Calculators mi.genworth.com Freddie Mac Form 91 Part II Review 39
Slide 40: Liquidity
Liquidity Generally Accepted Accounting Principles Freddie Mac Form 91 Part II Review 40
Slide 41: Liquidity-Current Ratio
Liquidity-Current Ratio Generally Accepted Accounting Principles Freddie Mac Form 91 Part II Review 41
Slide 42: Balance Sheet
Balance Sheet Quick Ratio or Acid Test Current Assets : (Cash #1 + Acct Receivable #2 + #4+ #5 +Other Current Assets #6) Current Liabilities: (Acct Pay. #15 + MNB #16 + Other Current Liabilities #17) Current Assets: $208,105 + 0 + 0 +0+0 = $208105 Current Liabilities: $0 + $0+ $45,844 = $45,844 4.53
Slide 43: Quick Ratio
Quick Ratio Freddie Mac Form 91 Part II Review 43
Slide 44: Quick Reference Guide
Quick Reference Guide Access: – Form 91 • Quick Reference Guide Section 8 – The Partnership K-1 Page 17 Freddie Mac Form 91 Part II Review 44
Slide 45: Partnership K-1
Partnership K-1 Page 17 Can We Use Ordinary Income/Rental Income? Was There A Distribution? Solvent? Freddie Mac Form 91 Part II Review 45
Slide 46: Quick Reference Guide Partnership K-1
Quick Reference Guide Partnership K-1 Genworth Calculator Is A Tool; Lenders/Underwriters Review Each Loan File And Determine Compliance With Freddie Mac Or Investor Guidelines Freddie Mac Form 91 Part II Review 46
Slide 47: Partnership K-1
Partnership K-1 Page 17 Can We Use Ordinary Income/Rental Income? Was There A Distribution? Solvent? Freddie Mac Form 91 Part II Review 47
Slide 48: Quick Reference Guide Partnership K-1
Quick Reference Guide Partnership K-1 0.00 Genworth Calculator Is A Tool; Lenders/Underwriters Review Each Loan File And Determine Compliance With Freddie Mac Or Investor Guidelines Freddie Mac Form 91 Part II Review 48
Slide 49: Partnership K-1
Partnership K-1 Page 17 Freddie Mac Form 91 Part II Review 49
Slide 50: Section 8
Section 8 Page 19 Freddie Mac Form 91 Part II Review 50
Slide 51: Partnership Form 1065
Partnership Form 1065 No Example Freddie Mac Form 91 Part II Review 51
Slide 52: Partnership Form 1065
Partnership Form 1065 Page 19 Freddie Mac Form 91 Part II Review 52
Slide 53: Partnership Form 1065
Partnership Form 1065 See Statement Page 19 Freddie Mac Form 91 Part II Review 53
Slide 54: Partnership Form 1065
Partnership Form 1065 Page 24 Freddie Mac Form 91 Part II Review 54
Slide 55: Freddie Mac Form 91 Part II Review
Freddie Mac Form 91 Part II Review 55
Slide 56: Partnership Form 1065
Partnership Form 1065 Page 23 Freddie Mac Form 91 Part II Review 56
Slide 57: Chapter 5304
Chapter 5304 Freddie Mac Form 91 Part II Review 57
Slide 58: Partnership Form 1065
Partnership Form 1065 Page 19 Freddie Mac Form 91 Part II Review 58
Slide 59: Partnership Form 1065
Partnership Form 1065 Page 23 Freddie Mac Form 91 Part II Review 59
Slide 60: Partnership K-1
Partnership K-1 Freddie Mac Form 91 Part II Review 60
Slide 61: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch.E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 62
Slide 62: S Corps
S Corps Check for trends or changes – Date Incorporated – Gross receipts – Cost of goods sold – Gross profit – Bottom line “Ordinary Income” – Were W-2 wages paid to borrower? Page 30 Freddie Mac Form 91 Part II Review 63
Slide 63: S Corps
S Corps Review 1125-E For Compensation Paid to Officers – You can be an officer, but not an owner Page 35 Freddie Mac Form 91 Part II Review 64
Slide 64: S Corps
S Corps Review for W-2 paid from business – Is this salary income or self-employed income? – Did we give credit for this income already? Page 1 Freddie Mac Form 91 Part II Review 65
Slide 65: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch.E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 66
Slide 66: S Corp K-1
S Corp K-1 Page 28 Did John Get A Distribution? Freddie Mac Form 91 Part II Review 67
Slide 67: Page 2 of K-1 and Page 3 of Form 1120S
Page 2 of K-1 and Page 3 of Form 1120S Page 29 Freddie Mac Form 91 Part II Review 68
Slide 68: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch.E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 69
Slide 69: Schedule E Partnerships and S Corps
Schedule E Partnerships and S Corps Page 12 Freddie Mac Form 91 Part II Review 70
Slide 70: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II 1040 or Schedule 1 Line 17 Net Income/Loss Sch.E Taxed at a personal rate $_________ Freddie Mac Form 91 Part II Review 71
Slide 71: Pages 2 and 3
Pages 2 and 3 Freddie Mac Form 91 Part II Review 72
Slide 72: Freddie Mac Does Not Have a Written Policy Regarding Distributions
Freddie Mac Does Not Have a Written Policy Regarding Distributions However, Fannie Mae Does - Freddie Mac Form 91 Part II Review 73
Slide 73: Liquidity
Liquidity Generally Accepted Accounting Principles Freddie Mac Form 91 Part II Review 74
Slide 74: Balance Sheet
Balance Sheet Page 33 Freddie Mac Form 91 Part II Review 75
Slide 75: Balance Sheet
Balance Sheet Quick Ratio or Acid Test Current Assets : (Cash #1 + Acct Receivable #2 + #4+ #5 +Other Current Assets #6) Current Liabilities: (Acct Pay. #15 + MNB #16 + Other Current Liabilities #17) Current Assets: $4,523 + 0 + 0 +0+$0 = $4,523 Current Liabilities: $0 + $5,373+ $0 = $5,373 .842 - S
Slide 76: Quick Ratio
Quick Ratio Freddie Mac Form 91 Part II Review 77
Slide 77: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! Page 28 Freddie Mac Form 91 Part II Review 78
Slide 78: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! * Page 28 *If you use $11,735 you must justify the use and maintain in your file Freddie Mac Form 91 Part II Review 79
Slide 79: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! * Page 28 Freddie Mac Form 91 Part II Review 80
Slide 80: S Corporation Form 1120S
S Corporation Form 1120S Page 30 Freddie Mac Form 91 Part II Review 81
Slide 81: Rental Income - Partnership or S Corps
Rental Income - Partnership or S Corps No Example Freddie Mac Form 91 Part II Review 82
Slide 82: S Corporation Form 1120S
S Corporation Form 1120S Page 30 Freddie Mac Form 91 Part II Review 83
Slide 83: S Corporation Form 1120S
S Corporation Form 1120S Page 30 Freddie Mac Form 91 Part II Review 84
Slide 84: 1120S Statement
1120S Statement Page 36 Freddie Mac Form 91 Part II Review 85
Slide 85: S Corporation Form 1120S
S Corporation Form 1120S Page 33 Freddie Mac Form 91 Part II Review 86
Slide 86: S Corporation Form 1120S
S Corporation Form 1120S Page 33 Freddie Mac Form 91 Part II Review 87
Slide 87: S Corporation Form 1120S
S Corporation Form 1120S Page 30 Freddie Mac Form 91 Part II Review 88
Slide 88: S Corporation Form 1120S
S Corporation Form 1120S Page 34 Freddie Mac Form 91 Part II Review 89
Slide 89: S Corp K-1
S Corp K-1 How Much Does John Own? Page 28 Freddie Mac Form 91 Part II Review 90
Slide 90: S Corporation Form 1120S
S Corporation Form 1120S We Must Subtract This Amount/Adjustment From The Qualifying Income Which Was The W-2 Wages Paid From The Business Freddie Mac Form 91 Part II Review 91
Slide 91: S Corp Totals
S Corp Totals Freddie Mac Form 91 Part II Review 92
Slide 92: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines
Slide 93: Genworth Rate Express
Genworth Rate Express® > 800 444.5664 | & Genworth =, %, & isl Ea ay MI & RATES UNDERWRITING & GUIDES | LOS&CONNECTIONS | GENWORTHTOOLKIT | TRAINING YGet A Quote -Rate PIONS THAT MATTER Genworth Mortgage Insurance Express View Rate Cards | \ \ / Explore MI | \ | 7 Products Learn About MI Understand
Slide 94: LOS Connections
LOS Connections EA GenworthZ, =. MI & RATES YOU-CENTRIC SOLUTIONS | UNDERWRITING & GUIDES LOS & CONNECTIONS Submit on our Site Submit with your LOS Use Optimal Blue & Doc Delivery Access Paper Applications GENWORTH TOOLKIT | TRAINING 7\N\ | Underwritin ° — | Innovate ewes % KNOW MORE Rate Express Fi
Slide 95: Training Tools and Information
Training Tools and Information
Slide 96: Training Tools and Information
Training Tools and Information 99
Slide 97: Additional MI Site Information
Additional MI Site Information
Slide 98: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative
Slide 99: 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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