Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (July 2019)
83 slides from Enact's investor presentation, July 2019
Slide 1: Self-Employed Borrower
Self-Employed Borrower Fannie Mae Cash Flow Form 1084 Part I The Personal Tax Returns July 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 to be determined that self-employed borrowers demonstrate the financial ability to repay the mortgage. – History – Income calculation – Continuance / Stability of income Fannie Mae Cash Flow Analysis Form (Fo
Slide 3: Objective
Objective Learn to use the Fannie Mae Cash Flow Analysis (Form 1084) and data from tax returns to calculate supportable self-employed borrower income. – W-2 wages from a business owned by the borrower – Income from a Schedule C (Sole Proprietor) – Consideration of Capital Gains & Losses Schedule
Slide 4: Self-Employment Fannie Mae
Self-Employment Fannie Mae https://www.fanniemae.com/content/guide/selling/b3/3.2/01.html Fannie Mae Cash Flow Analysis Form (Form 1084) 4
Slide 5: Self-Employment Fannie Mae
Self-Employment Fannie Mae Fannie Mae 2019 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) Fannie Mae Cash Flow Analysis Form (Form 1084) 5
Slide 6: Self-Employment Fannie Mae
Self-Employment Fannie Mae Fannie Mae 2019 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) Fannie Mae Cash Flow Analysis Form (Form 1084) 6
Slide 7: Self-Employment Fannie Mae
Self-Employment Fannie Mae Fannie Mae 2019 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) Fannie Mae Cash Flow Analysis Form (Form 1084) 8
Slide 8: Does Borrower Own 25% Or More Of A Business?
Does Borrower Own 25% Or More Of A Business? Can checking the Self Employed Indicator to “Yes” increase the risk of the loan when evaluated by DU? No Yes Fannie Mae Cash Flow Analysis Form (Form 1084) 14
Slide 9: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) 17
Slide 10: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) 18
Slide 11: You'll Need Calculators
You’ll Need Calculators- Fannie Mae Cash Flow Analysis Form (Form 1084) 19
Slide 12: Fannie Mae's 1084
Fannie Mae’s 1084 Fannie Mae Cash Flow Analysis Form (Form 1084) 20
Slide 13: You'll Need
You’ll Need Fannie Mae Cash Flow Analysis Form (Form 1084) 21
Slide 14: The Case Study
The Case Study You will be working with John and Mary Homeowner who: – Own a Schedule C business called (John) – Have schedule B interest and dividend income – Have capital gains/loss activity reported on a Schedule D – Own an existing rental property shown on a Schedule E – Own 35% of an LLC ca
Slide 15: Form 1040
Form 1040 Review for: – Identifiers • Name • Address • Social Security Number – All pages and schedules – Any Red Flags – Date • Most recent – Signatures Page 2 Fannie Mae Cash Flow Analysis Form (Form 1084) 24
Slide 16: Calculator and Quick Reference Guide
Calculator and Quick Reference Guide Access your Quick Reference Guide 1084 Form and Case Study Fannie Mae Cash Flow Analysis Form (Form 1084) 25
Slide 17: Form 1040
Form 1040 Review for: – Wages are now reported on line 1 Page 2 Fannie Mae Cash Flow Analysis Form (Form 1084) 26
Slide 18: Do Our Applicants Have Ownership?
Do Our Applicants Have Ownership? Is this W-2 wage for Self-Employed or Salary income? John said he “owned an S Corp…How do we verify if someone has ownership an S Corp when we looking at personal returns? Page 1 Fannie Mae Cash Flow Analysis Form (Form 1084) 27
Slide 19: Form 1040
Form 1040 Review for: – S Corps and partnerships still report on Line 17 but now on Schedule 1…. – How do you know you need a Schedule 1? Page 2 Fannie Mae Cash Flow Analysis Form (Form 1084) 28
Slide 20: Schedule 1
Schedule 1 Let’s look at the E… Page 3 Fannie Mae Cash Flow Analysis Form (Form 1084) 29
Slide 21: Schedule E to Validate Ownership
Schedule E to Validate Ownership Page 12 Fannie Mae Cash Flow Analysis Form (Form 1084) 30
Slide 22: 1120S K-1
1120S K-1 John is 100% owner Page 28 Fannie Mae Cash Flow Analysis Form (Form 1084) 31
Slide 23: Any Other W-2 Wages?
Any Other W-2 Wages? Review Form 1040, Line 7 for any additional W-2 Wages – Review all W-2’s filed – Determine if applicant owns 25% or more of the business • If yes, it is considered self-employed income • If no, calculate that income on a different form or separately * *Use of the W-2 wages i
Slide 24: Schedule E to Validate Ownership
Schedule E to Validate Ownership Don’t forget to ask for both K1’s. Who has ownership in Dallas Designers? Fannie Mae Cash Flow Analysis Form (Form 1084) 33
Slide 25: 1065 K-1
1065 K-1 Mary is 35% owner Page 17 Fannie Mae Cash Flow Analysis Form (Form 1084) 34
Slide 26: Interest and Dividends
Interest and Dividends Don’t use unless needed for qualifying – Two year history of stable receipt and likelihood of continuance required – Only use when earned from assets owned by “a business only” – Typically will say “From K-1” or from the business the borrower owns – Check investor overlays
Slide 27: Interest and Dividends
Interest and Dividends Page 6 Fannie Mae Cash Flow Analysis Form (Form 1084) 36
Slide 28: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 37
Slide 29: Is There a Schedule C?
Is There a Schedule C? Check for multiple Schedule C’s… Page 3 Fannie Mae Cash Flow Analysis Form (Form 1084) 38
Slide 30: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 39
Slide 31: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 40
Slide 32: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 41
Slide 33: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) 42
Slide 34: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 43
Slide 35: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 44
Slide 36: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 45
Slide 37: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) 46
Slide 38: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 47
Slide 39: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) 48
Slide 40: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form (Form 1084) 49
Slide 41: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) 50
Slide 42: Schedule C
Schedule C Only the $999 amortization & Casualty Loss of $2,000 is added back. Page 8 Fannie Mae Cash Flow Analysis Form (Form 1084) 51
Slide 43: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) 52
Slide 44: Schedule C Line 9 - Car and Truck Expenses
Schedule C Line 9 - Car and Truck Expenses Use This Depreciation Adjustment Option Only When Investor Policy Allows And The Adjustment Is Needed To Qualify Fannie Mae Cash Flow Analysis Form (Form 1084) 53
Slide 45: Schedule C
Schedule C Additional depreciation can be found by multiplying business miles on 44a x IRS depreciation factor for that year. Page 8 Fannie Mae Cash Flow Analysis Form (Form 1084) 54
Slide 46: Schedule C
Schedule C Use This Depreciation Option Only When Investor Policy Allows And The Adjustment Is Needed To Qualify Fannie Mae Cash Flow Analysis Form (Form 1084) 55
Slide 47: Schedule C
Schedule C Verify 4562 is for the Schedule C Page 13 & 14 Fannie Mae Cash Flow Analysis Form (Form 1084) 56
Slide 48: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form (Form 1084) 57
Slide 49: Schedule C - Other
Schedule C - Other Car & Truck Expenses Worksheet $11,848 Interest that could be added to income to support the payment in the DTI Pages 15 & 16 Fannie Mae Cash Flow Analysis Form (Form 1084) 59
Slide 50: Schedule D - Capital Gains
Schedule D - Capital Gains Don’t use unless needed for qualifying – Two year history, stable receipt and likely to continue – Check investor overlays before using – Only enter on the worksheet if coming from a self- employed source – Let’s Review the 1040 Schedule 1, Line 13 Pages 3, 9, 10 Fanni
Slide 51: Schedule D
Schedule D Where Did The $13,544 Loss On Line 6 Come From? The 1040, Schedule 1 Showed A $3,000 Loss. Page 9 Fannie Mae Cash Flow Analysis Form (Form 1084) 61
Slide 52: Schedule D
Schedule D Page 10 Fannie Mae Cash Flow Analysis Form (Form 1084) 62
Slide 53: Genworth Rental Income Calculator
Genworth Rental Income Calculator – Locate Calculator and Quick Reference Guide for Rental Income – Turn to Schedule E, Part I, Rentals – Rental Income has been removed from the Cash Flow Analysis Form Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 64
Slide 54: Mortgage Statement/Payment Coupon
Mortgage Statement/Payment Coupon A mortgage statement/payment coupon can verify: – If loan is impounded or escrowed – What property is associated with the mortgage payment – Current tax and insurance information – Current HOA dues: most investors want verification PUD, Condo or Coop PITI $1,637
Slide 55: Fannie Mae Cash Flow Analysis Form (Form 1084)
Fannie Mae Cash Flow Analysis Form (Form 1084) 67
Slide 56: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 68
Slide 57: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 69
Slide 58: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 70
Slide 59: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 71
Slide 60: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 72
Slide 61: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 73
Slide 62: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 74
Slide 63: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 75
Slide 64: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 76
Slide 65: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 77
Slide 66: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 78
Slide 67: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 79
Slide 68: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 80
Slide 69: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 81
Slide 70: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form (Form 1084) 82
Slide 71: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 83
Slide 72: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 84
Slide 73: 2018 Schedule E Rental Income
2018 Schedule E Rental Income PITI $1,637 (verified on mortgage statement) + $265 (verified HOA) = $1,902 Fannie Mae Cash Flow Analysis Form (Form 1084) 85
Slide 74: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form (Form 1084) 86
Slide 75: Net Rental Income
Net Rental Income Compare “rental income” figure with loan application (Fannie Mae Form 1003) – Most systems calculate rental income from the REO section of the 1003 – Review the 1003 to verify what appears as rental income/rental loss – If the number is different, override your system to reflec
Slide 76: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Fannie Mae Cash Flow Analysis Form (Form 1084) 88
Slide 77: Genworth Rate Express®
Genworth Rate Express® Fannie Mae Cash Flow Analysis Form (Form 1084) 89
Slide 78: LOS Connections
LOS Connections Fannie Mae Cash Flow Analysis Form (Form 1084) 90
Slide 79: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) 91
Slide 80: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form (Form 1084) 92
Slide 81: Additional MI Site Information
Additional MI Site Information Fannie Mae Cash Flow Analysis Form (Form 1084) 93
Slide 82: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Fannie Mae Cash Flow Analysis Form (Form 1084) 94
Slide 83: 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