Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (March 2021)
105 slides from Enact's investor presentation, March 2021
Slide 1: Self-Employed Borrower: SAM Form Part I - Personal Tax Returns
CONFIDENTIAL Self-Employed Borrower: SAM Form Part I - Personal Tax Returns March 2021 Customer Education Brought to you by: Genworth Customer Development and Process Consulting Self-Employed Borrower SAM Form Part I 0
Slide 2: Lender Responsibility
CONFIDENTIAL 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 Session Covers Conventional Loan
Slide 3: Objective
CONFIDENTIAL Objective Learn to use the Schedule Analysis Form (SAM) form and calculate supportable self-employed borrower income from personal tax returns – W-2 wages from a business owned by the borrower – Schedule B dividends and interest income – Income from a Schedule C (Sole Proprietor) – Cons
Slide 4: Self-Employment Fannie Mae
CONFIDENTIAL Self-Employment Fannie Mae https://www.fanniemae.com/content/guide/selling/b3/3.2/01.html Self-Employed Borrower SAM Form Part I 3
Slide 5: Self-Employment Fannie Mae
CONFIDENTIAL Self-Employment Fannie Mae Fannie Mae 2021 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (10/24/2016) Self-Employed Borrower SAM Form Part I 4
Slide 6: Self-Employment Fannie Mae
CONFIDENTIAL Self-Employment Fannie Mae Fannie Mae 2021 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (10/24/2016) Self-Employed Borrower SAM Form Part I 5
Slide 7: Self-Employment Fannie Mae
CONFIDENTIAL Self-Employment Fannie Mae Fannie Mae 2021 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (10/24/2016) Self-Employed Borrower SAM Form Part I 6
Slide 8: Documentation Matrix
CONFIDENTIAL Documentation Matrix Updated March 2021 http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf Self-Employed Borrower SAM Form Part I 7
Slide 9: Documentation Matrix
CONFIDENTIAL Documentation Matrix Page 14 of Matrix Self-Employed Borrower SAM Form Part I 8
Slide 10: Documentation Matrix
CONFIDENTIAL Documentation Matrix Page 15 of Matrix Self-Employed Borrower SAM Form Part I 9
Slide 11: Documentation Matrix
CONFIDENTIAL Documentation Matrix Page 15 of Matrix Self-Employed Borrower SAM Form Part I 10
Slide 12: Documentation Matrix
CONFIDENTIAL Documentation Matrix Page 16 of Matrix Self-Employed Borrower SAM Form Part I 11
Slide 13: Documentation Matrix
CONFIDENTIAL Documentation Matrix Page 29 of Matrix Self-Employed Borrower SAM Form Part I 12
Slide 14: Chapter 5304.1(d) Business & Income Analysis
CONFIDENTIAL Chapter 5304.1(d) Business & Income Analysis https://guide.freddiemac.com/app/guide/section/5304.1 Self-Employed Borrower SAM Form Part I 13
Slide 15: Chapter 5304.1(d) Business & Income Analysis
CONFIDENTIAL Chapter 5304.1(d) Business & Income Analysis https://guide.freddiemac.com/app/guide/section/5304.1 Self-Employed Borrower SAM Form Part I 14
Slide 16: Chapter 5304.1(d) Business & Income Analysis
CONFIDENTIAL Chapter 5304.1(d) Business & Income Analysis https://guide.freddiemac.com/app/guide/section/5304.1 Self-Employed Borrower SAM Form Part I 15
Slide 17: Chapter 5304.1(d) Business & Income Analysis
CONFIDENTIAL Chapter 5304.1(d) Business & Income Analysis https://guide.freddiemac.com/app/guide/section/5304.1 Self-Employed Borrower SAM Form Part I 16
Slide 18: COVID-19 Guidelines
COVID-19 Guidelines Fannie Mae and Freddie Mac policies Self-Employed Borrower SAM Form Part I 17
Slide 19: Fannie Mae LL-2021-03
CONFIDENTIAL Fannie Mae LL-2021-03 Effective for applications taken June 11, 2020 and until further notice Self-Employed Borrower SAM Form Part I 18
Slide 20: Updated SEB Profit and Loss FAQ For 2021
CONFIDENTIAL Updated SEB Profit and Loss FAQ For 2021 Self-Employed Borrower SAM Form Part I 19
Slide 21: Fannie Mae LL-2021-03
CONFIDENTIAL Fannie Mae LL-2021-03 Effective for applications taken June 11, 2020 and until further notice Self-Employed Borrower SAM Form Part I 20
Slide 22: Fannie Mae LL-2021-03
CONFIDENTIAL Fannie Mae LL-2021-03 Effective for applications taken June 11, 2020 and until further notice Self-Employed Borrower SAM Form Part I 21
Slide 23: Business Income Calculation Adjustment
CONFIDENTIAL Business Income Calculation Adjustment Effective for applications taken June 11, 2020 and until further notice LL-2021-03 Self-Employed Borrower SAM Form Part I 22
Slide 24: Bulletin 2020-8
CONFIDENTIAL Bulletin 2020-8 Effective for applications taken April 14, 2020 and until further notice Extended to 20 days in Credit Underwriting: Bulletin 2020-27 – Self-employed Borrowers: Verification of the current existence of the business- business open and operating • Confirm that the Borrower
Slide 25: Bulletin 2020-19
CONFIDENTIAL Bulletin 2020-19 Updates to COVID-19 impact on originations: ▪ Temporary requirements and guidance for self-employed income https://sf.freddiemac.com/articles/news/guide-bulletin-2020-19-new-temporary-requirements-for-self- employed-income-choicerenovation-mortgages-and-more Self-Employ
Slide 26: Bulletin 2020-44 Amended 2020-19
CONFIDENTIAL Bulletin 2020-44 Amended 2020-19 Effective for applications taken June 11, 2020 and until further notice https://guide.freddiemac.com/ci/okcsFattach/get/1004034_7 Self-Employed Borrower SAM Form Part I 25
Slide 27: P & L And Bank Statement Updates
CONFIDENTIAL P & L And Bank Statement Updates https://sf.freddiemac.com/general/covid-19-selling-faq Self-Employed Borrower SAM Form Part I 26
Slide 28: Bulletin 2020-19
CONFIDENTIAL Bulletin 2020-19 Effective for applications taken June 11, 2020 and until further notice (See next slide) https://guide.freddiemac.com/app/guide/bulletin/2020-19 Self-Employed Borrower SAM Form Part I 27
Slide 29: Bulletin 2020-19
CONFIDENTIAL Bulletin 2020-19 Effective for applications taken June 11, 2020 and until further notice https://guide.freddiemac.com/app/guide/bulletin/2020-19 Self-Employed Borrower SAM Form Part I 28
Slide 30: Bulletin 2020-19
CONFIDENTIAL Bulletin 2020-19 Effective for applications taken June 11, 2020 and until further notice https://guide.freddiemac.com/app/guide/bulletin/2020-19 Self-Employed Borrower SAM Form Part I 29
Slide 31: Bulletin 2020-19
CONFIDENTIAL Bulletin 2020-19 Effective for applications taken June 11, 2020 and until further notice Establishing Stable Monthly Income- continued https://guide.freddiemac.com/app/guide/bulletin/2020-19 Self-Employed Borrower SAM Form Part I 30
Slide 32: COVID-19 SEB Training Tools and Training
CONFIDENTIAL COVID-19 SEB Training Tools and Training Self-Employed Borrower SAM Form Part I 31
Slide 33: Training Tools and Information
CONFIDENTIAL Training Tools and Information Self-Employed Borrower SAM Form Part I 32
Slide 34: Training Tools and Information
CONFIDENTIAL Training Tools and Information Self-Employed Borrower SAM Form Part I 33
Slide 35: When Borrowers Own Multiple Partnerships, S Corps Or Corporations
CONFIDENTIAL When Borrowers Own Multiple Partnerships, S Corps Or Corporations, Complete A Separate Worksheet For Each Business; Complete A Separate Worksheet For Each Borrower Self-Employed Borrower SAM Form Part I 34
Slide 36: Does Borrower Own > 25% of a Business?
CONFIDENTIAL Does Borrower Own > 25% of a Business? Can checking the Self-employed Indicator to “Yes” increase the ® risk of the loan when evaluated by Desktop Underwriter ? What about Loan Product Advisor®? No Yes Self-Employed Borrower SAM Form Part I 35
Slide 37: You'll Need
CONFIDENTIAL You’ll Need Self-Employed Borrower SAM Form Part I 36
Slide 38: The Case Study
CONFIDENTIAL 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 sho
Slide 39: IRS Form 1040
CONFIDENTIAL IRS Form 1040 Review for: – Name, Address, Social – All pages and schedules, supporting documents such as W-2, 1099 – Look lines 1-8, should you have a supporting document or supporting schedule? Page 2 Self-Employed Borrower SAM Form Part I 38
Slide 40: IRS Form 1040
CONFIDENTIAL IRS Form 1040 Important to Review for: – Review Line 8 for indication of a Schedule 1 – Schedule 1 report “other income types such as • Schedule C sole proprietor • Schedule E rental, partnerships • Schedule F Farms • Unemployment Page 2 Self-Employed Borrower SAM Form Part I 39
Slide 41: Does Your Borrower Have Additional Sources Income?
CONFIDENTIAL Does Your Borrower Have Additional Sources Income? Take a closer look at line 5 Schedule e activity Is it rental or partnership or S Corp or both?? If, partnership or S Corp income, verify you have the K-1s before continuing Page 4 Self-Employed Borrower SAM Form Part I 40
Slide 42: Schedule E Has Two Parts
CONFIDENTIAL Schedule E Has Two Parts Page 11 Self-Employed Borrower SAM Form Part I 41
Slide 43: Schedule E Partnerships and S Corps
CONFIDENTIAL Schedule E Partnerships and S Corps Page 12 Self-Employed Borrower SAM Form Part I 42
Slide 44: 1065 K-1
CONFIDENTIAL 1065 K-1 Page 17 Self-Employed Borrower SAM Form Part I 43
Slide 45: Double Check for the S Corp Documents
CONFIDENTIAL Double Check for the S Corp Documents Don’t forget to ask for both K-1’s. Designing the Future? Self-Employed Borrower SAM Form Part I 44
Slide 46: 1120S K-1
CONFIDENTIAL 1120S K-1 John is 33% owner Page 25 Self-Employed Borrower SAM Form Part I 45
Slide 47: Calculator and Quick Reference Guide
CONFIDENTIAL Calculator and Quick Reference Guide Access your Quick Reference Guide SAM Form and YOUR Case Study Self-Employed Borrower SAM Form Part I 46
Slide 48: 2020 Schedule B
CONFIDENTIAL 2020 Schedule B Don’t use unless needed for qualifying – Use ONLY if income is coming from SELF-EMPLOYMENT – We are only reviewing a one year, so we cannot use! Page 6 Self-Employed Borrower SAM Form Part I 47
Slide 49: SAM Form Section II Schedule C
CONFIDENTIAL SAM Form Section II Schedule C Self-Employed Borrower SAM Form Part I 48
Slide 50: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 49
Slide 51: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 50
Slide 52: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 51
Slide 53: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 52
Slide 54: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 53
Slide 55: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 54
Slide 56: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 55
Slide 57: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 56
Slide 58: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 57
Slide 59: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 58
Slide 60: Schedule C
CONFIDENTIAL Schedule C Page 7 Self-Employed Borrower SAM Form Part I 59
Slide 61: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 60
Slide 62: Schedule C
CONFIDENTIAL Schedule C Review Line 9 for Car and Truck Expenses – If there is an entry, look for the math Page 7 Self-Employed Borrower SAM Form Part I 61
Slide 63: Schedule C
CONFIDENTIAL Schedule C Additional depreciation can be found by multiplying business miles on Schedule C, Line 44a x IRS depreciation factor for that year. Page 8 If The Schedule C Section IV (On Page 2) Is Blank, Review For An IRS Form 4562 Worksheet Self-Employed Borrower SAM Form Part I 62
Slide 64: Schedule C
CONFIDENTIAL Schedule C Verify 4562 is for the Schedule C – Review Page 2 of the worksheet Line #30 Page 15 Self-Employed Borrower SAM Form Part I 63
Slide 65: Schedule C
CONFIDENTIAL Schedule C Page 16 Business Miles Of 8,244 x 27¢ Is $2,225 In Additional Depreciation That Could Be Added Back. Self-Employed Borrower SAM Form Part I 64
Slide 66: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 65
Slide 67: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 66
Slide 68: IRS Publication 463
CONFIDENTIAL IRS Publication 463 https://www.journalofaccountancy.com/news/2020/jan/2020-irs-mileage-rates- 22724.html#:~:text=The%20rate%20for%20service%20to,few%20amounts%20that%20is%20incr easing. Self-Employed Borrower SAM Form Part I 67
Slide 69: Schedule C
CONFIDENTIAL Schedule C Enter only the $2,807 amortization/casualty loss on your calculator Page 8 Self-Employed Borrower SAM Form Part I 68
Slide 70: Schedule C
CONFIDENTIAL Schedule C Self-Employed Borrower SAM Form Part I 69
Slide 71: SAM Form Section III
CONFIDENTIAL SAM Form Section III Don’t Use If You Don’t Need; If Needed To Qualify Check Investor Guidelines Self-Employed Borrower SAM Form Part I 70
Slide 72: Schedule D Capital Gains
CONFIDENTIAL Schedule D Capital Gains Try to not unless needed for qualifying – Two-year history, stable receipt and likely to continue – Check investor overlays before using – Let’s review IRS Form 1040, Line 7 to see what was reported – Our 2020 example show $3,000 loss Pages 2 and 9 Self-Employed
Slide 73: Schedule D
CONFIDENTIAL Schedule D Page 9 Where Did The $10,544 Loss On Line 6 Come From? The 1040 Showed A $3,000 Loss. Self-Employed Borrower SAM Form Part I 72
Slide 74: Schedule D
CONFIDENTIAL Schedule D Page 10 Self-Employed Borrower SAM Form Part I 73
Slide 75: Genworth Rental Income Calculator
CONFIDENTIAL 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 Form 91 Page 11 Self-Employed Borrower SAM Form Part I 74
Slide 76: Mortgage Statement/Payment Coupon
CONFIDENTIAL 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 PI
Slide 77: CONFIDENTIAL Self-Employed Borrower SAM Form Part I
CONFIDENTIAL Self-Employed Borrower SAM Form Part I 76
Slide 78: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 77
Slide 79: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 78
Slide 80: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 79
Slide 81: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 80
Slide 82: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 81
Slide 83: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 82
Slide 84: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 83
Slide 85: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 84
Slide 86: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 85
Slide 87: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 86
Slide 88: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 87
Slide 89: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 88
Slide 90: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 89
Slide 91: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 90
Slide 92: Page 11
CONFIDENTIAL Page 11 Self-Employed Borrower SAM Form Part I 91
Slide 93: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 92
Slide 94: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 93
Slide 95: Mortgage Statement/Payment Coupon
CONFIDENTIAL 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 PI
Slide 96: 2020 Schedule E Rental Income
CONFIDENTIAL 2020 Schedule E Rental Income Self-Employed Borrower SAM Form Part I 95
Slide 97: URLA Rental Property
CONFIDENTIAL URLA Rental Property PITI $1,950 (verified on mortgage statement) + $150 (verified HOA) = $2,100 Self-Employed Borrower SAM Form Part I 96
Slide 98: Net Rental Income
CONFIDENTIAL 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
Slide 99: Genworth Underwriting Guidelines
CONFIDENTIAL Genworth Underwriting Guidelines Self-Employed Borrower SAM Form Part I 98
Slide 100: Genworth Rate Express
CONFIDENTIAL Genworth Rate Express® Self-Employed Borrower SAM Form Part I 99
Slide 101: Training Tools and Information
CONFIDENTIAL Training Tools and Information Self-Employed Borrower SAM Form Part I 10 0
Slide 102: Training Tools and Information
CONFIDENTIAL Training Tools and Information Self-Employed Borrower SAM Form Part I 101 10 1
Slide 103: Additional MI Site Information
CONFIDENTIAL Additional MI Site Information Self-Employed Borrower SAM Form Part I 102
Slide 104: Your Genworth Resources
CONFIDENTIAL Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Self-Employed Borrower SAM Form Part I 103
Slide 105: Legal Disclaimer
CONFIDENTIAL 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 uncertainti