Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (March 2019)
95 slides from Enact's investor presentation, March 2019
Slide 1: Self-Employed Borrower: Fannie Mae Cash Flow Form 1084 Part I
Self-Employed Borrower Fannie Mae Cash Flow Form 1084 Part I Personal Tax Returns March 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 108
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 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 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 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 1084 7
Slide 8: 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 1084 8
Slide 9: 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 1084 9
Slide 10: 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 1084 11
Slide 11: 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 1084 12
Slide 12: Self-Employment Fannie Mae
Self-Employment Fannie Mae Fannie Mae Cash Flow Analysis Form 1084 13
Slide 13: 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 1084 14
Slide 14: DU/DO Release Notes DU Version 10.0-Appendix A
DU/DO Release Notes DU Version 10.0- Appendix A Fannie Mae Cash Flow Analysis Form 1084 15
Slide 15: Fannie Mae Cash Flow Analysis Form 1084
Fannie Mae Cash Flow Analysis Form 1084 16
Slide 16: Training Tools and Information
Training Tools and Information new.mi.Genworth.com Fannie Mae Cash Flow Analysis Form 1084 17
Slide 17: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form 1084 18
Slide 18: You'll Need Calculators
You’ll Need Calculators- Fannie Mae Cash Flow Analysis Form 1084 19
Slide 19: Fannie Mae's 1084
Fannie Mae’s 1084 Fannie Mae Cash Flow Analysis Form 1084 20
Slide 20: You'll Need
You’ll Need Fannie Mae Cash Flow Analysis Form 1084 21
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 and dividend income – Have capital gains/loss activity reported on a Schedule D – Own an existing rental property shown on a Schedule E – Ow
Slide 22: Tax Forms
Tax Forms Fannie Mae Cash Flow Analysis Form 1084 23
Slide 23: IRS Form 1040
IRS Form 1040 Page 3 Fannie Mae Cash Flow Analysis Form 1084 24
Slide 24: Form 1040
Form 1040 Review for: – Identifiers • Name • Address • Social Security Number – All pages and schedules – Any Red Flags – Date • Most recent – Signatures Page 3 Fannie Mae Cash Flow Analysis Form 1084 25
Slide 25: 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 1084 26
Slide 26: Form 1040
Form 1040 Review for: – Wages are now reported on line 1 Page 2 Fannie Mae Cash Flow Analysis Form 1084 27
Slide 27: Do Our Applicants Have Ownership?
Do Our Applicants Have Ownership? Is this W-2 wage for Self-Employed or Salary income? Page 1 Fannie Mae Cash Flow Analysis Form 1084 28
Slide 28: Form 1040
Form 1040 Review for: – Wages are now reported on line 1 – Is there a Schedule 1? Page 2 Fannie Mae Cash Flow Analysis Form 1084 29
Slide 29: Schedule 1
Schedule 1 Let’s look at the E… Page 3 Fannie Mae Cash Flow Analysis Form 1084 30
Slide 30: Schedule E to Validate Ownership
Schedule E to Validate Ownership Page 11 & 12 Fannie Mae Cash Flow Analysis Form 1084 31
Slide 31: Schedule E to Validate Ownership
Schedule E to Validate Ownership Page 12 Fannie Mae Cash Flow Analysis Form 1084 32
Slide 32: 1120S K-1 John is 100% owner
1120S K-1 John is 100% owner Page 28 Fannie Mae Cash Flow Analysis Form 1084 33
Slide 33: 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 34: Schedule E to Validate Ownership
Schedule E to Validate Ownership Don’t forget to ask for both K-1’s. Who has ownership in Dallas Designers? Fannie Mae Cash Flow Analysis Form 1084 35
Slide 35: 1065 K-1 Mary is 35% owner
1065 K-1 Mary is 35% owner Page 17 Fannie Mae Cash Flow Analysis Form 1084 36
Slide 36: Interest Income From S Corps/Partnerships
Interest Income From S Corps/Partnerships Page 6 All Dividend And Interest Income Appears On 1040 Lines 8 And 9 Review Schedule B For Specific Sources, Before Using To Qualify Fannie Mae Cash Flow Analysis Form 1084 37
Slide 37: 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 38: Interest and Dividends
Interest and Dividends Page 6 Fannie Mae Cash Flow Analysis Form 1084 39
Slide 39: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 40
Slide 40: Is There a Schedule C?
Is There a Schedule C? Check for multiple Schedule C’s… Page 3 Fannie Mae Cash Flow Analysis Form 1084 41
Slide 41: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 42
Slide 42: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 43
Slide 43: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 44
Slide 44: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form 1084 45
Slide 45: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 46
Slide 46: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 47
Slide 47: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 48
Slide 48: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form 1084 49
Slide 49: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 50
Slide 50: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form 1084 51
Slide 51: Schedule C
Schedule C Page 7 Fannie Mae Cash Flow Analysis Form 1084 52
Slide 52: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form 1084 53
Slide 53: Schedule C
Schedule C Only the $999 Amortization and Casualty Loss of $2,000 is added back. Page 8 Fannie Mae Cash Flow Analysis Form 1084 54
Slide 54: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form 1084 55
Slide 55: 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 1084 56
Slide 56: 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 1084 57
Slide 57: 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 1084 58
Slide 58: Schedule C
Schedule C Verify 4562 is for the Schedule C Page 13 & 14 Fannie Mae Cash Flow Analysis Form 1084 59
Slide 59: Schedule C
Schedule C Fannie Mae Cash Flow Analysis Form 1084 60
Slide 60: Personal Debt Paid by Business
Personal Debt Paid by Business Fannie Mae Cash Flow Analysis Form 1084 61
Slide 61: 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 1084 62
Slide 62: 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 63: Schedule D
Schedule D Page 9 Where Did The $13,544 Loss On Line 6 Come From? The 1040, Schedule 1 Showed A $3,000 Loss. Fannie Mae Cash Flow Analysis Form 1084 64
Slide 64: Schedule D
Schedule D Page 10 Fannie Mae Cash Flow Analysis Form 1084 65
Slide 65: 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 1084 67
Slide 66: Fannie Mae Cash Flow Analysis Form 1084
Fannie Mae Cash Flow Analysis Form 1084 69
Slide 67: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 70
Slide 68: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 71
Slide 69: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 72
Slide 70: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 73
Slide 71: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 74
Slide 72: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 75
Slide 73: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 76
Slide 74: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 77
Slide 75: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 78
Slide 76: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 79
Slide 77: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 80
Slide 78: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 81
Slide 79: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 82
Slide 80: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 83
Slide 81: Page 11
Page 11 Fannie Mae Cash Flow Analysis Form 1084 84
Slide 82: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 85
Slide 83: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 86
Slide 84: 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 Fannie Mae
Slide 85: 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 1084 88
Slide 86: 2018 Schedule E Rental Income
2018 Schedule E Rental Income Fannie Mae Cash Flow Analysis Form 1084 89
Slide 87: 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 88: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Fannie Mae Cash Flow Analysis Form 1084 91
Slide 89: Genworth Rate Express
Genworth Rate Express® Fannie Mae Cash Flow Analysis Form 1084 92
Slide 90: LOS Connections
LOS Connections Fannie Mae Cash Flow Analysis Form 1084 93
Slide 91: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form 1084 94
Slide 92: Training Tools and Information
Training Tools and Information Fannie Mae Cash Flow Analysis Form 1084 95
Slide 93: Additional MI Site Information
Additional MI Site Information Fannie Mae Cash Flow Analysis Form 1084 96
Slide 94: 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 1084 97
Slide 95: 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