Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (April 2021)
71 slides from Enact's investor presentation, April 2021
Slide 1: Understanding Desktop Underwriter - Advanced Guidelines and Updates
Understanding Desktop Underwriter® - Advanced Guidelines and Updates April 2021 Customer Education Brought to you by: Genworth Customer Development and Process Consulting
Slide 2: Agenda
Agenda In Today’s Session – Fannie Mae Website – COVID 19 Resources – Credit, Income and Asset and Appraisal Messages – Data Integrity Reminders and Fannie Mae Updates – Genworth Website Today’s Session Addresses Only Conventional Loans Understanding Desktop Underwriter Advanced 1
Slide 3: Genworth Training
Genworth Training https://new.mi.genworth.com/training/course/understanding-desktop-underwriter-basics#watchnow Understanding Desktop Underwriter Advanced 2
Slide 4: Fannie Mae News and Events
https://singlefamily.fanniemae.com/news-events Understanding Desktop Underwriter Advanced 3
Slide 5: Selling and Servicing Guide, Forms and Communications
https://singlefamily.fanniemae.com/selling-and-servicing-guide-forms-and-communications Understanding Desktop Underwriter Advanced
Slide 6: In Case You Missed It!
In Case You Missed It! https://singlefamily.fanniemae.com Understanding Desktop Underwriter Advanced 5
Slide 7: Fannie Mae COVID-19 Resources
Fannie Mae COVID-19 Resources Fannie Mae Updates, FAQs, Fannie Mae’s COVID 19 webpage https://singlefamily.fanniemae.com/ Understanding Desktop Underwriter Advanced 6
Slide 8: Genworth Training
Genworth Training https://new.mortgageinsurance.genworth.com/training/search-results?search_keyword=basics Understanding Desktop Underwriter Advanced 7
Slide 9: COVID Updates
COVID 19 Updates Understanding Desktop Underwriter Advanced 8
Slide 10: Desktop Underwriter Release Notes
Desktop Underwriter Release Notes https://singlefamily.fanniemae.com/applications-technology/desktop-underwriter-desktop-originator Understanding Desktop Underwriter Advanced 9
Slide 11: Desktop Underwriter Potential Red Flag Messages - Updated
Desktop Underwriter Potential Red Flag Messages - Updated Messages Must Be Cleared – Provides message text – Why message appeared – Possible ways to clear or resolve https://singlefamily.fanniemae.com/media/5611/display Understanding Desktop Underwriter Advanced
Slide 12: Check for Full Details
Check for Full Details Understanding Desktop Underwriter Advanced 11
Slide 13: General Messages
General Messages Clear Potential Erroneous Information – Confirm SS# Understanding Desktop Underwriter Advanced 12
Slide 14: General Messages
General Messages See temporary guidelines Watch the expiration date of your documents! It’s 4 months - not 120 days! Understanding Desktop Underwriter Advanced 13
Slide 15: General Messages
General Messages Check Pricing Reminder- If the loan can be submitted as a HomeReady loan - All LLPA waived for transactions with credit score of 680 or greater and LTV of 80% or greater. https://www.fanniemae.com/content/pricing/llpa-matrix.pdf Understanding Desktop Underwriter Advanced 14
Slide 16: General Messages
General Messages • Check for MI coverage • Check MI guidelines Reminder - If the loan can be submitted as a HomeReady loan or is an HFA loan, the MI coverage requirement is lower when the LTV is greater than 90%! Understanding Desktop Underwriter Advanced 15
Slide 17: Credit and Liabilities
Credit and Liabilities • Check for overlay of minimum credit score • Check for overlay of minimum number of credit scores • Check for overlay of minimum number of tradelines used in credit score Understanding Desktop Underwriter Advanced 16
Slide 18: Credit and Liabilities
Credit and Liabilities Borrowers with Credit Freeze – DU will underwrite if only one repository is frozen • A warning message will be issued by DU reminding lenders of their responsibility – If two repositories are frozen DU will issue an error message – If no credit score is generated by the two re
Slide 19: Credit and Liabilities
Credit and Liabilities If consumers ask for a freeze online or by phone, the credit reporting agency must have the freeze in place within one business day. And when consumers want to lift the freeze, the credit reporting agencies have to make that happen within one hour. (If consumers make the r
Slide 20: Credit and Liabilities
Credit and Liabilities Verification Messages Broken out by Topic: –Credit and Liabilities •Bankruptcy, foreclosures, charge offs, late pays, omitted accounts •What accounts were indicated as “to be paid off” •Mortgage payment that need additional attention Understanding Desktop Underwriter Advanced
Slide 21: Credit and Liabilities
Credit and Liabilities – When DU issues “Approve/Eligible” using the disputed trade lines: • Include the payment, if any, in the DTI but no further documentation is required. – When loan casefile does not receive Approve recommendation including the disputed trade line, risk will be assessed EXCLUDI
Slide 22: Credit and Liabilities
Credit and Liabilities Accounts Paid off at Closing – Funds must be verified to pay off the account (if indicated in DU loan to be paid, DU will add amount to be verified); Underwriters will use discretion and MAY include a payment even if the account is being paid off. The account may remain open a
Slide 23: Credit and Liabilities
Credit and Liabilities For loan casefiles underwritten through DU – DU determines the maximum allowable debt-to income ratio based on the overall risk assessment of the loan casefile – DU will apply a maximum allowable DTI ratio of 50% Understanding Desktop Underwriter Advanced 22
Slide 24: Liabilities
Liabilities To exclude a liability that someone else pays requires documentation for 12 months showing timely payment and to exclude a mortgage, they must be a co- signer When excluding a mortgage payment that someone else has been verified making the payments, it is the PITIA that can be exclud
Slide 25: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Revolving/Lines of Credit- Revolving charge accounts and unsecured lines of credit are open-ended and should be treated as long-term debts and must be considered part of the borrower's recurring monthly debt obligations. Th
Slide 26: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Instalment Loans- All installment debt that is not secured by a financial asset— including student loans, automobile loans, personal loans, and timeshares—must be considered part of the borrower’s recurring monthly debt obl
Slide 27: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Lease- Lease payments must be considered as recurring monthly debt obligations regardless of the number of months remaining on the lease. This is because the expiration of a lease agreement for rental housing or an automobi
Slide 28: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Child Support- When the borrower is required to pay child support under a divorce decree, separation agreement, or any other written legal agreement—and those payments must continue to be made for more than ten months—the p
Slide 29: Liabilities…cont
Liabilities…cont The total monthly obligation is the sum of the following: Student Loans- If a monthly student loan payment is provided on the credit report, the lender may use that amount for qualifying purposes. If the credit report does not reflect the correct monthly payment, the lender may use
Slide 30: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Business Debt- When a self-employed borrower claims that a monthly obligation that appears on his or her personal credit report (such as a Small Business Administration loan) is being paid by the borrower’s business, the le
Slide 31: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Federal Tax lien- When a borrower has entered into an installment agreement with the IRS to repay delinquent federal income taxes, the lender may include the monthly payment amount as part of the borrower’s monthly debt obl
Slide 32: Liabilities...cont
Liabilities...cont The total monthly obligation is the sum of the following: Other Properties Owned- When the borrower owns mortgaged real estate, the status of the property determines how the existing property's PITIA must be considered in qualifying for the new mortgage transaction. If the mortgag
Slide 33: Documenting Employment and Income
Documenting Employment and Income Break Out Income Type For Proper AUS Results Understanding Desktop Underwriter Advanced 32
Slide 34: Employment and Income
Employment and Income See temporary guidelines Paystub Reminders: – The borrower’s name and SSN# must be consistent with the application (spelling, middle initial or a JR or III) – Computer generated? – If paid hourly, the number of hours must be noted on the paystub – Dated within 30 days of applic
Slide 35: Employment and Income
Employment and Income See temporary guidelines Verbal Verifications – Verbal verifications of employment for employed borrowers are required to be completed within 10 business days of closing or, if lenders choose, a VVOE can be completed prior to loan delivery – Verbal verifications of employme
Slide 36: Employment and Income
Employment and Income See temporary guidelines Fannie Mae requires lenders to have each borrower whose income (regardless of income source) is used to qualify for the loan to complete and sign a separate IRS Form 4506-C at or before closing. The IRS Form 4506-C – IRS document used to retrieve past f
Slide 37: Employment and Income
Employment and Income Commission Income- A minimum history of 2 years of commission income is recommended; however, commission income that has been received for 12 to 24 months may be considered as acceptable income, as long as there are positive factors to reasonably offset the shorter income histo
Slide 38: Employment and Income
Employment and Income Fannie Mae Bonus and Overtime-A minimum history of two years of employment income is recommended. However, income that has been received for a shorter period of time may be considered as acceptable income, as long as the borrower’s employment profile demonstrates that there are
Slide 39: Employment and Income
Employment and Income Tip Income- may be used to qualify the borrower if the lender verifies that the borrower has received it for the last two years. Documentation-Obtain the following documents: A completed Request for Verification of Employment (Form 1005 or Form • 1005(S))*, or the borrower’s
Slide 40: Employment and Income
Employment and Income Automobile Allowance- to be considered as acceptable stable income, the borrower must have received payments for at least two years. The lender must add the full amount of the allowance to the borrower’s monthly income, and the full amount of the lease or financing expenditure
Slide 41: Employment and Income
Employment and Income See temporary guidelines Self Employment- The lender may verify a self-employed borrower’s employment and income by obtaining from the borrower copies of his or her signed federal income tax returns (both individual returns and in some cases, business returns) that were filed w
Slide 42: Employment and Income
Employment and Income See temporary guidelines Self Employment- When two years of signed individual federal tax returns are provided, the lender may waive the requirement for business tax returns if: the borrower is using his or her own personal funds to pay the down payment and closing costs and
Slide 43: Employment and Income
See temporary Employment and Income guidelines Self Employment, Analysis of the Borrower’s Personal Income- The lender must prepare a written evaluation of its analysis of a self-employed borrower’s personal income, including the business income or loss, reported on the borrower’s individual income
Slide 44: Employment and Income
See temporary Employment and Income guidelines Self Employment, Analysis of the Borrower’s Personal Income- When a borrower is relying upon self-employed income to qualify for a mortgage and the requirements that permit the lender to waive business tax returns are not met, the lender must prepare a
Slide 45: Employment and Income
Employment and Income See temporary guidelines • Use of LoanBeam for income 1084 workbook – Fannie Mae has approved the use of this tool and if lender uses it to calculate income and enter the monthly income amount in DU, Fannie Mae will provide representation and warranty enforcement relief* on the
Slide 46: Employment and Income
Employment and Income See temporary guidelines • Use of LoanBeam for income 1084 workbook – Lenders may receive enforcement relief when using a Fannie Mae-approved tool immediately. – The list of Approved Vendor Tools is available on Fannie Mae’s website Understanding Desktop Underwriter Advanced 45
Slide 47: Income and Employment
Income and Employment • General Underwriting Requirements – Lenders must review the “type” of income earned and entered in DU; income used for qualifying must be reasonably stable and likely to continue at the current levels. RED FLAG: Declining income – Bonus and Overtime must be annualized or not
Slide 48: Assets
Assets Do not enter gift funds in Section 2. Gifts are entered in Section 4. Understanding Desktop Underwriter Advanced
Slide 49: Assets
Assets Observation Section Lists Total Assets Entered By Type; Underwriting Analysis Report Lists Total Funds Required, Including Any Reserves Assets Entered By Type Total Funds Required Additional Reserves May Need To Be Verified If Paying Down Accounts, Paying Off Collections Or Judgments Or Tax L
Slide 50: Assets- Minimum Borrower Contribution
Assets- Minimum Borrower Contribution 1. If the borrower receives a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contributi
Slide 51: Assets
Assets Standard Depository Messages: – Number of months documentation Best Practices: – Do you have All of the pages? –Truncated account numbers allowed as long as the last four digits are displayed Understanding Desktop Underwriter Advanced 50
Slide 52: Assets
Assets See temporary guidelines Mutual Funds and Other Non-liquid Account Types: – Proof of liquidation Proof Of Liquidation – When used for the down payment or closing costs, if the value of the asset is at least 20% more than the amount of funds needed for the down payment and closing cost
Slide 53: Assets
Assets See temporary guidelines Stocks or Bond Account Messages: – Non-vested stock options and non-vested restricted stock are not acceptable sources of funds for the transaction Understanding Desktop Underwriter Advanced 52
Slide 54: Assets
Assets Sale of Personal Assets- The lender must document the following: • The borrower’s ownership of the asset for all asset types that are titled assets, for example automobile title. • The value of the asset, as determined by an independent and reputable source, if the proceeds represent more tha
Slide 55: Assets
Assets See temporary guidelines Retirement accounts (401k or IRA) – Accounts that allow for withdrawals only in connection with the borrower’s employment termination, retirement, or death, or the account does not allow for any type of withdrawal should not be entered Look For Indications That the Ac
Slide 56: Assets
Assets DU uses the number of financed properties to apply the following eligibility guidelines for casefiles when the borrower has multiple financed properties and the subject property is an investment or second home.: – A minimum credit score of 720 is required for borrowers with 7-10 financed prop
Slide 57: Assets
Assets Are all the assets per DU verified plus any additional that are needed to payoff a judgment or collection? Evidence of liquidation if needed? Additional reserves? Understanding Desktop Underwriter Advanced 56
Slide 58: Property Type and PITIA
Property Type and PITIA Is Property type entered correctly (condo, PUD, manufactured home) Are the HOA dues, flood insurance or MI payments included in the housing payment, if applicable? Do you have written support? Does the occupancy make sense? Borrower Section Lender Loan Info Understandin
Slide 59: Refinance
Refinance Paying off a second mortgage? Verify it was used to purchase the property or treat the loan as a cash out. Verify seasoning requirements for ownership and taking cash out. Is the property currently offered for sale or has it been offered for sale in the past six months? For refinan
Slide 60: Underwriting Analysis Report
Underwriting Analysis Report Page #2 Validate the Details Understanding Desktop Underwriter Advanced 59
Slide 61: Underwriting Analysis Report
Underwriting Analysis Report Amortization Type –Fixed or ARM? –ARM •Note Rate vs. Qualifying Rate Understanding Desktop Underwriter Advanced 60
Slide 62: Underwriting Analysis Report
Underwriting Analysis Report ARM Qualifying Rate https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting- Borrowers/Chapter-B3-6-Liability-Assessment/1736872401/B3-6-04-Qualifying-Payment-Requirements-04- 15-2014.htm Always Enter The Index And Margin On ARM
Slide 63: ARMS: LIBOR-SOFR Transition
ARMS: LIBOR-SOFR Transition https://www.fanniemae.com/content/news/libor-sofr-transition?utm_campaign=ssn- sell2019iss&utm_source=sfsfmc&utm_medium=email&utm_content=eml-noa-1120b-o-n&utm_term=b2b Understanding Desktop Underwriter Advanced 62
Slide 64: Property
Property Field reviews are no longer required for properties with values over $1,000,000 with LTV/CLTV over 75% Lenders required to choose the most reliable appraisal when two appraisals are obtained Waiver of project reviews for all detached condo units (excluding manufactured homes) and allo
Slide 65: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines 64
Slide 66: Genworth Rate Express
Genworth Rate Express® >» 4% & 800 444.5664 | 4 | Q : Genworth z=. | Mortgage Insurance GE MI MI & RATES ERWRITING & GUIDES | LOS & CONNECTIONS | GENWORTH TOOLKIT | TRAINING | OUR BLOG | ABOUT US Rate Express Rate Cards D-19 updates and resources Genworth Mortgage Insurance GenRATE MI Products About
Slide 67: Training Tools and Information
Training Tools and Information 66
Slide 68: Training Tools and Information
Training Tools and Information 67
Slide 69: Additional MI Site Information
Additional MI Site Information 68
Slide 70: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative 69
Slide 71: 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