Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (June 2019)
86 slides from Enact's investor presentation, June 2019
Slide 1: Loan Product Advisor Part I, The Basics
Loan Product Advisor® Part I, The Basics June 2019 Genworth Mortgage Insurance Corporation ©2019 Genworth Financial, Inc. All rights reserved.
Slide 2: Agenda
Agenda Loan Product Advisor® – What is Loan Product Advisor – What is Risk – Reviewing the Feedback Certificate – Data Integrity Reminders – Resources – Genworth Today’s Session Covers Conventional Loans Only Loan Product Advisor 2
Slide 3: FreddieMac.com
FreddieMac.com Loan Product Advisor 3
Slide 4: What is Loan Product Advisor?
What is Loan Product Advisor? – Loan Product Advisor is Freddie Mac’s automated underwriting system – It gives users access to Freddie Mac’s credit requirements, allowing you to easily identify the overall underwriting risk – It replaces Loan Prospector® http://www.freddiemac.com/singlefamily/pdf/Lo
Slide 5: Loan Product Advisor is Part of the Loan Advisor Suite
Loan Product Advisor is Part of the Loan Advisor Suite Loan Product Advisor 5
Slide 6: What is Risk?
What is Risk? Risk analysis is the backbone of mortgage lending: – The lender is deciding whether to give a sizeable loan to the applicant – The lender will make an informed decision based on the risk in the loan – By looking at how loans have performed in the past, lenders are able to identify
Slide 7: What Risk Factors is Loan Product Advisor Looking at?
What Risk Factors is Loan Product Advisor Looking at? Loan Product Advisor 7
Slide 8: Credit Reputation
Credit Reputation Credit Score Freddie Mac’s Loan Product AdvisorSM (LPA) A tri-merge Credit Report or 3 In-File Reports are required FICO scores must be requested for each borrower Identifying the Underwriting Score is achieved by; – If the borrower has two scores select the low
Slide 9: Credit Reputation
Credit Reputation Credit Score For an Accept Mortgage and an A-minus Mortgage, Loan Product Advisor has determined that the Borrower's credit reputation is acceptable – In all other Mortgages, the Seller must thoroughly evaluate the Borrower's credit reputation in accordance with the require
Slide 10: Credit Reputation
Credit Reputation Foreclosures, bankruptcies, liens and/or judgements Loan Product Advisor 10
Slide 11: Credit Reputation
Credit Reputation Mortgage delinquencies Loan Product Advisor 11
Slide 12: Credit Reputation
Credit Reputation Credit delinquencies, repossessions, collections, or charge-offs Loan Product Advisor 12
Slide 13: Credit Reputation
Credit Reputation Credit accounts: type, age, limits, usage and status of revolving accounts Loan Product Advisor 13
Slide 14: Credit Reputation
Credit Reputation Borrower’s request for new credit in last 12 months Inquires – Inquires may indicate the borrower has additional debt. • When the credit report indicates that a creditor has made an inquiry within the previous 90-day period, the Seller must determine whether additional cred
Slide 15: Credit Reputation
Credit Reputation Authorized User Accounts – The Lender must disregard the FICO scores based on significant inaccuracies which include tradelines for accounts in which the borrower is not the primary account holder, but is listed as the authorized user. The lender does not have to disregard the FICO
Slide 16: Capacity
Capacity Debt ratios: Qualifying monthly housing expense–to-income ratio • The percent of the borrower’s gross monthly income that will go towards paying housing debt and the borrower’s established long term consumer debt and certain other debt obligations. – The lower the ratio, the lower the r
Slide 17: Capacity
Capacity Salaried versus self-employed borrower Loan Product Advisor 17
Slide 18: Capacity
Capacity Cash reserves Liquid Reserves = The liquid assets remaining after the loan closes – To calculate reserves you typically divide the remaining liquid assets by the proposed PITIA of the subject property • Based on the use of the subject property, additional reserves may be required on
Slide 19: Capacity
Capacity Number of Borrowers Co-borrower’s are considered in the evaluation of a mortgage loan application. – Generally, the presence of more than one borrower with good traditional credit helps to reduce risk – Research has shown that mortgages that have more than one borrower, tend to have
Slide 20: Capacity
Capacity Loan Characteristics: – Product: a 15, 20 and 30-year fixed rate, an adjustable rate – Purpose of Loan: purchase or refinance (cash-out or no cash out) Why the money is being borrowed can influence the risk – Purchase – Refinance • No cash-out/limited cash-out/rate and term • Cash-o
Slide 21: Collateral
Collateral Borrower’s total equity or down payment – The relationship between: • The amount of money borrowed= Loan Amount • The lesser of the Sales Price or Appraised Value of the property • Refinance the LTV is calculated off the Appraised Value – Example: • Mortgage: $100,000 • Appraised valu
Slide 22: Collateral
Collateral Property Type: a 1-unit or 2 to 4 unit detached property, Condominium Unit or Manufactured Home The number of units and property type can influence loan risk: – One-unit properties, not in a co-op nor attached condos, are the benchmark – Two- Three- and Four- unit properties signi
Slide 23: Collateral
Collateral Property Use: Primary Residence, Second Home or Investment use Loan Product Advisor 23
Slide 24: Loan Product Advisor Response File
Loan Product Advisor Loan Product Advisor Returns a “Response File”: – Documentation Checklist: Used to help you process/document your file – Credit report: Loan Product Advisor allows for several options for credit reports. In-file credit reports or Tri-Merged credit reports (If you opted to or
Slide 25: Loan Product Advisor: The Process Continued
Loan Product Advisor...The Process Continued – For validation, you may use in-file credit reports pulled either inside or outside Loan Product Advisor. (In-file credit reports are the default in Loan Product Advisor) Three must be requested for each borrower. – You may select to order a tri-merged c
Slide 26: Feedback Certificate
Loan Product Advisor Feedback Certificate Loan Product Advisor 26
Slide 27: Freddie Mac Purchase Eligibility
Freddie Mac Purchase Eligibility • Review the Feedback Certificate for Purchase Eligibility Messages – Freddie Mac Eligible – Freddie Mac Ineligible (Not eligible for sale to Freddie Mac/Investor) – Freddie Mac 500 A-minus Offering Many Lenders Do NOT Allow For A-Minus Loans To Be Delivered Or Insur
Slide 28: Feedback Certificate- Risk Class
Feedback Certificate- “Risk Class” Risk Classes for: •Conventional / Conforming Loans – ACCEPT – CAUTION Loan Product Advisor 28
Slide 29: Feedback Certificate-Loan Data
Feedback Certificate-Loan Data Loan Data Fields – Borrower name – Appraisal Identifier, AUS Key #, Application # – Property Address and Mortgage Type Documentation Levels for Conventional Conforming Loans – Streamlined Accept (Generally the Rule of One…). – Standard (Generally the Rule of Two) But I
Slide 30: Feedback Certificate-Results
Feedback Certificate-Results Appraisal Type http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 30
Slide 31: Feedback Certificate- Credit Report Information
Feedback Certificate- Credit Report Information http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 31
Slide 32: Feedback Certificate- Mortgage Information
Feedback Certificate- Mortgage Information http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 32
Slide 33: Feedback Certificate- Mortgage Information
Feedback Certificate- Mortgage Information http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 33
Slide 34: Feedback Certificate- Mortgage Information
Feedback Certificate- Mortgage Information http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 34
Slide 35: Required ARM Detail
Required ARM Detail Loan Product Advisor 35
Slide 36: Feedback Certificate- Asset Information
Feedback Certificate- Asset Information http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 36
Slide 37: Feedback Certificate- Calculated Values
Feedback Certificate- Calculated Values http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 37
Slide 38: Feedback Certificate- Borrower Information
Feedback Certificate- Borrower Information Validate Liabilities From Your LOS To Loan Product Advisor; Do Ratios Match? What Liabilities Must Be Included? http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 38
Slide 39: Feedback Certificate- Transaction Information
Feedback Certificate- Transaction Information http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 39
Slide 40: Feedback Certificate- Feedback Summary
Feedback Certificate- Feedback Summary http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html Loan Product Advisor 40
Slide 41: Feedback Certificate- Employment & Income
Feedback Certificate- Employment & Income Documentation “Level” determines the documentation required • – Note: Many messages say “if”, so they apply only “if”…. Loan Product Advisor 41
Slide 42: Feedback Certificate- Asset Information
Feedback Certificate- Asset Information Loan Product Advisor 42
Slide 43: Feedback Certificate- Asset Information Reserves
Feedback Certificate- Asset Information Reserves • Read All Messages Loan Product Advisor 43
Slide 44: Feedback Certificate- Asset Information Reserves
Feedback Certificate- Asset Information Reserves • Read All Messages Loan Product Advisor 44
Slide 45: Feedback Certificate- Credit and Liabilities
Feedback Certificate- Credit and Liabilities Read!! Guidance when no payment is listed or liability is not on the credit report; option to verify funds to pay off open ended accounts; Loan Product Advisor 45
Slide 46: Feedback Certificate- Property and Appraisal
Feedback Certificate- Property and Appraisal Loan Product Advisor 46
Slide 47: Feedback Certificate- General Messages
Feedback Certificate- General Messages Loan Product Advisor 47
Slide 48: Feedback Certificate- General Messages
Feedback Certificate- General Messages Loan Product Advisor 48
Slide 49: The Checklist - Use It!!
The Checklist - Use It!! Loan Product Advisor 49
Slide 50: Property Eligibility Requirements
Property Eligibility Requirements Page 30 and 31 of matrix http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf Loan Product Advisor 50
Slide 51: Common Errors
Common Errors Double Check Your Data – Address information wrong – Property Type entered incorrectly (condo, but entered as single family) – HOA, Condo or PUD dues not included in DTI – Liabilities omitted without supporting documentation – Inquires not cleared as either a new account opened or
Slide 52: Always Remember
Always Remember A Few Reminders: – Use FULL vested value of the borrower’s 401k, IRA, KEOGH, 403b or other IRS qualified plan as reserves IF borrower has access to the funds currently without restriction; Ensure loans taken are subtracted from the value of the asset account and that applicant is
Slide 53: Always Remember
Always Remember A Few Reminders: – If a revolving debt, open-ended accounts or deferred non-student loan do not show a payment on the credit report, you are required to use 5% of the balance, or obtain a copy of a statement evidencing lower payment. – For open-ended debt (AmEx O type accounts),
Slide 54: FAQ's
FAQ’s http://www.freddiemac.com/loanadvisorsuite/faq/loanproductadvisor.html Loan Product Advisor 54
Slide 55: Loan Product Advisor Functionality Guide
Loan Product Advisor Functionality Guide – Updated June 2019 – Assists with data entry – Error messages – Correcting errors – Assigning a loan https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/fun_guide.pdf Loan Product Advisor 55
Slide 56: Freddie Mac Seller/Servicer Guide
Freddie Mac Seller/Servicer Guide Loan Product Advisor 56
Slide 57: Resources & Learning
Resources & Learning Loan Product Advisor 57
Slide 58: Freddie Mac Training Resources
Freddie Mac Training Resources https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/lpa_resources.pdf Loan Product Advisor 58
Slide 59: Borrower's Without Credit Scores
Borrower’s Without Credit Scores https://sf.freddiemac.com/content/_assets/resources/pdf/requirements/mtges4borr_nocreditscores.pdf Loan Product Advisor 59
Slide 60: Selection and Use of Credit Scores
Selection and Use of Credit Scores https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/credit_scores.pdf Loan Product Advisor 60
Slide 61: Feedback Message Cause and Resolution
Feedback Message Cause and Resolution https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/lpfm_cr.pdf Loan Product Advisor 61
Slide 62: Determination of Reserve Requirements
Determination of Reserve Requirements https://sf.freddiemac.com/content/_assets/resources/pdf/requirements/reserves.pdf Loan Product Advisor 62
Slide 63: Determination of Total Funds to Be Verified
Determination of Total Funds to Be Verified https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/cashtoclose.pdf Loan Product Advisor 63
Slide 64: Determination of Total Monthly Debt
Determination of Total Monthly Debt https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/conv_lp_liabilities.pdf Loan Product Advisor 64
Slide 65: Loan Product Advisor Documentation Matrix
Loan Product Advisor Documentation Matrix Tool to help document files http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf Loan Product Advisor 65
Slide 66: Freddie Mac Rental Income Matrix
Freddie Mac Rental Income Matrix Tool to help document files http://www.freddiemac.com/learn/pdfs/uw/rental.pdf Loan Product Advisor 66
Slide 67: Automated Income Assessment
Automated Income Assessment http://www.freddiemac.com/learn/pdfs/uw/auto_inc_assess_employer.pdf Loan Product Advisor 67
Slide 68: Automated Asset Assessment
Automated Asset Assessment http://www.freddiemac.com/learn/pdfs/uw/auto_asset_assess.pdf Loan Product Advisor 68
Slide 69: AIM for Self Employment
AIM for Self Employment http://www.freddiemac.com/learn/pdfs/uw/auto_assess_tax_return_data.pdf Loan Product Advisor 69
Slide 70: How AIM for Self-Employed Works
Freddie Mac Single-Family Business How AIM for Self-Employed Works 0@e00 Loan Product Advisor and the LoanBeam® technology work together to make your job easier and provide immediate income rep and warranty relief. It's the only AUS-integrated self-employed income assessment solution in the industry
Slide 71: Frequently Asked Questions
Freddie Mac Single-Family Business 0@e00 Frequently Asked Questions What is AIM? What is AIM for self-employed? How does the LoanBeam solution work? What LOS vendors currently support LoanBeam? Does AIM for self-employed provide income representation and warranty relief? How do | know if a loan is e
Slide 72: Collateral Representation and Warranty Relief
Collateral Representation and Warranty Relief https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/crwr_prod.pdf Loan Product Advisor 72
Slide 73: Automated Collateral Evaluation (ACE)
Automated Collateral Evaluation (ACE) – Must receive “feedback message transaction is eligible for appraisal waiver” and be “Accept/Eligible” for LPA – Transaction must be: – 1 unit primary or second home including condos – LTV/TLTV 80% or less – No cash-out refinance – Feedback must indicate eligib
Slide 74: Automated Collateral Evaluation
Automated Collateral Evaluation https://sf.freddiemac.com/content/_assets/resources/pdf/requirements/ace.pdf Loan Product Advisor 74
Slide 75: Loan Collateral Advisor
Loan Collateral Advisor® Loan Product Advisor 75
Slide 76: Loan Collateral Advisor: Simplified Risk Scoring System
Loan Collateral Advisor® Simplified Risk Scoring System – Scale of 1-5 provided in .5 increments, with one representing the lowest valuation risk score. This score is found in Loan Collateral Advisor and does not print on the feedback certificate – Eligible Mortgages with LTV/TLTV/HTLTV ratios <
Slide 77: HVE Point Value Estimate
HVE Point Value Estimate http://www.freddiemac.com/hve/hve.html Loan Product Advisor 77
Slide 78: HVE FAQ's
HVE FAQ’s http://www.freddiemac.com/hve/faq.html Loan Product Advisor 78
Slide 79: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Loan Product Advisor
Slide 80: Genworth Rate Express
Genworth Rate Express® Loan Product Advisor
Slide 81: LOS Connections
LOS Connections Loan Product Advisor
Slide 82: Training Tools and Information
Training Tools and Information Loan Product Advisor
Slide 83: Training Tools and Information
Training Tools and Information Loan Product Advisor 83
Slide 84: Additional MI Site Information
Additional MI Site Information Loan Product Advisor
Slide 85: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative Loan Product Advisor
Slide 86: 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