Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (January 2020)
84 slides from Enact's investor presentation, January 2020
Slide 1: Best Practices In Loan Processing: Suggested Best Practices and Reminders
Best Practices In Loan Processing: Suggested Best Practices and Reminders January 2020 ©2020 Genworth Financial, Inc. All rights reserved.
Slide 2: Agenda
Agenda Objective for today is to provide basic file review before passing a file off to underwriting. – 1003 or URLA (Uniform Residential Loan Application) Review – Purchase and Sale Agreement Review – Liability and Credit Report Review – Income Review – Assets review – Credit review ® – AUS Loan Pr
Slide 3: New URLA
New URLA Use Of The New Uniform Residential Loan Application Is Required November 1, 2020 Best Practices In Loan Processing 2
Slide 4: URLA
URLA Review Entire URLA – Property address in USPS format – Is property a manufactured home? Do you do manufactured homes? Possible it is modular? Verify – Occupancy, does it make sense? • Other REO? Where do they work? – Ask the source of down payment? List on cover letter or notes to file – Comple
Slide 5: 1003 Declarations and signatures
1003 Declarations and signatures – Permanent resident alien or Non- Permanent resident alien marked? • Proper documentation in file? – Note: The New URLA citizenship is found on the first page under personal information – Question a - make sure this section is correct. If a refi, clearly there has b
Slide 6: Purchase Agreement
Purchase Agreement Carefully Review Purchase Agreement for: – Sales Price, verify correct in LOS/ Feedback Results – Stay on top of the loan commit date and estimated closing date! Prioritize. Best Practices In Loan Processing 5
Slide 7: Purchase Agreement
Purchase Agreement Carefully Review Purchase Agreement for: – All pages, exhibits, attachment addendums and signed by all parties – Look for anything “to be repaired” – Condition issues that affect safety, soundness and habitability – Any HOA or condo dues listed in agreement? Include in housing rat
Slide 8: Purchase Agreement
Purchase Agreement Earnest Money and the Purchase Agreement: – Earnest money, does it match the LE? Was it drawn from an account listed on the 1003? – Did the borrower explain it was a gift? If so, gift documentation applies. – Does the check amount match the contract amount? – Has the earnest money
Slide 9: Liabilities
Liabilities Best Practices for Review Best Practices In Loan Processing 8
Slide 10: Documentation Matrix – Freddie Mac
Documentation Matrix – Freddie Mac – Documentation Matrix- December 2019 – Assists with processing and documenting loan files – Be mindful of Product Overlays https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf Best Practices In Loan Processing 9
Slide 11: Liabilities and the Credit Report
Liabilities and the Credit Report • Best Practices: – Review the 1003 section, don’t assume it was completed properly – Review credit report, ensure all liabilities populated correctly (i.e. leases, mortgages) – Any judgements or tax liens – Review pay stubs for additional debt (undisclosed debt) –
Slide 12: Debts Included in the DTI - Freddie Mac
Debts Included in the DTI - Freddie Mac Page 27 doc matrix Did You Verify Taxes, Insurance And HOA For Properties Owned? Even For Properties Owned Free And Clear, They Should Be Included Best Practices In Loan Processing 11
Slide 13: Freddie Mac and Student Loans
Freddie Mac and Student Loans https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf Best Practices In Loan Processing 12
Slide 14: Debts Included in the DTI – Fannie Mae
Debts Included in the DTI – Fannie Mae The total monthly obligation is the sum of the following: – Monthly housing expense (PITIA) – Monthly payments on installment debts and other mortgage debts that extend beyond ten months (including deferred installment loans); – Monthly payments on revolving de
Slide 15: Debts Included in the DTI – Fannie Mae
Debts Included in the DTI – Fannie Mae The total monthly obligation….cont. (B3-6-05) – 30 Day charge accounts - monthly balance will not be calculated in the DTI, but included as reserves in the “required funds to be verified” – Do not omit or mark paid by close • Verify MOP is “O” on credit report
Slide 16: Fannie Mae Student Loan Policy
Fannie Mae Student Loan Policy Student Loans – Is it Deferred or in Repayment? B3-6-05 Best Practices In Loan Processing 15
Slide 17: Employment and Income
Employment and Income Best Practices for Review Best Practices In Loan Processing 16
Slide 18: Documenting Employment and Income
Documenting Employment and Income Two Year History is Required on the URLA for All Applicants Freddie Mac Documentation Matrix Borrowers Who Experienced Recent Employment Gaps (e.g. 30 Days), A Letter Of Explanation Is Not Required, But The Seller Remains Responsible For Establishing The Employment
Slide 19: Documenting Employment and Income
Documenting Employment and Income Do Not Lump Income Types Together Break Out Income Type For Proper AUS Results Best Practices In Loan Processing 18
Slide 20: Pay Stubs
Pay Stubs 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 application; if stale dated, obtain a more recent
Slide 21: Review Pay Stub W-2 Any Problems?
Review Pay Stub W-2 Any Problems? Best Practices In Loan Processing 20
Slide 22: Any Problem With This Paystub?
Any Problem With This Paystub? Julie Jewell 999-44-4545 Best Practices In Loan Processing 21
Slide 23: Examining W-2s
Examining W-2s W-2 Review Reminders: – Name and SSN# must match the application and also the pay stub – Applicant’s address should also match the 1003 and bank statement mailing address – W-2s should be the most recent one or two (if required) – read the feedback – Is the yearly income /12 consisten
Slide 24: Review the W-2 - Any Problems Here?
Review the W-2 - Any Problems Here? Best Practices In Loan Processing 23
Slide 25: Written Verification of Employment
Written Verification of Employment Review the VOE When It Comes Back In: – Forms should be signed, dated with signature and printed name of employer – If faxed, note the origin of the faxed document - Is it coming from the employer? – Income consistent with application? – Is bonus or overtime likely
Slide 26: Best Practices In Loan Processing
Best Practices In Loan Processing 25
Slide 27: Freddie Mac Long Term Rental Income
Freddie Mac Long Term Rental Income One-year management history or ownership of a primary home income (Section 5306.19c)(ii) March 1, 2019 – The borrower must own a Primary Residence to use rental income to qualify when purchasing a new rental property; and – Whether purchasing a new rental property
Slide 28: Freddie Mac Rental Income Matrix
Freddie Mac Rental Income Matrix Updated December 2019 – Tool to assist in determining requirements for documenting and using rental income from subject or other property the borrower may own – Genworth also has calculating rental income webinar specific to calculating rental income https://sf.fredd
Slide 29: Fannie Mae Selling Announcement SEL
Fannie Mae Selling Announcement SEL 2019-08 – Effective for all DU casefiles submitted on or after the weekend of December 7 and for manually underwritten loans with application dates on or after December 7, 2019. Best Practices In Loan Processing 28
Slide 30: Selling Guide October
Selling Guide October Best Practices In Loan Processing 29
Slide 31: Fannie Mae Seller Guide
Fannie Mae Seller Guide General Guidelines and Rental Income Forms* – Borrowers that have a history of renting the subject or another property, typically income is reported on IRS Form 1040 Schedule E – Properties owned by businesses, such as an LLC or S Corp or Partnership, rental income is found o
Slide 32: Fannie Mae 2106 Policy Updated
Fannie Mae 2106 Policy Updated Effective December 2018 – All commission income will be treated the same – Individual returns or tax transcripts will not be required (unless borrower files a schedule C then tax returns will be required) – Updated the policy regarding commission income and unreimburse
Slide 33: Freddie Mac 2106 Policy
Freddie Mac 2106 Policy Commission Income – Effective February 2019 Best Practices In Loan Processing 32
Slide 34: Assets and Reserves
Assets and Reserves Asset Documentation Reminders and Best Practices Best Practices In Loan Processing 33
Slide 35: Asset Documentation
Asset Documentation Review the URLA – Review total assets listed on URLA with total funds to be verified on AUS – Do you have enough funds verified? – If not, contact borrower for source of additional funds. Where will they come from…gift? Best Practices In Loan Processing 34
Slide 36: Assets and Reserves
Assets and Reserves If reserves are required, document that the borrower has sufficient reserves from acceptable sources. – Reserves are dependent on: • Risk of the loan file and how many properties the borrower owns • Property and occupancy type • Product and underwriting type Always verify your ap
Slide 37: Large Deposits and Recently Opened Accounts
Large Deposits and Recently Opened Accounts The lender must investigate any indication of borrowed funds. These must be identified differently, based upon how the asset account was verified… – A large deposit and any single deposit that is 50% or more of the total income being used to qualify – If u
Slide 38: Guidance on Large Deposits
Guidance on Large Deposits Fannie Mae Selling Guide Chapter B3-4.2-02 Depository Accounts (12/06/2016) Best Practices In Loan Processing 37
Slide 39: Additional Guidance on Large Deposits
Additional Guidance on Large Deposits Fannie Mae Selling Guide Chapter B3-4.2-02 Depository Accounts (12/06/2016) Best Practices In Loan Processing 38
Slide 40: Large Deposits & Recently Opened Accounts
Large Deposits & Recently Opened Accounts Freddie Max Documentation Matrix December 2019 Page 20 Best Practices In Loan Processing 39
Slide 41: Asset Documentation Review
Asset Documentation Review When Reviewing Bank Statements, Look for the Following: – The bank statement: is the borrower’s name, account #, and address consistent with 1003? – Verify statement includes an account number (it can be truncated to four digits) – Did the applicant provide the most recent
Slide 42: Review the VOD
Review the VOD If Using a VOD, Review….. – Who completed it; Name, Title, Date…can you read it? – Current balance vs. average balance? Large increase? Did you check? • If large increases, that large increase must be addressed or sourced – The date the account was opened: • If opened in the last 90 d
Slide 43: VOD Review
VOD Review SAMPLE Best Practices In Loan Processing 42
Slide 44: Asset and Reserves - Best Practices
Asset and Reserves - Best Practices Some Reminders: – A bank generated print out can be acceptable, but it must be signed and stamped by the institution/teller and meet Fannie Mae or Freddie Mac criteria – Enter each asset separately, according to account type – Verify you have all pages of the asse
Slide 45: Important Updates About Reserves
Important Updates About Reserves Effective for Loans Submitted and Resubmitted On or After November 12, 2017 – Loan Product Advisor will determine reserves for additional properties owned and obligated on when subject is a second home or investment property – Data accuracy is critical – Enter all el
Slide 46: Multiple Financed Property Reserve Policy
Multiple Financed Property Reserve Policy Best Practices In Loan Processing 45
Slide 47: Fannie Mae Reserve Requirements
Borrowers with Multiple Financed Properties – Fannie Mae Reserve Requirements DU determines the reserves required for the other residential financed properties (excluding the borrower’s principal residence and the subject property). The reserve amount is determined by applying a specific percentage
Slide 48: AUS Findings and Feedback Review
AUS Findings and Feedback Review Best Practices for Review, 1008/1003/DU/LPA Messages Best Practices In Loan Processing 47
Slide 49: Loan Product Advisor Feedback Certificate
Loan Product Advisor Feedback Certificate • Review: – Recommendation – Eligibility – Most recent submission – Documentation level • Standard • Streamlined – Appraisal requirement – Read ALL messages on the Feedback results Review The Feedback Certificate Best Practices In Loan Processing 48
Slide 50: Loan Product Advisor Feedback Certificate
Loan Product Advisor Feedback Certificate • Review: – Verify with 1008, does it match Best Practices In Loan Processing 49
Slide 51: Income/Employment Messages
Income/Employment Messages • Documentation “Level” determines the documentation required – Note: Many messages say “if”, so they apply only “if”…. Best Practices In Loan Processing 50
Slide 52: Loan Product Advisor Feedback Certificate
Loan Product Advisor Feedback Certificate • Verify and review: – Read ALL messages on the Feedback results – Do you have the supporting document? – Did you look at the supporting document? – Document to the results (i.e. one year W-2 required, verify only one is included in the submission package to
Slide 53: The Checklist
The Checklist Best Practices In Loan Processing 52
Slide 54: Easy To Read Funds To Verify
Easy To Read Funds To Verify Best Practices In Loan Processing 53
Slide 55: Additional Funds To Be Verified
Additional Funds To Be Verified Best Practices In Loan Processing 54
Slide 56: Desktop Underwriter Findings
Desktop Underwriter Findings Best Practices for Review Best Practices In Loan Processing 55
Slide 57: DU Findings Report
DU Findings Report Risk/Eligibility – Why NOT eligible – How underwritten (specific product/program) – Potential inaccuracies Potential Red Flag Messages: – Social Security alerts – Valuation concerns Best Practices In Loan Processing 56
Slide 58: Sample DU Findings Report
Sample DU Findings Report MI Message Verify Premium Amount Included in DTI For DU or Loan Product Advisor for that matter –Genworth Rate Quote in file to support MI premium used? Best Practices In Loan Processing 57
Slide 59: DU Findings Report
DU Findings Report Verification Messages Broken Out By Topic: –Credit and Liabilities • Bankruptcy, foreclosures, charge offs, omitted accounts-do you have proper documentation • What accounts were indicated as “to be paid off” • Mortgage that need additional attention Best Practices In Loan Process
Slide 60: DU Findings Report
DU Findings Report Read Funds Section and Verify No Additional Funds are Needed – Submit only statements that needed for the transaction; It takes time for underwriters to review documents that are not needed. Best Practices In Loan Processing 59
Slide 61: Fannie Mae Website
Fannie Mae Website https://www.fanniemae.com/singlefamily/originating-underwriting Best Practices In Loan Processing 60
Slide 62: Fannie Mae Website
Fannie Mae Website https://www.fanniemae.com/singlefamily/originating-underwriting-training Best Practices In Loan Processing 61
Slide 63: Fannie Mae Top Trending Questions
Fannie Mae Top Trending Questions https://www.fanniemae.com/content/faq/trending-questions-lenders-faqs Avoiding Best Practices CommonIn Loan Underwriting Processing Errors 62
Slide 64: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines mi.genworth.com Best Practices In Loan Processing 63
Slide 65: Genworth MI Top Decision Errors
Genworth MI Top Decision Errors https://new.mi.genworth.com/underwriting-tips-and-credit-policy Best Practices In Loan Processing 64
Slide 66: Best Practices In Loan Processing
Best Practices In Loan Processing 65
Slide 67: Best Practices In Loan Processing
Best Practices In Loan Processing 66
Slide 68: Genworth MI Decision Tips Updated Every Quarter
Genworth MI Decision Tips Updated Every Quarter Best Practices In Loan Processing 67
Slide 69: Contract Underwriting Submission Tips
Contract Underwriting Submission Tips https://new-content.mortgageinsurance.genworth.com/documents/contract-svcs/12930753.CSTips.Q418.pdf Best Practices In Loan Processing 68
Slide 70: Contract Underwriting Submission Tips
Contract Underwriting Submission Tips Best Practices In Loan Processing 69
Slide 71: Contract Underwriting Submission Tips
Contract Underwriting Submission Tips Best Practices In Loan Processing 70
Slide 72: Contract Underwriting Submission Tips
Contract Underwriting Submission Tips Best Practices In Loan Processing 71
Slide 73: https://sf.freddiemac.com/
https://sf.freddiemac.com/ Best Practices In Loan Processing 72
Slide 74: Best Practices In Loan Processing
Best Practices In Loan Processing 73
Slide 75: Freddie Mac LPA resources
file:///C:/Users/213029011/Downloads/lpa_resources%20(2).pdf Best Practices In Loan Processing 74
Slide 76: Documentation and Rental Income Matrix
Documentation and Rental Income Matrix – Documentation Matrix Updated December 2019 – Rental Income Matrix Updated December 2019 – Assists with processing and documenting loan files – Be mindful of Product Overlays Best Practices In Loan Processing 75
Slide 77: Genworth Rate Express
Genworth Rate Express® mi.genworth.com Best Practices In Loan Processing 76
Slide 78: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines mi.genworth.com Best Practices In Loan Processing 77
Slide 79: LOS Connections
LOS Connections mi.genworth.com Best Practices In Loan Processing 78
Slide 80: Training Tools and Information
Training Tools and Information mi.genworth.com Best Practices In Loan Processing 79
Slide 81: Training Tools and Information
Training Tools and Information Best Practices In Loan Processing 80
Slide 82: Additional MI Site Information
Additional MI Site Information Best Practices In Loan Processing 81
Slide 83: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Best Practices In Loan Processing 82
Slide 84: 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
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