Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (September 2019)
37 slides from Enact's investor presentation, September 2019
Slide 1: Understanding Adjustable Rate Mortgages
Understanding Adjustable Rate Mortgages September 2019 ©2019 Genworth Financial, Inc. All rights reserved.
Slide 2: ARM Characteristics
ARM Characteristics Adjustable Rate Mortgages, or ARM’s, have an interest rate that • increases or decreases over the life of the loan, based upon the interest rate environment. • Characteristics of an ARM include: • A starting interest rate that is generally lower than the rate offered on a fixed r
Slide 3: ARM Components
ARM Components Index Changes in the interest rate are governed by a financial index. The lender chooses an index for each ARM product that is out of their influence. Common indexes include: Treasury Securities, Costs of Funds or the LIBOR index. Margin This is a predetermined amount that is added to
Slide 4: ARM Features
ARM Features Conversion Clause – A provision in some ARM’s that allows the consumer to change the ARM to a fixed-rate loan at some point during the term. Conversion is usually allowed at the end of the first adjustment period. At the time of the conversion, the new fixed rate is generally set at one
Slide 5: ARM Indexes
ARM Indexes • One-Year Treasury Index – H15 – Federal Reserve The One Year Treasury Bill is one of the primary borrowing or debt instruments of the Treasury Department • of the United States. This Bill is used for short term borrowing or financing by the Treasury Department for the United States Gov
Slide 6: ARM Indexes
ARM Indexes https://www.fanniemae.com/content/announcement/ll1905.pdf Adjustable Rate Mortgages 5
Slide 7: ARM Indexes
ARM Indexes • COFI – Cost of Funds Index The Eleventh District Cost of Funds is the most prevalent index in the Western U.S. The COFI • index, which is a weighted monthly average, has been published since 1981 by the San Francisco Federal Home Bank (The Eleventh District). The funds used for the cal
Slide 8: ARM Indexes
ARM Indexes Adjustable Rate Mortgages
Slide 9: Fannie Mae’s Standard ARM Plan Matrix
Fannie Mae’s Standard ARM Plan Matrix https://www.fanniemae.com/content/eligibility_information/arm-matrix.pdf Adjustable Rate Mortgages
Slide 10: ARM Indexes
ARM Indexes • 1 Year MTA This index is an average of the monthly one-year treasury adjusted to constant maturity for the • past 12 months. Yields on Treasury Securities at constant maturity are determined by the U.S. Treasury from the daily yield curve, which is based on the closing market-bid yield
Slide 11: ARM Indexes
ARM Indexes http://www.armindexes.com/ Adjustable Rate Mortgages 10 10
Slide 12: The Adjustment Period
The Adjustment Period Depending on the type of ARM loan, the interest rate and monthly payment will change based on the type. The period between rate changes is called the adjustment period. – A 1-Year ARM that adjusts every year – A 3/3 ARM in which the initial interest rate lasts for three years a
Slide 13: Hybrid ARMs
Hybrid ARMs A Hybrid ARM – This loan is a hybrid of a fixed-rate period and an adjustable-rate period – The interest rate is fixed for a short-term period, then the rate may adjust annually – A 3/1 ARM will have a 3-year fixed rate period, after that may adjust annually for the remaining term – A 3/
Slide 14: ARM Caps
ARM Caps Adjustable-rate mortgages (ARM’s) typically include several kinds of caps that control how your interest rate can adjust. There are three kinds of caps: – Initial adjustment cap: This cap says how much the interest rate can increase the first time it adjusts, after the fixed-rate period exp
Slide 15: ARM Caps
ARM Caps Adjustable-rate mortgages (ARM’s) typically include several kinds of caps that control how your interest rate can adjust. An ARM may have different cap structures. A 10/1 ARM has a 10-year fixed rate period, after that may adjust annually for the remaining term and different lenders may off
Slide 16: Example Of A 10/1 ARM With 2/6 Caps
Example Of A 10/1 ARM With 2/6 Caps • Index 1 Year MTA : 1.375% • Annual Adjustment Cap: 2.00% • Discount: 1.00% • Lifetime Adjustment Cap 6.00% • Margin: 2.75% *11th year Index: 2.25% • A. Calculate the Fully Indexed Rate: • • Index 1.375 • +Margin 2.75 Fully Indexed Rate 4.125% • B. Calculate the
Slide 17: Example Of A 10/1 ARM With 2/6 Caps
Example Of A 10/1 ARM With 2/6 Caps • Index 1 Year MTA : 1.375% • Annual Adjustment Cap: 2.00% • Discount: 1.00% • Lifetime Adjustment Cap 6.00% • Margin: 2.75% *11th year Index: 2.25% • • C. Calculate Maximum 11th Year Rate: • • Starter Rate 3.125% • +Annual Adj. Cap 2.00% • Max 1st Year Rate 5.125
Slide 18: Example Of A 10/1 ARM With 5/2/6 Caps
Example Of A 10/1 ARM With 5/2/6 Caps Index: .750% Annual Adjustment Cap: 2.000% Discount: 1.00% Initial Adjustment Cap: 5.000% Lifetime Adjustment Cap: 6.000% Margin: 2.750% 11th year Index: 2.25% • A. Calculate the Fully Indexed Rate: • • Index 1.375 • +Margin 2.75 Fully Indexed Rate 4.125% • B. C
Slide 19: Example Of A 10/1 ARM With 5/2/6 Caps
Example Of A 10/1 ARM With 5/2/6 Caps Index: .750% Annual Adjustment Cap: 2.000% Discount: 1.00% Initial Adjustment Cap: 5.000% Lifetime Adjustment Cap: 6.000% Margin: • 2.750% 11th year Index: 2.25% • •C. Calculate Maximum 11th Year Rate: • Starter Rate 3.125% • +Annual Adj. Cap 5.00% • Max 1st Yea
Slide 20: ARM Loan Estimate (LE)
ARM Loan Estimate (LE) Adjustable Rate Mortgages 19 19
Slide 21: ARM Disclosure
ARM Disclosure Adjustable Rate Mortgages 20
Slide 22: CFPB Disclosures
CFPB Disclosures https://files.consumerfinance.gov/f/201401_cfpb_booklet_charm.pdf Adjustable Rate Mortgages 21
Slide 23: Agency Guidelines
Agency Guidelines For Adjustable Rate Mortgages Adjustable Rate Mortgages 22
Slide 24: Fannie Mae Eligibility Matrix
Fannie Mae Eligibility Matrix https://www.fanniemae.com/content/eligibility_information/eligibility-matrix.pdf Adjustable Rate Mortgages 23 23
Slide 25: Fannie Mae ARM’s
Fannie Mae ARM’s https://www.fanniemae.com/content/guide/selling/b2/1.3/02.html#Initial.20Note.20Rate.20Limitations Adjustable Rate Mortgages 24 24
Slide 26: Freddie Mac ARM’s
Freddie Mac ARM’s https://guide.freddiemac.com/app/guide/chapter/4401 Adjustable Rate Mortgages 25
Slide 27: Freddie Mac Qualifying Requirements
Freddie Mac Qualifying Requirements https://guide.freddiemac.com/app/guide/content/a_id/1000523 26
Slide 28: ARM Quiz
ARM Quiz Index: .750% Annual Adjustment Cap: 2.000% Discount: 1.250% Initial Adjustment Cap: 5.000% Lifetime Adjustment Cap: 6.000% Margin: 2.750% 6th year Index: 3.000% 1. What is the initial Fully Indexed Accrual Rate (FIAR)? 2. What is the start/teaser rate? 3. What is the Qua
Slide 29: ARM Quiz Answers
ARM Quiz Answers 1. What is the initial Fully Indexed Accrual Rate (FIAR)? Index .75 + Margin 2.75= FIAR 3.5 2. What is the start/teaser rate? FIAR 3.5 – Discount 1.25 = Starter Rate 2.25% 3. What is the Qualifying Rate? 3.5 or 2.25 + 2= (*4.25) Requirement on ARM’s with adjustment periods of 6 mont
Slide 30: Genworth Rate Express®
Genworth Rate Express® mi.genworth.com Adjustable Rate Mortgages 29
Slide 31: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines mi.genworth.com Adjustable Rate Mortgages 30
Slide 32: LOS Connections
LOS Connections mi.genworth.com Adjustable Rate Mortgages 31
Slide 33: Training Tools and Information
Training Tools and Information mi.genworth.com Adjustable Rate Mortgages 32
Slide 34: Training Tools and Information
Training Tools and Information mi.genworth.com Adjustable Rate Mortgages 33
Slide 35: Additional MI Site Information
Additional MI Site Information mi.genworth.com Adjustable Rate Mortgages 34
Slide 36: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative Adjustable Rate Mortgages 35
Slide 37: 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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