Genworth Financial Inc · NYSE:GNW
Genworth Financial — Investor Presentation (November 2020)
104 slides from Genworth Financial's investor presentation, November 2020
Slide 1: Self-Employed Borrower: Form 1084 Part II – The Business Tax Returns
Self-Employed Borrower: Form 1084 Part II – The Business Tax Returns November 2020 Customer Education Brought to you by: Genworth Customer Development and Process Consulting ©2020 Genworth Financial, Inc. All rights reserved. 0
Slide 2: 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. – Partnership 1065 Business Tax Return and K-1s – Sub Chapter S or 1120S Business Tax Return and K-1s SEB 1084 Part II - Business Tax Returns 1
Slide 3: Self-Employment Fannie Mae
Self-Employment Fannie Mae https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/#Overview Fannie Mae 2020 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) SEB 1084 Part II - Business Tax Returns 2
Slide 4: Self-Employment Fannie Mae
Self-Employment Fannie Mae https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/#Overview Fannie Mae 2020 Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) SEB 1084 Part II - Business Tax Returns 3
Slide 5: Analyzing K1’s & Business Returns
Analyzing K1’s & Business Returns Fannie Mae 2020 Selling Guide B3-3.3-07, Income or Loss Reported on IRS Form 1065 or 1120S, Schedule K1 (06/28/2016) SEB 1084 Part II - Business Tax Returns 4
Slide 6: Fannie Mae Has a Written Policy Mandating Distributions
Fannie Mae Has a Written Policy Mandating Distributions https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/ SEB 1084 Part II - Business Tax Returns 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/originating-underwriting#selling-promo SEB 1084 Part II - Business Tax Returns 6
Slide 8: Lender Letter LL-2020-03
Lender Letter LL-2020-03 Policy For SEB Extended To November 30, 2020 Income: Updated to business 20 days SEB 1084 Part II - Business Tax Returns 7
Slide 9: Fannie Mae LL-2020-03 Effective June 11, 2020 And Remains Effective Until Further Notice
Fannie Mae LL-2020-03 Effective June 11, 2020 And Remains Effective Until Further Notice Due to the pandemic’s continuing impact on businesses throughout the country, lenders are now required to obtain the following additional documentation to support the decision that the self-employed income meets
Slide 10: Fannie Mae LL-2020-03 Effective June 11, 2020 And Remains Effective Until Further Notice
Fannie Mae LL-2020-03 Effective June 11, 2020 And Remains Effective Until Further Notice Lenders must review the profit and loss statement, and business depository accounts, if required, and other relevant factors to determine the extent to which a business has been impacted by COVID-19. LL- 2020-03
Slide 11: SEB 1084 Part II - Business Tax Returns
SEB 1084 Part II - Business Tax Returns 10
Slide 12: Business Income Calculation Adjustment
Business Income Calculation Adjustment LL-2020-03 SEB 1084 Part II - Business Tax Returns 11
Slide 13: COVID-19 Tools and Resources
COVID-19 Tools and Resources https://new.mi.genworth.com/training/course/COVID-19-Self-Employed-Borrower-Updates https://new.mi.genworth.com/training/course/how-use-business-stability-and-income-calculator SEB 1084 Part II - Business Tax Returns 12
Slide 14: 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 income earned from personal assets – *Have capital gain/loss activity reported on a Schedule D – *Own an existing rental property shown on a S
Slide 15: You’ll Need
You’ll Need SEB 1084 Part II - Business Tax Returns 14
Slide 16: In Case Study Part I We Completed Sections 1-6 of the Personal Tax Returns
In Case Study Part I We Completed Sections 1-6 of the Personal Tax Returns SEB 1084 Part II - Business Tax Returns 15
Slide 17: 1065 - Partnership with K1
1065 - Partnership with K1 SEB 1084 Part II - Business Tax Returns 16
Slide 18: Business Classifications
Business Classifications Partnership (General or Limited) – Two or More Partners – Business Income Reported on Form 1065 – Personal Income Reported on Schedule E and K-1 – Income Taxed at Personal Rate – All owners are issued a K-1s which are attached to the business tax return (IRS Form 1065) Advan
Slide 19: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17 (2018) Net Income/Loss Sch E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 18
Slide 20: Partnerships
Partnerships Check for trends or changes – Date business started – Gross Receipts – Cost of Good Sold – Gross Profit – Bottom line “Ordinary Income” – Guaranteed Payments • Payments “paid out” to all partners, review the K-1 to see how much was paid to your partner Page 22 SEB 1084 Part II - Busines
Slide 21: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 20
Slide 22: Partnership K-1
Partnership K-1 Page 20 SEB 1084 Part II - Business Tax Returns 21
Slide 23: Rental Income – Partnership or S Corps
Rental Income – Partnership or S Corps No Example SEB 1084 Part II - Business Tax Returns 22
Slide 24: Partnership K-1
Partnership K-1 Page 20 SEB 1084 Part II - Business Tax Returns 23
Slide 25: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 24
Slide 26: Schedule E Partnerships and S Corps
Schedule E Partnerships and S Corps Page 14 SEB 1084 Part II - Business Tax Returns 25
Slide 27: 1065 Partnership K-1 Schedule E page 2
1065 Partnership K-1 % Line 1 Ordinary Income/Loss $_________ Line 22 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 26
Slide 28: Page 4 and 2
Page 4 and 2 SEB 1084 Part II - Business Tax Returns 27
Slide 29: Analyzing K1’s & Business Returns
Analyzing K1’s & Business Returns Fannie Mae 2020 Selling Guide B3-3.3-07, Income or Loss Reported on IRS Form 1065 or 1120S, Schedule K1 (06/28/2016) SEB 1084 Part II - Business Tax Returns 28
Slide 30: Fannie Mae Has a Written Policy Mandating Distributions
Fannie Mae Has a Written Policy Mandating Distributions https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/ SEB 1084 Part II - Business Tax Returns 29
Slide 31: Liquidity
Liquidity Fannie Mae 2020 Selling Guide B3-3.3-07, Income or Loss Reported on IRS Form 1065 or 1120S, Schedule K1 (06/28/2016) SEB 1084 Part II - Business Tax Returns 30
Slide 32: Balance Sheet
Balance Sheet Page 26 SEB 1084 Part II - Business Tax Returns 31
Slide 33: Training Tools and Information
Training Tools and Information SEB 1084 Part II - Business Tax Returns 32
Slide 34: Training Tools and Information
Training Tools and Information SEB 1084 Part II - Business Tax Returns 33
Slide 35: Liquidity
Liquidity Generally Accepted Accounting Principles SEB 1084 Part II - Business Tax Returns 34
Slide 36: Liquidity – Current Ratio
Liquidity – Current Ratio Generally Accepted Accounting Principles SEB 1084 Part II - Business Tax Returns 35
Slide 37: Balance Sheet
Balance Sheet Page 26 If the Schedule L Balance Sheet is blank is there any additional documentation you may be able to provide to document the businesses liquidity? SEB 1084 Part II - Business Tax Returns 36
Slide 38: Balance Sheet
Balance Sheet Quick Ratio or Acid Test Current Assets : (Cash #1 + Acct Receivable #2 + #4+ #5 +Other Current Assets #6) Current Liabilities: (Acct Pay. #15 + MNB #16 + Other Current Liabilities #17) Current Assets: $59,000 + 0 + 0 +0+0 = $59,000 = $59,000/1 Current Liabilities: $0 + $0+ $0 = $0 Pag
Slide 39: Liquidity – Quick Ratio
Liquidity – Quick Ratio Generally Accepted Accounting Principles We entered $1 for liabilities to be able to get a result from the calculator SEB 1084 Part II - Business Tax Returns 38
Slide 40: Quick Reference Guide Partnership K-1
Quick Reference Guide Partnership K-1 Genworth Calculator Is A Tool; Lenders/Underwriters Review Each Loan File And Determine Compliance With Fannie Mae Or Investor Guidelines SEB 1084 Part II - Business Tax Returns 39
Slide 41: Partnership K-1
Partnership K-1 Can We Use Ordinary Income/Rental Income? Was There A Distribution? Solvent? Page 20 SEB 1084 Part II - Business Tax Returns 40
Slide 42: Partnership K-1
Partnership K-1 Page 20 SEB 1084 Part II - Business Tax Returns 41
Slide 43: Partnership K-1
Partnership K-1 Page 20 SEB 1084 Part II - Business Tax Returns 42
Slide 44: Rental Income - Partnership or S Corp
Rental Income - Partnership or S Corp No Example SEB 1084 Part II - Business Tax Returns 43
Slide 45: Partnership K-1
Partnership K-1 Page 20 SEB 1084 Part II - Business Tax Returns 44
Slide 46: Partnership K-1
Partnership K-1 Before You Give Credit For The Guarantee Payments, Does This Business Appear to Be Capable Of Paying It In The Future? Could We Look At The Balance Sheet Again? Page 20 SEB 1084 Part II - Business Tax Returns 45
Slide 47: Fannie Mae Selling Guide < than 25%
Fannie Mae Selling Guide < than 25% SEB 1084 Part II - Business Tax Returns 46
Slide 48: Partnership Form 1065
Partnership Form 1065 Page 22 SEB 1084 Part II - Business Tax Returns 47
Slide 49: Section 8 – Form 1065
Section 8 – Form 1065 Page 22 SEB 1084 Part II - Business Tax Returns 48
Slide 50: Section 8 – Form 1065
Section 8 – Form 1065 Page 22 SEB 1084 Part II - Business Tax Returns 49
Slide 51: Section 8 – Form 1065
Section 8 – Form 1065 Page 22 SEB 1084 Part II - Business Tax Returns 50
Slide 52: Section 8 – Form 1065
Section 8 – Form 1065 No Example SEB 1084 Part II - Business Tax Returns 51
Slide 53: Section 8 – Form 1065
Section 8 – Form 1065 Page 22 SEB 1084 Part II - Business Tax Returns 52
Slide 54: Section 8 – Form 1065
Section 8 – Form 1065 Page 22 SEB 1084 Part II - Business Tax Returns 53
Slide 55: Section 8 – Form 1065
Section 8 – Form 1065 Page 27 SEB 1084 Part II - Business Tax Returns 54
Slide 56: Section 8 – Form 1065
Section 8 – Form 1065 Page 26 SEB 1084 Part II - Business Tax Returns 55
Slide 57: Section 8 – Form 1065
Section 8 – Form 1065 SEB 1084 Part II - Business Tax Returns 56
Slide 58: Section 8 – Form 1065
Section 8 – Form 1065 Page 26 SEB 1084 Part II - Business Tax Returns 57
Slide 59: Section 8 – Form 1065
Section 8 – Form 1065 SEB 1084 Part II - Business Tax Returns 58
Slide 60: Partnership K-1
Partnership K-1 Page 20 SEB 1084 Part II - Business Tax Returns 59
Slide 61: Partnership 1065 Total Income
Partnership 1065 Total Income SEB 1084 Part II - Business Tax Returns 60
Slide 62: 1120S - S Corporation with K1
1120S - S Corporation with K1 SEB 1084 Part II - Business Tax Returns 61
Slide 63: Business Classifications
Business Classifications S Corporation – Can be Owned by One Person – “Managing Shareholder” Must Receive a Salary – Business Income Reported on Form 1120S – Income Reported on Form 1040’s • Schedule E • Could also be W-2 wages or 1099 income – All Shareholders of an S Corp are Issued K-1’s – K-1s a
Slide 64: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch.E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 63
Slide 65: S Corps
S Corps Check for trends or changes – Date Incorporated – Gross receipts – Cost of goods sold – Gross profit – Bottom line “Ordinary Income” – Were W-2 wages paid to borrower? Page 30 SEB 1084 Part II - Business Tax Returns 64
Slide 66: S Corps
S Corps Review 1125-E For Compensation Paid to Officers – You can be an officer, but not an owner Page 35 SEB 1084 Part II - Business Tax Returns 65
Slide 67: S Corps
S Corps Review for W-2 paid from business – Is this salary income or self-employed income? – Did we give credit for this income already? Page 1 SEB 1084 Part II - Business Tax Returns 66
Slide 68: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch.E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 67
Slide 69: S Corp K-1
S Corp K-1 Did John Get A Distribution? Page 28 SEB 1084 Part II - Business Tax Returns 68
Slide 70: Page 2 of K-1 and Page 3 of Form 1120S
Page 2 of K-1 and Page 3 of Form 1120S Page 29 SEB 1084 Part II - Business Tax Returns 69
Slide 71: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch.E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 70
Slide 72: Schedule E Partnerships and S Corps
Schedule E Partnerships and S Corps Page 14 SEB 1084 Part II - Business Tax Returns 71
Slide 73: K-1 1120S S Corp Schedule E page 2
1120S S Corp K-1 % Line 1 Ordinary Income/Loss $_________ Line 21 Ordinary Income/Loss $_________ Schedule E page 2 Part II Schedule 1 Line 5 or 17(2018) Net Income/Loss Sch.E Taxed at a personal rate $_________ SEB 1084 Part II - Business Tax Returns 72
Slide 74: Page 4 and 2
Page 4 and 2 SEB 1084 Part II - Business Tax Returns 73
Slide 75: Fannie Mae Has A Written Policy Mandating Distributions
Fannie Mae Has A Written Policy Mandating Distributions https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/ SEB 1084 Part II - Business Tax Returns 74
Slide 76: Liquidity
Liquidity Generally Accepted Accounting Principles SEB 1084 Part II - Business Tax Returns 75
Slide 77: Balance Sheet
Balance Sheet Page 33 SEB 1084 Part II - Business Tax Returns 76
Slide 78: Balance Sheet
Balance Sheet Quick Ratio or Acid Test Current Assets : (Cash #1 + Acct Receivable #2 + #4+ #5 +Other Current Assets #6) Current Liabilities: (Acct Pay. #15 + MNB #16 + Other Current Liabilities #17) Current Assets: $237,777 + 51,340 +0 +$248,226+$0 = $537,343 Current Liabilities: $1,039,320 + $592,
Slide 79: Quick Ratio
Quick Ratio SEB 1084 Part II - Business Tax Returns 78
Slide 80: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! Page 28 SEB 1084 Part II - Business Tax Returns 79
Slide 81: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! * Page 28 SEB 1084 Part II - Business Tax Returns 80
Slide 82: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! * Page 28 SEB 1084 Part II - Business Tax Returns 81
Slide 83: S Corp K-1
S Corp K-1 Let’s Put Numbers On Our Tool! * Page 28 SEB 1084 Part II - Business Tax Returns 82
Slide 84: S Corporation Form 1120S
S Corporation Form 1120S Page 30 SEB 1084 Part II - Business Tax Returns 83
Slide 85: S Corporation Form 1120S
S Corporation Form 1120S Page 30 SEB 1084 Part II - Business Tax Returns 84
Slide 86: Rental Income – Partnership or S Corps
Rental Income – Partnership or S Corps No Example SEB 1084 Part II - Business Tax Returns 85
Slide 87: S Corporation Form 1120S
S Corporation Form 1120S Page 30 SEB 1084 Part II - Business Tax Returns 86
Slide 88: S Corporation Form 1120S
S Corporation Form 1120S Page 30 SEB 1084 Part II - Business Tax Returns 87
Slide 89: 1120S Statement
1120S Statement Page 36 SEB 1084 Part II - Business Tax Returns 88
Slide 90: S Corporation Form 1120S
S Corporation Form 1120S Page 30 SEB 1084 Part II - Business Tax Returns 89
Slide 91: S Corporation Form 1120S
S Corporation Form 1120S Page 33 SEB 1084 Part II - Business Tax Returns 90
Slide 92: S Corporation Form 1120S
S Corporation Form 1120S Page 30 SEB 1084 Part II - Business Tax Returns 91
Slide 93: S Corporation Form 1120S
S Corporation Form 1120S Page 34 SEB 1084 Part II - Business Tax Returns 92
Slide 94: S Corporation Form 1120S
S Corporation Form 1120S Page 28 SEB 1084 Part II - Business Tax Returns 93
Slide 95: S Corp K-1
S Corp K-1 How Much Does John Own? Page 28 SEB 1084 Part II - Business Tax Returns 94
Slide 96: S Corporation Form 1120S
S Corporation Form 1120S SEB 1084 Part II - Business Tax Returns 95
Slide 97: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines SEB 1084 Part II - Business Tax Returns 96
Slide 98: Genworth Rate Express®
Genworth Rate Express® SEB 1084 Part II - Business Tax Returns 97
Slide 99: LOS Connections
LOS Connections SEB 1084 Part II - Business Tax Returns 98
Slide 100: Training Tools and Information
Training Tools and Information SEB 1084 Part II - Business Tax Returns 99
Slide 101: Training Tools and Information
Training Tools and Information SEB 1084 Part II - Business Tax Returns 10 0
Slide 102: Additional MI Site Information
Additional MI Site Information SEB 1084 Part II - Business Tax Returns 10 1
Slide 103: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative SEB 1084 Part II - Business Tax Returns 10 2
Slide 104: 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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