Enact Holdings, Inc. · NASDAQ:ACT
Enact — Genworth Mortgage Insurance — Investor Presentation (June 2018)
49 slides from Enact's investor presentation, June 2018
Slide 1: Calculating Rental Income
Calculating Rental Income Fannie Mae And Freddie Mac June 2018 Genworth Mortgage Insurance Corporation ©2018 Genworth Financial, Inc. All rights reserved.
Slide 2: Welcome to the Webinar
Welcome to the Webinar A Few Reminders: – Do you have Participant materials printed • Genworth Rental Calculator • 2017 Schedule E for Larry Landlord – Use the “questions” tab on your control panel for questions or problems – Follow guidelines set by your specific investor; They may have additional
Slide 3: Objectives
Objectives What we will cover: – General guidelines for calculation of rental income for Fannie Mae and Freddie Mac – Recent changes relating to rental properties from Fannie Mae Announcements and Freddie Mac Bulletins – Overview of Fannie Mae Rental Forms 1037, 1038, 1039 – Overview of Freddie Mac
Slide 4: Training Tools and Information
Training Tools and Information Rental Income 4
Slide 5: Training Tools and Information
Training Tools and Information Rental Income 5
Slide 6: Rental Income Calculator and Quick Reference Guide
{ ] Genworth3'<. Calculator and Quick Reference Guide: Rental Income Please use the following calculator and quick reference guide to assist m calculating rental income from IRS Form 1040 Schedule E Property 1 Cateulstor Utage Note: Clic Grey Buttons to Dw for Monthy Tals 1, [Grocs Ronesitine 3) *On
Slide 7: Rental Income
Rental Income Basics about rental income requirements: – Rental income must be supported by the borrower’s most recent personal tax returns if used for qualification purposes* • Follow the underwrite you are utilizing – Desktop Underwriter® follow the DU findings report – Loan Product Advisor® f
Slide 8: Updates For Freddie Mac 2017-12
Updates For Freddie Mac 2017-12 Effective for loans with settlement dates on or after February November9, 2018; 30, 2018 Sellers may implement immediately – Short-term and long-term rental income sources for refinance transactions – Updates policy for rental properties NOT owned in the prior cal
Slide 9: Let’s Review The New Form 92 And The Bulletin
Let’s Review The New Form 92 And The Bulletin Rental Income 9
Slide 10: Freddie Mac Update
Freddie Mac Update Rental Income 10
Slide 11: Freddie Mac Form 92
Freddie Mac Form 92 Check Out Genworth Website for Calculator Rental Income 11
Slide 12: Freddie Mac Form 92
Freddie Mac Form 92 Check Out Genworth Website for Calculator Rental Income 12
Slide 13: Freddie Mac Seller/Servicer Guide
Freddie Mac Seller/Servicer Guide November 30, 2018 Rental Income Section Has Been Updated; Examples Included, Additional Guidelines Fully Addressed Rental Income 13
Slide 14: Short Term Rental Income Sources
Short Term Rental Income Sources Short-term rental income sources –refinance transactions for subject properties and non-subject investment properties owned in prior calendar year : – Short-term rental income sources where a lease is NOT utilized (less than one year term) – Two-year history of r
Slide 15: Long Term Rental Income
Long Term Rental Income Long-term rental income sources - refinance transactions for subject properties owned in prior calendar year and non-subject owned in the prior year: – One-year history of the rental income reported on Schedule E is required with availability of a current one-year term le
Slide 16: Long Term Rental Income-NEW
Long Term Rental Income-NEW One-year management history or limitation on net rental income – Applies to subject purchase, subject refinance or non-subject transactions when property was purchased or placed in service for use as a rental in the current calendar year. – 30% Rental Income Rule Rent
Slide 17: Leases and Income Calculations
Leases and Income Calculations Expanded requirements, additional specificity and guidance: – Leases (Section 5306.19c)(ii)) Specifying that leases must be current and fully executed, with a minimum original term of one year (with an allowance for a month-to-month term if in the automatically ren
Slide 18: Additional Updates
Additional Updates Expanded requirements, additional specificity and guidance: – Removes requirement to verify operating expenses when rental income is not used to qualify – Removes requirement for completion of Income approach on appraisal – Rental income reported on IRS form 8825, Section 5306
Slide 19: Form Updates
Form Updates Guide Impacts: – Guide Form 1000 Comparable Rent Schedule reintroduced • Used on a purchased when NO lease is available and property will be rented out long term (one year) – Form 998, Operating Income Statement, being retired – Form 91, Income Calculations- Updated to remove the Sc
Slide 20: Updates For Freddie Mac 2015-12
Updates For Freddie Mac 2015-12 Effective for loans with settlement dates October 26, 2015 – Increases number of financed properties to six when the subject is a second home or investment Rental Income 20
Slide 21: Reserve Policy - Chapter 5501.2
Reserve Policy - Chapter 5501.2 Rental Income 21
Slide 22: 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 23: Freddie Mac Rental Income
Freddie Mac Rental Income Use Rental Income Matrix – Stable Rental Income used for qualifying – Tax Returns or leases – Form 998 – Need for Tax Returns – Income Approach – Reserves – Gift Funds – Max number of financed properties Rental Income 23
Slide 24: Freddie Mac Rental Income
Freddie Mac Rental Income Rental Income 24
Slide 25: 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 foun
Slide 26: Fannie Mae Seller Guide Updates
Fannie Mae Seller Guide Updates 2017-02 Updates Market Rent – Use 75% of the market rents (from form 1007 or form 1025) or leases, whichever is less. Rental Income 26
Slide 27: Training Tools and Information
Training Tools and Information Rental Income 27
Slide 28: Training Tools and Information
Training Tools and Information Rental Income 28
Slide 29: Fannie Mae Rental Calculators
Fannie Mae Rental Calculators https://mortgageinsurance.genworth.com/Training/SelfEmployedBorrower.aspx Rental Income 29
Slide 30: Borrowers with Multiple Financed Properties
Borrowers with Multiple Financed Properties DU uses the number of financed properties to apply the following eligibility guidelines: – A minimum credit score of 720 is required for borrowers with 7-10 financed properties – Borrowers are limited to a maximum of 10 financed properties Rental Incom
Slide 31: Multiple Financed Properties Fannie Mae
Multiple Financed Properties Fannie Mae Applies When The Subject Transaction Is A Second Home Or Investment Property AND The Borrower is Personal Obligated On The Financing Rental Income 31
Slide 32: Reserves - Fannie Mae Multiple Financed Properties DU 10.0
Reserves - Fannie Mae Multiple Financed Properties DU 10.0 Applies When The Subject Transaction Is A Second Home Or Investment Property AND The Borrower is Personal Obligated On The Financing Rental Income 32
Slide 33: Reserves - Fannie Mae Multiple Financed Property Examples
Reserves - Fannie Mae Multiple Financed Property Examples Applies When The Subject Transaction Is A Second Home Or Investment Property AND The Borrower is Personal Obligated On The Financing Rental Income 33
Slide 34: Rental Income - Fannie Mae
Rental Income - Fannie Mae Fannie Mae Requirements 2-4 Unit Primary Residence – Purchase: Gross income is calculated from Form 1025 (small residential properties). – Net rental income is determined by taking the lesser of 75% of the gross rent from form 1025 or 75% of the existing leases. Note:
Slide 35: You Need….
You Need…. – 2017 Schedule “E” handout – Rental Income Calculation Form • Impounded/non-impounded are calculated the same • Training today assume a escrowed or impounded loan Rental Income 35
Slide 36: Schedule E Handout
Schedule E Handout Rental Income 36
Slide 37: Mortgage Statement/Payment Coupon
Mortgage Statement/Payment Coupon Always ask for one – If loan is impounded or escrowed – What property the mortgage payment is associated with – If non impounded, obtain current tax and insurance information – If condo, PUD or Coop, most investors want verification of current HOA dues Rental In
Slide 38: Mortgage Statement/Payment Coupon
Mortgage Statement/Payment Coupon $2450 HOA DUES $155.50 Payment Above Came From Mortgage Statement And HOA Coupon From Borrower And Is Impounded; For Non-impounded Loans Obtain Tax And Insurance Information Rental Income 38
Slide 39: Rental Income Calculator and Quick Reference Guide
{ ] Genworth3'<. Calculator and Quick Reference Guide: Rental Income Please use the following calculator and quick reference guide to assist m calculating rental income from IRS Form 1040 Schedule E method should not be used when calculating rental income on @ borrower's primary rescence Check appli
Slide 40: Net Rental Income
Net Rental Income Compare “rental income” figure with your 1003 or loan application – Most systems calculate rental income from the REO section of the 1003. – Review the 1003 to verify what appears as rental income/rental loss. – If the number is different, override your system to reflect the tr
Slide 41: Net Rental Income
Net Rental Income Do not use leases, use the “Cash Flow” from the property – Be sure to flag the mortgage payment in your system as a rental property lien so that it will NOT count it in the debt ratio. 44 Renters Way R $225000 180,400 3,500 2,500 875 $2605.5 Rental Income 41
Slide 42: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Rental Income 42
Slide 43: Genworth Rate Express
Genworth Rate Express® Rental Income 43
Slide 44: LOS Connections
LOS Connections Rental Income 44
Slide 45: Training Tools and Information
Training Tools and Information Rental Income 45
Slide 46: Training Tools and Information
Training Tools and Information Rental Income 46
Slide 47: Additional MI Site Information
Additional MI Site Information Rental Income 47
Slide 48: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Rental Income 48
Slide 49: 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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