Genworth Financial Inc · NYSE:GNW
Genworth Financial — Genworth Mortgage Insurance — Investor Presentation (June 2021)
54 slides from Genworth Financial's investor presentation, June 2021
Slide 1: Mortgage Acronyms for the Beginner
Mortgage Acronyms for the Beginner June 2021 Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina ©2021 Genworth Mortgage Insurance Corporation. All rights reserved.
Slide 2: Genworth MI is now Enact
Genworth MI is now Enact We’re changing to remain focused on you. As part of our evolution, we are now known as Enact. We’re building on our trusted reputation for quality service and success with an increased focus on providing responsive solutions and insightful expertise for you. Learn more at ht
Slide 3: Welcome to the Mortgage Industry
Welcome to the Mortgage Industry 3
Slide 4: Objectives
Objectives What we will cover: • The Mortgage Industry uses many different acronyms; This session will provide definitions of many of the commonly used acronyms to get the “New to the Mortgage Industry” professional understanding basic terminology 4
Slide 5: What to Expect Throughout the Loan Approval Process
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Slide 6: Mortgage acronyms
VVOE/PCV HUD FICO CLTV PMI LOS DU ® CRM MBS T PO LPA URLA DTI VA NMLS# ARM URAR/1004 ATR PITI/PITIA VOE HMDA FHA RESPA AUS VOM CFPB LTV POC MLO LE SOFR QM CD GSE HELOC 6
Slide 7: The Who and Why - CFPB
The Who and Why - CFPB The Consumer Financial Protection Bureau (CFPB), created with the passage of the Dodd-Frank Act, is the principal federal agency responsible for enforcement of RESPA laws and regulations* • State attorney generals, state insurance commissioners and other state agencies also ha
Slide 8: The Who and Why - CFPB
The Who and Why - CFPB Functions: • Oversees rule-making for federal consumer financial protection laws • Supervises large banks and most non-banks for compliance with federal consumer financial laws • Restricts unfair, deceptive, or abusive acts or practices • Enforces federal consumer financial pr
Slide 9: ATR – Ability to Repay
ATR – Ability to Repay At Minimum Creditors Must Consider: • Current or reasonably expected income or assets • Current employment status • Monthly payment on the covered transaction • Monthly payment on any simultaneous loan • Monthly payment for mortgage-related obligations • Current debt obligatio
Slide 10: QM – Qualified Mortgages
QM – Qualified Mortgages Qualified Mortgages (QM) must meet certain requirements Risky features, such as those that harmed consumers in the recent mortgage crisis, are prohibited or limited. • No excess upfront points and fees. • No toxic loan features.. • Caps on how much income can go towards debt
Slide 11: RESPA – Real Estate Settlement Procedures Act
RESPA – Real Estate Settlement Procedures Act The Real Estate Settlement Procedures Act (RESPA): The rules • Applies to any federally regulated mortgage loan and • Secured by a first or subordinate lien on a residential real property regulations • Designed for one-to-four families apply to: • Conven
Slide 12: HUD
HUD https://www.hud.gov/topics 12
Slide 13: The Secondary Market
The Secondary Market The “Players” or Investors in the secondary mortgage market are typically are divided into two categories: • The Organized Market • The Private Market Organized Market = Government Private Market = “Unorganized” 13
Slide 14: The Secondary Market
The Secondary Market Each Government Sponsored Enterprise (GSE) has its own “role” in the secondary market • Ginnie Mae guarantees timely payment to investors on FHA, VA and USDA Rural Housing loans (as part of a residential mortgage-backed security or MBS); Ginnie Mae is a wholly owned Government C
Slide 15: Definition of Mortgage Loan Originator
Definition of Mortgage Loan Originator A Mortgage Loan Originator is an individual who for compensation or gain or in the expectation of compensation or gain: • • Takes a residential mortgage loan application, or Offers or negotiates terms of a residential mortgage loan, MLO • The SAFE ACT prohibits
Slide 16: Mortgage Loan Officer or MLO typically
Mortgage Loan Officer or MLO typically: • Markets Lender’s Loan Products • Assesses Borrower’s Eligibility • Complete Loan Application • Provides Borrower with Legally Required Lending Disclosures • Collects Initial Documentation • Educates Applicants about Product/Process • Works with Processor • I
Slide 17: NMLS#
NMLS# https://nationwidelicensingsystem.org/Pages/default.aspx 17
Slide 18: URLA
URLA 9 pages 4 pages 2 pages 1 page 1 page https://www.fanniemae.com/singlefamily/uniform-residential-loan-application 18
Slide 19: The Credit Report
The Credit Report A credit report is a record of the borrower’s credit activities. The report allows you to review the borrower’s current liabilities and their payment history There are two different types of credit reports typically used in the mortgage industry • An in-file credit report is credit
Slide 20: Scoring Models
Scoring Models The Scoring Models that are used in the mortgage industry were developed and are maintained by Fair Isaac Corp. FICO • The most common credit score in use was developed by Fair Isaac Corporation (FICO) • Evaluates the borrower’s credit data • Assigns a “score” which predicts borrower’
Slide 21: How Scores are Calculated
How Scores are Calculated https://www.myfico.com/credit-education/whats-in-your-credit-score 21
Slide 22: What "Will Be" an Application?
What “Will Be” an Application? New definition of an “Application” Defined by six elements: • Borrower Name • Property Address • Income • Estimated Property Value • Social Security Number • Mortgage Loan Amount Current Reg X Defines An Application As Consisting Of 7 Elements Including A “Catch All”-
Slide 23: Disclosure Forms
Disclosure Forms The Loan Estimate (Initial Consumer Disclosure) • The Loan Estimate tells the borrower important details about the loan they have requested • The LE includes important information including: • Estimated interest rate • Monthly payment • Closing costs • How the interest rate will cha
Slide 24: LE – Loan Estimate
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Slide 25: CFPB's Loan Estimate Explainer
CFPB’s Loan Estimate Explainer https://www.consumerfinance.gov/owning-a-home/loan-estimate/ 25
Slide 26: 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 fact
Slide 27: Automated Underwriting/Scoring Systems
Automated Underwriting/Scoring Systems Automated Systems Assist Lenders: • Quantify the Risk • Determine Minimum Documentation Requirements • Determine Program Eligibility GSE AUS • Fannie Mae ® • Desktop Underwriter (DU) • Freddie Mac ® • Loan Product Advisor 27
Slide 28: Loan Type - FHA
Loan Type - FHA L3. Mortgage Loan Information HUD.GOV US. Department of Housing and Urban Development Secretary Julién Castro Mortgage Type Applied For O Conventional © USDA-RD OFHA OVA — © Other: ‘owing Home | Aboot Us | Single Famiy | Healthcare | tuttanaty | Hoong [ont ostems | [WUo > Program Ofi
Slide 29: Loan Type - VA
Loan Type - VA https://www.va.gov/housing-assistance/home-loans/loan-types/ 29
Slide 30: Loan Type - Conventional
Loan Type - Conventional 30 L3. Mortgage Loan Information Mortgage Type Applied For O Conventional © USDA-RD OFHA OVA © Other: Amortization Type O Fixed Rate © Other (explain): O Adjustable Rate If Adjustable Rate: Initial Period Prior to First Adjustment (months) Subsequent Adjustment Period (month
Slide 31: PMI – Private Mortgage Insurance – The Basics
PMI – Private Mortgage Insurance – The Basics Who does Mortgage Insurance insure? • Insures the LENDER not the borrower in cases of default on conventional loans • FHA and VA loans are insured by HUD or the Veteran’s Administration • Different types of MI products are available • Monthly • Annual •
Slide 32: Amortization Type - ARM
Amortization Type - ARM 32 L3. Mortgage Loan Information Mortgage Type Applied For O Conventional © USDA-RD OFHA OVA (Other: Amortization Type O Fixed Rate © Other (explain): O Adjustable Rate If Adjustable Rate: Initial Period Prior to First Adjustment (months) Subsequent Adjustment Period : (month
Slide 33: 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 rate
Slide 34: SOFR
SOFR FEDERAL RESERVE BANK of NEW YORK Serving the Second District and the Nation About the Markets & Policy Economic Financial Institution Financial Services New York Fed Implementation Research ‘Supervision & Infrastructure home > markets & policy implementation > domestic market operations > SOFR
Slide 35: PITI
PITI 35 Terms of Loan Mortgage Lien Type Note Rate % O First Lien Loan Term (months) O Subordinate Lien Proposed Monthly Payment for Property First Mortgage (P &1) Subordinate Lien(s) (P & |) Homeowner's Insurance Supplemental Property Insurance Property Taxes Mortgage Insurance Association/Project
Slide 36: Loan to Value (LTV)
Loan to Value (LTV) Loan to Value (LTV) The relationship between: • The amount of money borrowed= Loan Amount • The lesser of the Sales Price or Appraised Value of the property (on a purchase) • Refinance the LTV is calculated off the Appraised Value Example: • Mortgage: $80,000 • Appraised value: $
Slide 37: Combined LTV (CLTV) Calculations & Exercises
Combined LTV (CLTV) Calculations & Exercises • WHAT IS CLTV? Combined Loan to Value (CLTV) is the relationship between the amount of all monies borrowed (and/or drawn) and • the lesser of the Sales Price or Appraised Value of the property. May also be referred to as TLTV or Total Loan to Value. • CL
Slide 38: HELOC CLTV (HCLTV) Calculations & Exercises
HELOC CLTV (HCLTV) Calculations & Exercises What is HCLTV? • HELOC Combined Loan to Value (HCLTV) is the relationship between the amount of money available to borrow and the lesser of the Sales Price or Appraised Value of the property. May also be referred to as HTLTV or HELOC Total Loan to Value. F
Slide 39: Verbal Verification of Employment (VVOE)
Verbal Verification of Employment (VVOE) The Lender must independently obtain a phone number and, if possible, the employer’s address. Sources include: • Telephone Book • The Internet • Directory Assistance • The Applicable Licensing Bureau • The Lender must contact the employer & confirm the borrow
Slide 40: VOE/1005
VOE/1005 40 Enact
Slide 41: VOM
VOM Enact
Slide 42: Total Debt Ratio (DTI)
Total Debt Ratio (DTI) HOW TO CALCULATE THE DEBT RATIO ALSO DTI (DEBT TO INCOME) In order to calculate the debt, divide the total monthly debt payment by the borrower’s gross monthly income. For a manually underwritten conventional loan, a normally acceptable range is 36%-38% depending on the loan t
Slide 43: URAR
43 Enact
Slide 44: Disclosure Forms
Disclosure Forms The Closing Disclosure (Second Form) • A Closing Disclosure is a five-page form that provides final details about the mortgage loan to the borrower. It includes the loan terms, projected monthly payments, and how much the borrower will pay in fees and other costs to get the mortgage
Slide 45: Closing Disclosure - CD
45 ¥ i i H ili i 4 kk Hitt; ity tl Enact
Slide 46: CFPB's Closing Disclosure Explainer
CFPB’s Closing Disclosure Explainer https://www.consumerfinance.gov/owning-a-home/closing-disclosure/ 46
Slide 47: What is HMDA?
What is HMDA? The Home Mortgage Disclosure Act (HMDA) requires many financial institutions to maintain, report, and publicly disclose information about mortgages. HMDA was originally enacted by Congress in 1975 and is implemented by Regulation C. The Dodd-Frank Act transferred HMDA rulemaking author
Slide 48: TPO
TPO What Is a Third-Party Mortgage Originator? A third-party mortgage originator is any third-party that works with a lender to originate a mortgage loan. Third-party mortgage originators may include any person or company actively engaged in the marketing of mortgages, gathering information for mort
Slide 49: Enact Rate Express
Enact Rate Express® Enact" MI&RATES | UNDERWRITING & GUIDES | LOS& CONNECTIONS | ENACT TOOLKIT | TRAINING ouRBLoG =| ABOUTUS Je’ve changed to Temain focused on you. Genworth MI is now Enact. ° Rate Express (0) Find Rates Quick GETA QUOTE Now Underwriting Innovate Underwriting Know More & 800 444.566
Slide 50: Enact Underwriting Guidelines
Enact Underwriting Guidelines 50
Slide 51: Enact Training Resources
Enact Training Resources Genworth Ml is now Enact MI&RATES | UNDERWRITING & GUIDES | LOS & CONNECTIONS | ENACT TOOLKIT TRAINING =| ~ 6 & 800.444.5664 | | me We've changed to emain focused on you. Genworth MI is now Enact. ee fe & Training Boost Your Knowledge LEARN Now Underwriting Op Rate Express I
Slide 52: Enact Training Resources
Enact Training Resources 52 Enact Self-Employed Borrower Tools by Enact MI ‘We get it, mental math is hard. That’s why Enact provides a collection of downloadable calculators and reference guides to help you analyze a self-employed borrower's average monthly income and expenses. Please note that the
Slide 53: Your Enact Resources
Your Enact Resources • ActionCenter® : 800 444.5664 • Your Local Enact Regional Underwriter • Your Enact Sales Representative 53
Slide 54: Legal Disclaimer
Legal Disclaimer Enact 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 training is
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