Enact Holdings, Inc. · NASDAQ:ACT
Enact — Reg A Offering (August 2020)
40 slides from Enact's offering presentation, August 2020
Slide 1: Everyone is Talking About ATR & QM
Everyone is Talking About ATR & QM August 2020 These training materials are not legal advice or a legal opinion. Your legal counsel should be consulted regarding the requirements of Dodd-Frank and the CFPB Rules. Customer Education Brought to you by: Genworth Customer Development and Process Consult
Slide 2: Agenda
Agenda In Today’s Session we will cover the ATR & QM Story – The Who & Why • Dodd-Frank Wall Street Reform & Consumer Protection Act – The Enforcer • Consumer Financial Protection Bureau (CFPB) – The Basic Rule • Ability-to-Repay (ATR) Rule – The Agencies Reaction • Fannie Mae Release Notes 9.1 • Fr
Slide 3: The Who
The Who Dodd-Frank Wall Street Reform & Consumer Protection Act The Dodd-Frank Bill – Massive piece of legislation intended to address countless problem areas that are believed to have caused the financial crisis – More than 2,300 pages long and includes 16 titles – Dodd-Frank calls for many regulat
Slide 4: The Action
The Action Dodd Frank In July 2010, Congress passed and President Obama signed the Dodd- Frank Wall Street Reform and Consumer Protection Act. – Title X -Created the Consumer Financial Protection Bureau (CFPB) – Title XIV (The Mortgage Reform and Anti-Predatory Lending Act) The CFPB: – Consolidates
Slide 5: The Enforcer- CFPB
The Enforcer- CFPB As of July 2011, the Consumer Financial Protection Bureau, created with the passage of the Dodd-Frank Act, is the principal federal agency responsible for enforcement of RESPA laws and regulations. – State attorneys general, state insurance commissioners and other state agencies a
Slide 6: Headlines in the News
Headlines in the News https://www.nafcu.org/newsroom/scotus-rules-cfpb- https://bankingjournal.aba.com/2020/06/supreme- structure-unconstitutional-declines-abas-petition-hear- court-cfpb-director-must-be-removable-at-will/ fom-case Insert Text Here 5
Slide 7: Headlines in the News
Headlines in the News https://www.mba.org/2020-press-releases/june/mba-statement-on-the-supreme-court-ruling-in-seila-v-cfpb Insert Text Here 6
Slide 8: CFPB Functions
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 laws that outlaw discrimination and other unfair trea
Slide 9: The Rule
The Rule CFPB’s Ability-to-Repay (ATR) Rule Final CFPB rule, January 10, 2014, requires mortgage lenders to consider consumers’ ability to repay loans before extending credit – Excludes open-end credit, timeshare plans, reverse mortgages and certain temporary loans ATR & QM 8
Slide 10: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Key concepts of the new rule: – The creditor must make a reasonable and good faith determination that the consumer has the ability to repay the loan. • Mortgage borrowers must provide ample financial documentation; lenders must verify the documents. • In order to be appro
Slide 11: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule At minimum, creditors must consider: 1. Current or reasonably expected income or assets 2. Current employment status 3. Monthly payment on the covered transaction 4. Monthly payment on any simultaneous loan 5. Monthly payment for mortgage-related obligations 6. Current de
Slide 12: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Borrowers must be able to repay the mortgage: – Lenders must make a reasonable and good faith determination – Lender must review the borrower’s available income and assets Applicant must provide certain documents that show income and assets. These documents include, but a
Slide 13: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Deceptive ‘teaser rates’ are prohibited – The mortgage rate shown to a borrower cannot mask the true cost of the loan Mortgage lenders cannot measure the borrower’s ability to repay the loan based on a teaser rate – (A teaser rate is an introductory interest rate that is
Slide 14: Agency Reaction
Agency Reaction ATR & QM 13
Slide 15: Fannie Mae and Freddie Mac's Original Communication
Fannie Mae and Freddie Mac’s Original Communication Fannie Mae SEL 2013-06 Freddie Mac Bulletin 2013-16 Ability to Repay or ATR and Updates in Response to CFPB final Qualified Mortgages rule on ATR (ability to repay) – Max loan term 30 years – Retiring Mortgages with original – Must be fully amortiz
Slide 16: Fannie Mae
Fannie Mae ARM Qualifying Ratio in DU https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B2-Eligibility/Chapter- B2-1-Mortgage-Eligibility/Section-B2-1-4-Loan-Amortization-Types/1736854131/B2-1-4-02-Adjustable- Rate-Mortgages-ARMs-04-01- 2020.htm?SearchType=coveo&_ga=
Slide 17: Freddie Mac
Freddie Mac Calculating Borrower ratios for ARMs https://guide.freddiemac.com/app/guide/content/a_id/1000523 ATR & QM 16
Slide 18: Additional Guidance
Additional Guidance https://www.consumerfinance.gov/eregulations/1026-32/2013-12125#1026-32-b ATR & QM 17
Slide 19: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Exemptions for refinance loans: –There is an exception to the ATR rule for homeowners who are trying to refinance out of a risky mortgage and into a more stable loan. Per the ATR rule, nonstandard loans with interest-only payments or negative amortization features can be
Slide 20: Qualified Mortgages (QM)
Qualified Mortgages (QM) A Qualified Mortgage is a home loan that meets certain standards set forth by CFPB Lenders that generate such loans will be presumed to have also met the ATR Rule mandated by the Dodd-Frank Act The QM Rule, as defined by CFPB, is designed to create safer loans by prohibiting
Slide 21: Qualified Mortgages (QM)
Qualified Mortgages (QM) Qualified Mortgages have different legal protections for a lender depending on whether the loan is a higher-priced transaction (APR exceeds the average prime offer rate for a comparable transaction by 1.5 percentage points or more). – A higher-priced loan that is a QM has a
Slide 22: Qualified Mortgages (QM)
Qualified Mortgages (QM) Generally, a QM loan has: (i) substantially equal monthly payments, (ii) a loan term <= 30 years, (iii) points and fees that do not exceed 3%, (iv) been underwritten using the maximum interest rate that may apply during the first 5 years (and with amortizing monthly payments
Slide 23: Qualified Mortgages (QM)
Qualified Mortgages (QM) (v) the creditor considers and verifies the borrower’s income, assets and debts in accordance with Appendix Q, and (vi) a DTI that does not exceed 43%. However, for a transitional period, loans that are eligible for purchase by *Fannie Mae or *Freddie Mac, FHA, VA, USDA, Rur
Slide 24: GSE Patch
GSE Patch https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-steps-address-gse-patch/ ATR & QM 23
Slide 25: Higher-Priced Mortgage Loan- HPML
Higher-Priced Mortgage Loan- HPML What is a “higher-priced mortgage loan?” In general, a higher-priced mortgage loan is one with an annual percentage rate, or APR, higher than a benchmark rate called the Average Prime Offer Rate. The Average Prime Offer Rate (APOR) is an annual percentage rate that
Slide 26: Qualified Mortgages (QM)
Qualified Mortgages (QM) In the lead up to the crisis, too many consumers took on risky loans that they didn’t understand. They didn’t realize their debt or payments could increase, or that they weren’t building any equity in the home. Before the crisis, many consumers took on mortgages that raised
Slide 27: Qualified Mortgages (QM)
Qualified Mortgages (QM) Appendix Q Provides additional guidance for determining Monthly Debt & Income https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/Q/ ATR & QM 26
Slide 28: Qualified Mortgages (QM)
Qualified Mortgages (QM) Liability Exposure –General TIL Damages –Statutory Damages •damages as set forth in TILA –Foreclosure Provision • a defense to a foreclosure action regardless of any statute of limitations on a private cause of action ATR & QM 27
Slide 29: CFPB General Comparison of ATR with QM
CFPB General Comparison of ATR with QM https://files.consumerfinance.gov/f/documents/201603_cfpb_atr-and-qm-comparison-chart.pdf ATR & QM 28
Slide 30: CFPB regulations
http://www.consumerfinance.gov/regulations https://www.congress.gov/bill/115th-congress/senate- bill/2155/text#toc- id85fe90d9cb9347b5be06fbbf343b0cdf ATR & QM 29
Slide 31: Genworth's QM Resources & Tools
Genworth’s QM Resources & Tools https://new.mortgageinsurance.genworth.com/regulatory-resources QM vs. ATR 30
Slide 32: Product Positioning & Points & Fees Considerations
Product Positioning & Points & Fees Considerations Product positioning and marketing is focused on products that have limited to no implementation and Points and Fees impacts for customers. https://new-content.mortgageinsurance.genworth.com/documents/regulatory- resources/QM_MIProductGrid201311_0.pd
Slide 33: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines
Slide 34: Genworth Rate Express
Genworth Rate Express® & 800 444.5664 | 4 | Search Q @ ORDERM UNDERWRITING & GUIDES | LOS & CONNECTIONS | GENWORTH TOOLKIT | TRAINING OUR BLOG | ABOUT US Genworth = a, Mortgage Insurance Rate Express ITIONS THAT MATTER Genworth Mortgage Insurance Rate Cards GenRATE ga YOU year! ttf,.: Quote Sweepsta
Slide 35: LOS Connections
LOS Connections NA & 800 444.5664 |G | Q Genworth == Ayre Mortgage Insurance mR Search Q S caaiecal @ VIEW ACCOUNT MI & RATES | UNDERWRITING & GUIDES LOS & CONNECTIONS | GENWORTH TOOLKIT | TRAINING OUR BLOG ABOUT US YOU-CENTRIC SOLUTIONS THAT MAT submit on Our Site Genworth Mortgage Insurance LOS Co
Slide 36: Training Tools and Information
Training Tools and Information
Slide 37: Training Tools and Information
Training Tools and Information 36
Slide 38: Additional MI Site Information
Additional MI Site Information
Slide 39: Your Genworth Resources
Your Genworth Resources ActionCenter®: 800 444.5664 Your Local Genworth Regional Underwriter Your Genworth Sales Representative
Slide 40: 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