Enact Holdings, Inc. · NASDAQ:ACT
Enact — Genworth Mortgage Insurance — Technical Presentation (December 2018)
54 slides from Enact's technical presentation, December 2018
Slide 1: Calculating Rental Income
Calculating Rental Income Fannie Mae And Freddie Mac December 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: Freddie Mac Rental Income Guidelines
Freddie Mac Rental Income Guidelines Rental Income 8
Slide 9: 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 9
Slide 10: Freddie Mac Rental Income
Freddie Mac Rental Income Rental Income 10
Slide 11: Freddie Mac Rental Income Matrix
Freddie Mac Rental Income Matrix Reserve Requirement Is Eight Months For Each Additional Second Home Or Investment Property The Borrower Is Obligated On When The Total Number Of Financed Properties is 7-10 And The Subject Is a Second Home Or Investment Rental Income 11
Slide 12: Freddie Mac Rental Income Matrix
Freddie Mac Rental Income Matrix If The Subject Is a Second Home Or Investment The Maximum Number Of Financed Properties The Borrower Can Be Obligated On Is 10 Rental Income 12
Slide 13: Updates For Freddie Mac 2017-12
Updates For Freddie Mac 2017-12 Effective for loans with settlement March 1, 9, dates on or after February 2019 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 calend
Slide 14: Let's Review The New Form 92 And The Bulletin
Let’s Review The New Form 92 And The Bulletin Rental Income 14
Slide 15: What Guidelines Do We Follow?
What Guidelines Do We Follow? Sellers may originate, underwrite and deliver Mortgages based either on the rental income requirements: – In effect prior to Bulletin 2017-12 in their entirety – The revised rental income requirements announced in Bulletin 2017-12 in their entirety (and for which th
Slide 16: Freddie Mac Form 92
Freddie Mac Form 92 Check Out Genworth Website for Calculator Rental Income 16
Slide 17: Freddie Mac Form 92
Freddie Mac Form 92 Check Out Genworth Website for Calculator Rental Income 17
Slide 18: Freddie Mac Form 92
Freddie Mac Form 92 Genworth Form 91 Rental Calculator www.new.mi.Genworth.com/training Rental Income 18
Slide 19: Freddie Mac Seller/Servicer Guide
Freddie Mac Seller/Servicer Guide Rental Income Section Has Been Updated; Examples Included, Additional Guidelines Fully Addressed Rental Income 19
Slide 20: Short Term Rental Income Sources
March 1, 2019 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-yea
Slide 21: Long Term Rental Income
March 1, 2019 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 on
Slide 22: Leases and Income Calculations
March 1, 2019 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 aut
Slide 23: Long Term Rental Income
March 1, 2019 Long Term Rental Income One-year management history or ownership of a primary home income – The borrower must own a Primary Residence to use rental income to qualify when purchasing a new rental property; and – Whether purchasing a new rental property or converting a Primary Reside
Slide 24: Additional Updates
March 1, 2019 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
Slide 25: 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 26: Reserve Policy - Chapter 5501.2
Reserve Policy - Chapter 5501.2 Rental Income 26
Slide 27: 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 28: Bulletin 2018-10
Bulletin 2018-10 Selling Updates – Increased number of financed properties to 10 when subject is a second home or investment. When 7-10 range loan must have: • 720 credit score • 8 months reserves for each second home or investment property borrower is obligated on • Accept/Eligible recommendati
Slide 29: Fannie Mae Rental Income Guidelines
Fannie Mae Rental Income Guidelines Rental Income 29
Slide 30: 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 31: 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. Rental Income 31
Slide 32: Fannie Mae Rental Calculators
Fannie Mae Rental Calculators https://mortgageinsurance.genworth.com/Training/SelfEmployedBorrower.aspx Rental Income 32
Slide 33: 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 34: 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 34
Slide 35: 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 35
Slide 36: 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 36
Slide 37: 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: Do
Slide 38: 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 38
Slide 39: Schedule E Handout
Schedule E Handout Rental Income 39
Slide 40: 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 41: 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 41
Slide 42: 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 43: 2017 Schedule E Rental Income
2017 Schedule E Rental Income Rental Income 43
Slide 44: Rental Income (Schedule E example)
Income: Properties: A =— > 3 Rents received 3 52,766. 4 Royalties received . 4 Expenses: 5 Advertising . 5 6 Auto and travel (see instructions) . 6 7 Cleaning and maintenance 7 1,477. 8 Commissions. 8 9 Insurance . . 9 1,801. 10 Legal and other professional fees . 10 11. Management fees . 11 12 Mort
Slide 45: 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 46: 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 46
Slide 47: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Rental Income 47
Slide 48: Genworth Rate Express
Genworth Rate Express® Rental Income 48
Slide 49: LOS Connections
LOS Connections Rental Income 49
Slide 50: Training Tools and Information
Training Tools and Information Rental Income 50
Slide 51: Training Tools and Information
Training Tools and Information Rental Income 51
Slide 52: Additional MI Site Information
Additional MI Site Information Rental Income 52
Slide 53: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Rental Income 53
Slide 54: 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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