Enact Holdings, Inc. · NASDAQ:ACT
Enact — Investor Presentation (December 2020)
49 slides from Enact's investor presentation, December 2020
Slide 1: Reviewing Base Income: With Documentation Requirements
Reviewing Base Income: With Documentation Requirements December 2020 Customer Education Brought to you by: Genworth Customer Development and Process Consulting NOTICE: This document contains confidential, non-public company information. Further distribution of this document is strictly prohibited. ©
Slide 2: Agenda
Agenda What we will cover – ATR – The Mortgage Application 1003 – Verifying Employment History – Verifying Employment Income • Verification of Employment (1005) • Paystubs • W-2’s • Verbal Verification of Employment (VVOE) • 4506-T and 4506-C – Fannie Mae & Freddie Mac References – Genworth Website
Slide 3: Ability-to-Repay (ATR) Rule
Ability-to-Repay (ATR) Rule Key concepts of the 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 approved
Slide 4: The Mortgage Application 1003/65
The Mortgage Application 1003/65 Review and Calculate Base Income 3
Slide 5: Fannie Mae's URLA Page
Fannie Mae’s URLA Page https://singlefamily.fanniemae.com/delivering/uniform-mortgage-data-program/uniform-residential-loan- application Review and Calculate Base Income 4
Slide 6: Uniform Residential Loan Application link
https://www.fanniemae.com/singlefamily/uniform-residential-loan-application Review and Calculate Base Income 5
Slide 7: Verifying Employment History
Verifying Employment History Two year history is required on the 1003 for all applicants – Spell out the full, complete business name and address. – Correctly identify type of employment: • Does the borrower receive a W-2 or 1099? • If the borrower owns 25% or more of the business, they are self-emp
Slide 8: Verifying Employment History
Verifying Employment History *New * * Enter the Employer’s main number. Do NOT list the borrower’s personal work phone number that was collected in Section 1a. Review and Calculate Base Income 7
Slide 9: Verifying Non-Employment Income
Verifying Non-Employment Income *New * Review and Calculate Base Income 8
Slide 10: Verifying Previous Employment History
Verifying Previous Employment History *New Review and Calculate Base Income 9
Slide 11: Verifying Employment Income
Verifying Employment Income What Not to Ask- “How Much Do You Make?” About $50,000 $39,850!! Review and Calculate Base Income 10
Slide 12: Verifying Employment Income
Verifying Employment Income The Interview- Let’s talk about how you get paid… Do you Receive an Annual Salary? Are you Paid by the Hour? • If yes, what is your hourly rate? • How many hours do you work per week? – Are your hours scheduled or per diem? – Do the amount of hours vary week-to-week? – Do
Slide 13: Temporary COVID-19 Policies
Temporary COVID-19 Policies Fannie Mae and Freddie Mac have temporary policies in place during COVID-19 pandemic – Second level • Third level – Fourth level • Fifth level https://singlefamily.fanniemae.com/media/22316/display https://guide.freddiemac.com/app/guide/bulletin/2020-44 Review and Cal
Slide 14: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Continuity of Income: Effective March 23, 2020 to December 31, 2020 – Verbal VOE • Lenders may obtain a written VOE confirming the borrower’s current employment status within the same timeframe as the verbal VOE requirements. • An email directly from the employer’s work email a
Slide 15: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Effective for applications taken April 14, 2020 and until further notice: – Age of Documents • For most income and asset documents, age requirements is reduced from four months to two months or 60 days from the note date. If an asset statement is issued quarterly, lenders must
Slide 16: Fannie Mae LL-2020-03
Fannie Mae LL-2020-03 Reminders and Suspension of Employment Validation Service – Reminder that unemployment may only be used if it clearly is associated with seasonal employment reported on the signed federal tax returns and lenders verified the income by following B3-3.1-09 of the Selling Guide. •
Slide 17: Bulletin 2020-5
Bulletin 2020-5 The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before December 31, 2020*. Credit Underwriting: – Employed Income – 10-day pre-closing verification (PCV), Sellers may obtain one of t
Slide 18: Bulletin 2020-8
Bulletin 2020-8 The temporary credit underwriting requirements below are effective for Mortgages with Application Received Dates on or after April 14, 2020, and remain in place for Mortgages with Application Received Dates Until Further Notice; however, Sellers are encouraged to apply these updates
Slide 19: Bulletin 2020-14
Bulletin 2020-14 The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received Until Further Notice GUIDANCE AND REMINDERS Furloughs and layoffs Freddie Mac provides requirements for income while on temporary leave in Section 5303
Slide 20: Bulletin 2020-14
Bulletin 2020-14 The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received Until Further Notice Unemployment compensation While we recognize that many individuals have become eligible for assistance and compensation available
Slide 21: Income Calculation
Income Calculation Annual Salary/ 12 months Weekly- Every Week Weekly Base x 52 / 12 months Bi-Weekly- Every Two Weeks Bi-Weekly Base x 26/ 12 months Bi-Monthly- Twice a Month Bi-Monthly Base x 2 Hourly- Per Hours Worked Hourly Rate x # of Hours Per Week x 52/ 12 months Pier Diem, Commissions, OT… A
Slide 22: Monthly Income
Monthly Income Self Employed income (25% or more ownership of business) would be entered as Base Income but the indicator must be checked in the employment section. Review and Calculate Base Income 21
Slide 23: Verifying the Qualifying Income
Verifying the Qualifying Income A minimum history of two years of employment is recommended. However, in certain circumstances income that has been received for a shorter period of time may be acceptable. Each file is reviewed individually. Base Pay (Salary and Hourly) Obtain the following documents
Slide 24: Verification of Employment-1005
Verification of Employment-1005 Plant scheduled for shut down January 2021 Review and Calculate Base Income 23
Slide 25: Written Verification of Employment-1005
Written Verification of Employment-1005 VOE Reminders: – Independently verify address to which you are sending – Do not put “Attention to” on the form – Forms should be signed, dated with signature and printed name of employer – If faxed, note the origin of the faxed document-Is it coming from the e
Slide 26: VOE-1005
VOE -1005 All of the information on Form 1005 must be legible. • The following fields are optional; • #11- Probability • #14- OT & Bonus • #16- Date of next pay increase • #17- Projected amount of next pay increase • #18- Date of last pay increase • #19 Amount of last pay increase • #24- Part III- P
Slide 27: Examining Pay Stubs
Examining Pay Stubs Review and Calculate Base Income 26
Slide 28: Examining Pay Stubs
Examining Pay Stubs Reminders: – The borrower’s name and SSN# must be consistent with the application (Spelling, middle initial or a JR or III). – Computer generated, if not the most recent tax return is required and/or a written voe – If paid hourly, the number of hours must be noted on the paystub
Slide 29: Examining W-2s
Examining W-2s Review and Calculate Base Income 28
Slide 30: Examining W-2s
Examining W-2s W-2 Reminders: – Name and SSN# match application and also the pay stub – Applicant’s address should also match the 1003 and bank statement mailing address – Should be the most recent one or two (if required) – Is the ytd income consistent with monthly income, if not obtain explanation
Slide 31: Verbal VOE (VVOE)
Verbal VOE (VVOE) http://freddiemac.com/learn Review and Calculate Base Income 30
Slide 32: Verbal VOE (VVOE)
Verbal VOE (VVOE) • The Lender must independently obtain a phone number and, if possible, the employer’s address. Sources include: Follow COVID-19 • Telephone Book policies as • The Internet directed by your • Directory Assistance Investor • The Applicable Licensing Bureau • The Lender must contact
Slide 33: 2019 Tax Format
2019 Tax Format Review and Calculate Base Income 32
Slide 34: Form 4506-T
Form 4506-T There is a new transcript format that better protects taxpayer data. This new format partially masks personally identifiable information. Financial data will remain fully visible to allow for tax preparation, tax representation or income verification. Because the full SSN is masked, the
Slide 35: IRS 4506-C
IRS 4506-C Fannie Mae https://www.irs.gov/pub/irs-pdf/f4506c.pdf Review and Calculate Base Income 34
Slide 36: Fannie Mae Guidelines 4506-T
Fannie Mae Guidelines 4506-T https://selling-guide.fanniemae.com/ Review and Calculate Base Income 35
Slide 37: Freddie Mac Guidelines 4506-T
Freddie Mac Guidelines 4506-T https://guide.freddiemac.com/app/guide/section/5302.5 Review and Calculate Base Income 36
Slide 38: Fannie Mae Selling Guide
Fannie Mae Selling Guide https://www.fanniemae.com/content/guide/selling/b3/3.1/01.html Review and Calculate Base Income 37
Slide 39: Fannie Mae Selling Guide
Fannie Mae Selling Guide https://www.fanniemae.com/content/guide/selling/b3/3.1/03.html Review and Calculate Base Income 38
Slide 40: Freddie Mac Selling Guide
Freddie Mac Selling Guide https://guide.freddiemac.com/app/guide/topic/5300 Review and Calculate Base Income 39
Slide 41: Freddie Mac's LPA Documentation Matrix
Freddie Mac’s LPA Documentation Matrix https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf Review and Calculate Base Income 40
Slide 42: Genworth Underwriting Guidelines
Genworth Underwriting Guidelines Review and Calculate Base Income 41
Slide 43: Genworth Rate Express
Genworth Rate Express® Review and Calculate Base Income 42
Slide 44: LOS Connections
LOS Connections Review and Calculate Base Income 43
Slide 45: Training Tools and Information
Training Tools and Information Review and Calculate Base Income 44
Slide 46: Training Tools and Information
Training Tools and Information Review and Calculate Base Income 45
Slide 47: Additional MI Site Information
Additional MI Site Information Review and Calculate Base Income 46
Slide 48: Your Genworth Resources
Your Genworth Resources ➢ ActionCenter®: 800 444.5664 ➢ Your Local Genworth Regional Underwriter ➢ Your Genworth Sales Representative Review and Calculate Base Income 47
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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