PDF Presented by Genworth Mortgage Insurance May 2017

[Pages:82]Calculating Income

Presented by Genworth Mortgage Insurance May 2017

Genworth Mortgage Insurance Corporation

?2017 Genworth Financial, Inc. All rights reserved.

Agenda

What we will cover

? General Income Requirements ? Documentation Requirements ? Fannie Mae ? Freddie Mac ? Practice Cases ? Genworth Website ? Helpful tools

Calculating Income

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Let's Take A Quiz

True or False: I own 10% of a Partnership. Do I get a Form K-1?

?True or False: If a borrower earns commission income and the trend over two years is declining, lenders can always take the most recent year and average over 12 months to be conservative?

Calculating Income

See Fannie Mae Seller Guide or The Guide for Freddie Mac for more information

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Income Requirements

Establish that income is:

? Steady, Stable or increasing. ? Likely to continue into the future ? Must be able to document the income as per investor guidelines (Are they

reporting it on their tax returns??) ? Income from other Non-Employed Sources such as Child Support, Interest

Income or Retirement income might be considered qualifying income but have different qualifying guidelines ? Policies change often, always verify requirements for uncommon or seldom used income types

Use Of Declining Income Is One Of The Most Common Calculation Errors

Calculating Income

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Income Document Requirements

Documentation Requirements

? Manual Underwrite: Typically requires two year history to be received and documented

? Automated underwriting (Loan Product AdvisorSM f/k/a Loan Prospector ? or Desktop Underwriter?):

? Typically follow the findings report or feedback certificate ? Often documentation is reduced from a manual underwrite

? Additional documentation is always required to clarify a question, inconsistency or continuance of an income source

? Conservative income calculations are preferred ? When MI is needed, always verify MI guideline requirements as well

Documentation Overlays May Exist; Always Check Investor Credit Policy For Additional Requirements

Calculating Income

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Resources

To access the Fannie Mae Seller Guide:

? Go to ? Click on "Single Family", "Guides" and then "Allregs" ? Allregs covers both manual and DU underwriting requirements ? Chapter B3-3-2 of the Seller Guide discusses Income Underwriting

requirements

?To access the Freddie Mac LPA Documentation Matrix and The Freddie Mac Seller/Servicer Guide:

? Go to ? Click on "Single Family", " and then "Allregs." which is Freddie Mac's

Seller/Servicer Guide or ? Click on "Learning Center" then "Quick References" for

? Loan Product Advisor Documentation Matrix (Updated February 2017) ? Rental income matrix, (updated in April 2017) ? Chapter 5301.1 of Seller/Servicer Guide for Stable monthly income and asset qualification for Freddie Mac

Calculating Income

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Documenting Employment and Income

Two Year History is Required on the 1003 for all applicants

For Freddie Mac, Gaps Greater Than 30 Days Should Be Addressed By The Applicant

Calculating Income

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Documenting Employment and Income

Do Not Lump Income Types Together Break Out Income Type For Proper AUS Results

Calculating Income

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