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Page 1: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Self-Employed Borrower:SAM Form Part I - Personal Tax Returns

November 2019

©2019 Genworth Financial, Inc. All rights reserved. 0

Page 2: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

1Self-Employed Borrower SAM Form Part I

Lender Responsibility

Investors (Fannie Mae, Freddie Mac, Private Investors) require it be

determined that self-employed borrowers demonstrate the financial

ability to repay the mortgage.

– History

– Income calculation

– Continuance / Stability of income

Session Covers Conventional Loans And Today’s Session Reviews The

Personal Tax Returns; Business Returns Are Reviewed In Part II

Page 3: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

2Self-Employed Borrower SAM Form Part I

Objective

Learn to use the Schedule Analysis Form (SAM) form and calculate

supportable self-employed borrower income from personal tax returns

– W-2 wages from a business owned by the borrower

– Schedule B dividends and interest income

– Income from a Schedule C (Sole Proprietor)

– Consideration of Capital Gains & Losses Schedule D

– Net Rental Income from Schedule E

Page 4: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Self-Employment Fannie Mae

3Self-Employed Borrower SAM Form Part I

https://www.fanniemae.com/content/guide/selling/b3/3.2/01.html

https://www.fanniemae.com/content/guide/selling/b3/3.2/01.html
Page 5: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Self-Employment Fannie Mae

4Self-Employed Borrower SAM Form Part I

Fannie Mae 2019 Selling Guide B3-3.2-01, Underwriting Factors and

Documentation for a Self-Employed Borrower (12/04/2018)

Page 6: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Self-Employment Fannie Mae

5Self-Employed Borrower SAM Form Part I

Fannie Mae 2019 Selling Guide B3-3.2-01, Underwriting Factors and

Documentation for a Self-Employed Borrower (12/04/2018)

Page 7: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Freddie Mac Documentation Matrix

Documentation Matrix

– Assists in underwriting and

documenting loans for Freddie Mac

– Lenders may have overlays

– Check specific program

requirements

– Updated October 2019

7Self-Employed Borrower SAM Form Part I

http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf

http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf
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8Self-Employed Borrower SAM Form Part I

Documentation Matrix

Page 14 of Matrix

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9Self-Employed Borrower SAM Form Part I

Documentation Matrix

Page 15 of Matrix

Page 10: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

10Self-Employed Borrower SAM Form Part I

Documentation Matrix

Page 15 of Matrix

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11Self-Employed Borrower SAM Form Part I

Documentation Matrix

Page 15 of Matrix

Page 12: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Chapter 5304.1(d) Business and Income

Analysis

13Self-Employed Borrower SAM Form Part I

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16Self-Employed Borrower SAM Form Part I

Chapter 5304.1(d) Business and Income

Analysis

Page 14: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Training Tools and Information

Self-Employed Borrower SAM Form Part I 17

www.mi.Genworth.com

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Training Tools and Information

Self-Employed Borrower SAM Form Part I 1818

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19Self-Employed Borrower SAM Form Part I

When Borrowers Own Multiple Partnerships, S Corps Or Corporations,

Complete A Separate Worksheet For Each Business; Complete A Separate

Worksheet For Each Borrower

Page 17: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Does Borrower Own > 25% of a Business?

20Self-Employed Borrower SAM Form Part I

Can checking the Self-employed Indicator to “Yes” increase the

risk of the loan when evaluated by Desktop Underwriter®? What

about Loan Product Advisor®?

YesNo

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You’ll Need

21Self-Employed Borrower SAM Form Part I

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22Self-Employed Borrower SAM Form Part I

The Case Study

You will be working with John and Mary Homeowner who:

– Own a Schedule C business called Impressive Images (John)

– Have schedule B interest income earned from personal assets

– Have capital gain/loss activity reported on a Schedule D

– Own an existing rental property shown on a Schedule E

– *Own 35% of an LLC called Dallas Designers (Mary)

• Reported on a 1065 Partnership Return

• Mary receives a K-1

– *Own 100% of an S Corporation called Wellness World (John)

• Income reported on 1120S Tax Return

• Receives a K-1

• John receives a W-2 Wage from the business (Wellness World)

*Covered in part II

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23Self-Employed Borrower SAM Form Part I

IRS Form 1040

Review for:

– Name, Address, Social

– All pages and schedules

– Any Red Flags

– Most recent

– Signed?

– Review Line 6 for indication of a

Schedule 1

Page 2

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Calculator and Quick Reference Guide

Access your Quick Reference Guide SAM Form and YOUR Case Study

24Self-Employed Borrower SAM Form Part I

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2018 Schedule B

25Self-Employed Borrower SAM Form Part I

Don’t use unless needed for‏

qualifying

– Use ONLY if income is coming

from SELF-EMPLOYMENT

– If borrower owns a US

corporation that paid dividends,

you must subtract out the

dividends paid

– We are only reviewing a one

year history, so we cannot use!

0

0

Page 6

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26Self-Employed Borrower SAM Form Part I

SAM Form Section II Schedule C

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27Self-Employed Borrower SAM Form Part I

Did Your Borrower File a Schedule C?

Review Line 12 on the

Schedule 1 for any

indication that the

borrower filed a Schedule

C for 2018 returns

Page 3

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Schedule C

28Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

29Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

30Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

31Self-Employed Borrower SAM Form Part I

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Schedule C

32Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

33Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

34Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

35Self-Employed Borrower SAM Form Part I

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Schedule C

36Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

37Self-Employed Borrower SAM Form Part I

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Schedule C

38Self-Employed Borrower SAM Form Part I

Page 7

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Schedule C

39Self-Employed Borrower SAM Form Part I

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40Self-Employed Borrower SAM Form Part I

Schedule C

Review Line 9 for Car and

Truck Expenses

– If there is an entry, look for the

math

Page 7

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Schedule C

Additional depreciation can be found by multiplying business miles on

Schedule C, Line 44a x IRS depreciation factor for that year.

41Self-Employed Borrower SAM Form Part I

Page 8

If The Schedule C Section IV (On Page 2) Is Blank, Review For An IRS Form

4562 Worksheet.

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Schedule C

42Self-Employed Borrower SAM Form Part I

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43Self-Employed Borrower SAM Form Part I

Schedule C

Verify 4562 is for the Schedule C

– Review Page 2 of the worksheet

Line #30

Page 13

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44Self-Employed Borrower SAM Form Part I

Schedule C

Page 14

Business Miles Of 8,422 x 25¢ Is $2,105 In Additional Depreciation

That Could Be Added Back.

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45Self-Employed Borrower SAM Form Part I

Schedule C

Pages 15 and 16

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IRS Publication 463

46Self-Employed Borrower SAM Form Part I

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Schedule C

47Self-Employed Borrower SAM Form Part I

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Schedule C

48Self-Employed Borrower SAM Form Part I

Enter only the $2,999 amortization on your calculator‏

Page 8

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Schedule C

49Self-Employed Borrower SAM Form Part I

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SAM Form Section III

50Self-Employed Borrower SAM Form Part I

Don’t Use If You Don’t Need; If Needed To Qualify Check Investor Guidelines

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51Self-Employed Borrower SAM Form Part I

Schedule D Capital Gains

Don’t use unless needed for

qualifying

– Two year history, stable receipt and

likely to continue

– Check investor overlays before using

– Let’s review IRS Form 1040, Line 13

for 2017 or Schedule 1, Line 13 for

2018 returns

– Our 2018 example show $3,000 loss

Pages 3 and 9

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Schedule D

52Self-Employed Borrower SAM Form Part I

Where Did The $13,544 Loss On Line 6 Come From?

The 1040 Showed A $3,000 Loss.

Page 9

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Schedule D

53Self-Employed Borrower SAM Form Part I

Page 10

0

Page 51: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

– Locate Calculator and Quick Reference

Guide for Rental Income

– Turn to Schedule E, Part I, Rentals

– Rental Income has been removed from

the Cash Flow Analysis Form

Genworth Rental Income Calculator

55Self-Employed Borrower SAM Form Part I

Page 11

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Mortgage Statement/Payment Coupon

A mortgage statement/payment coupon can verify:

– If loan is impounded or escrowed

– What property is associated with the mortgage payment

– Current tax and insurance information

– Current HOA dues: most investors want verification PUD, Condo or Coop

56Self-Employed Borrower SAM Form Part I

PITI $1,637 (verified on mortgage statement) + $265 (verified HOA) = $1,902

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57Self-Employed Borrower SAM Form Part I

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58Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

59Self-Employed Borrower SAM Form Part I

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60Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

61Self-Employed Borrower SAM Form Part I

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62Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

63Self-Employed Borrower SAM Form Part I

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64Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

65Self-Employed Borrower SAM Form Part I

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66Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

67Self-Employed Borrower SAM Form Part I

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68Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

69Self-Employed Borrower SAM Form Part I

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70Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

71Self-Employed Borrower SAM Form Part I

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72Self-Employed Borrower SAM Form Part I

Page 11

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2018 Schedule E Rental Income

73Self-Employed Borrower SAM Form Part I

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2018 Schedule E Rental Income

74Self-Employed Borrower SAM Form Part I

Page 71: Self-Employed Borrower SAM Form Part 1...Self-Employed Borrower SAM Form Part I 51 Schedule D Capital Gains Don’t use unless needed for qualifying –Two year history, stable receipt

Mortgage Statement/Payment Coupon

A mortgage statement/payment coupon can verify:

– If loan is impounded or escrowed

– What property is associated with the mortgage payment

– Current tax and insurance information

– Current HOA dues: most investors want verification PUD, Condo or Coop

75Self-Employed Borrower SAM Form Part I

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2018 Schedule E Rental Income

76Self-Employed Borrower SAM Form Part I

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2018 Schedule E Rental Income

77Self-Employed Borrower SAM Form Part I

PITI $1,637 (verified on mortgage statement) + $265 (verified HOA) = $1,902

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Compare “Rental Income” figure with loan application (Fannie Mae

Form 1003)

– 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 true income/loss

based on the tax returns

Net Rental Income

78Self-Employed Borrower SAM Form Part I

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Genworth Rate Express®

Self-Employed Borrower SAM Form Part I 79

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Genworth Underwriting Guidelines

Self-Employed Borrower SAM Form Part I 80

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LOS Connections

Self-Employed Borrower SAM Form Part I 81

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Training Tools and Information

Self-Employed Borrower SAM Form Part I 82

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Training Tools and Information

Self-Employed Borrower SAM Form Part I 83

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Additional MI Site Information

Self-Employed Borrower SAM Form Part I 84

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➢ ActionCenter®: 800 444.5664

➢ Your Local Genworth

Regional Underwriter

➢ Your Genworth Sales

Representative

Your Genworth Resources

Self-Employed Borrower SAM Form Part I 85

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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 training is not intended as legal advice, and is

not a substitute for advice of counsel. You should always check with your own legal advisors for

interpretations of legal and compliance principles applicable to your business.

,GENWORTH EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED‏

INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A

PARTICULAR PURPOSE, WITH RESPECT TO THESE MATERIALS AND THE RELATED TRAINING. IN

NO EVENT SHALL GENWORTH BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, OR

CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER WITH RESPECT TO THE TRAINING AND

THE MATERIALS.

Genworth Mortgage Insurance Offers A Comprehensive Suite Of Training

Opportunities To Boost Your Know-How, Benefit Your Bottom Line, And Serve Your

Borrowers Better. Visit mi.genworth.com To Learn More.

Collateral Underwriter®, Home Ready® and Desktop Underwriter® or DU® are registered trademarks of Fannie Mae

Loan Product Advisor®, Home Possible®, Loan Collateral Advisor® and Home Value Explorer® (HVE®) are registered trademarks of Freddie Mac

ActionCenter®, Homebuyer Privileges® and Rate Express® are registered trademarks of Genworth Mortgage Insurance

Self-Employed Borrower SAM Form Part I 86


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