reviewing miscellaneous non-employment income sources · • mortgage borrowers must provide ample...

Reviewing Miscellaneous Non-Employment Income Sources

February 2020

©2020 Genworth Financial, Inc. All rights reserved.

1Reviewing & Calculating Income from Miscellaneous Sources

ObjectiveUnderstand the Different Types of Income and How to Document Them

– Capital Gain– Alimony & Child Support– Social Security

• Tax Exempt– Public Assistance– Foster Care– Housing or Parsonage Allowance– Interest or Dividends

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 for a particular home loan, the borrower must have sufficient income and assets to repay the loan.

Reviewing & Calculating Income from Miscellaneous Sources‏2


The Mortgage Application 1003/65


Freddie Mac’s URLA Page

http://www.freddiemac.com/singlefamily/sell/ulad.html

http://www.freddiemac.com/singlefamily/sell/ulad.html


https://www.fanniemae.com/singlefamily/uniform-residential-loan-application

Fannie Mae’s URLA Page



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9 pages 4 pages 2 pages 1 page

1 page

Reviewing & Calculating Income from Miscellaneous Sources


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Verifying Non-Employment Income

•Reviewing & Calculating Income from Miscellaneous Sources

Freddie Mac


Selling Guide Income Topic 5300 Revised


https://guide.freddiemac.com/app/guide/topic/5300

https://guide.freddiemac.com/app/guide/content/a_id/1000659

https://guide.freddiemac.com/app/guide/topic/5300


Selling Guide Income Topic 5305.2




Income Continuance Requirements


Freddie Mac’s Single-Family Seller/Servicer Guide Series 5000: Origination and Underwriting

Topic 5300: Stable Monthly Income and Asset Qualification Sources

Chapter 5301: General Requirements for All Stable Monthly Income and Asset Qualification Sources

Income continuance charts were added to Topic 5301.1– Income and earnings types typically without documentable

continuance– Income types with documentable continuance– Other income types that may or may not have documentable

continuance

Loan Product Advisor Documentation Matrix


https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf


Fannie Mae


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https://singlefamily.fanniemae.com/


https://singlefamily.fanniemae.com/

Selling Guide


https://selling-guide.fanniemae.com/


Selling Guide




Non-Employment Income Sources


Fannie Mae Capital Gain Income

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Income received from capital gains is generally a one-time transaction; therefore, it should not be considered as part of the borrower’s stable monthly income. However, if the borrower needs to rely on income from capital gains to qualify, the income must be verified in accordance with the following requirements.


Freddie Mac Capital Gain Income


Single-Family Seller/Servicer GuideSeries 5000: Origination and UnderwritingTopic 5300: Stable Monthly Income and Asset Qualification SourcesChapter 5303: Employed Income5305.2: Specific Requirements for Other Income Types (10/31/18)

Alimony and Child SupportAlimony, Child Support or Separate Maintenance PaymentsIncome from alimony, child support or separate maintenance payments may be considered qualifying income if the documentation shows that the payer was obligated to make payments to the Borrower for the most recent six months and is obligated to make payment to the Borrower for at least the next three years. Evidence that the payments have been received for the most recent six months is required. If the payer has been obligated to make payments for less than six months, if the payments are not for the full amount or are not received on a consistent basis, the income must not be considered for qualifying


Fannie Mae Alimony or Child Support

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The following table provides verification requirements for alimony or child support.

Review the payment history to determine its suitability as stable qualifying income. To be considered stable income, full, regular, and timely payments must have been received for six months or longer. Income received for less than six months is considered unstable and may not be used to qualify the borrower for the mortgage. In addition, if full or partial payments are made on an inconsistent or sporadic basis, the income is not acceptable for the purpose of qualifying the borrower.


Freddie Mac - Alimony and Child Support




Fannie Mae Social Security

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The following table provides verification requirements for Social Security income.

Follow DU Findings Report for Documentation Requirements


Tax Exempt Income - Fannie Mae




Freddie Mac - Tax Exempt Income


Single-Family Seller/Servicer Guide Selling

Series 5000: Origination and Underwriting

Topic 5300: Stable Monthly Income and Asset Qualification Sources

Chapter 5305: Other Income

5305.2: Specific requirements for other income types



Fannie Mae Public Assistance

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The following table provides verification requirements for public assistance income.


Public Assistance - Freddie Mac

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Existing and established public assistance income: Evidence of the source, benefit type, payment frequency, amount, duration of benefit eligibility and current receipt must be obtained History of receipt: A history of receipt is not required for the income to be considered stableContinuance: All public assistance income must be likely to continue for the next three yearsCalculation: Use the documented public assistance benefit amountExisting and established sources of public assistance benefits: Document income source, benefit type, payment frequency, pre-

determined payment amount and duration of benefit eligibility with a copy of the benefit verification letter or other equivalent documentation from applicable agency.




Fannie Mae Foster Care

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Income received from a state- or county-sponsored organization for providing temporary care for one or more children may be considered acceptable stable income if the following requirements are met.


Freddie Mac – Foster Care


History of receipt: Most recent two-years

Continuance: Must be likely to continue for at least the next three years

Calculation: 24-month average



Fannie Mae Housing or Parsonage Allowance

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A housing or parsonage allowance may be considered qualifying income if there is documentation that it has been received for the most recent 12 months and the allowance is likely to continue for the next three years. The housing allowance may be added to income but may not be used to offset the monthly housing payment.


Freddie Mac – Housing or Parsonage Allowance


History of receipt: Most recent 12 months

Continuance: Must be likely to continue for at least the next three years

Calculation: Use the documented monthly payment amount

The housing allowance may not be used to offset the monthly housing payment.


Housing or parsonage allowance (for military housing entitlements refer to Section 5303.3(d). For housing allowance received pursuant to an employee relocation program, refer to Section 4408.3 (c))




Fannie Mae Interest and Dividends

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The following table provides verification requirements for interest and dividends income.


Freddie Mac – Interest and Dividends




Genworth Rate Express®

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Genworth Underwriting Guidelines

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LOS Connections

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Training Tools and Information

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Training Tools and Information

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Additional MI Site Information

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ActionCenter®: 800 444.5664

Your Local Genworth Regional Underwriter

Your Genworth Sales Representative

Your Genworth Resources


Legal Disclaimer Genworth Mortgage Insurance is happy to provide you with these training materials. While we strive for‏accuracy, 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 IMPLIED‏INCLUDING 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.

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