Calculator and Quick Reference Guide: Fannie Mae Cash Flow Analysis. 2020 ) + 0 (Sep. 2020 ) = $0 Mil. $360,000 / 240 = $1458.33 used for monthly income. Non- occupant coborrowers not permitted. Note: A lender may use Fannie Mae Rental Income Worksheets (Form 1037 or Form 1038) or a comparable form to calculate individual rental income (loss) reported on Schedule E. a. Every lender has different Asset Depletion Guidelines. Warning! Social Security Income For Mortgage Lending Guidelines, Fannie Mae Collection Guidelines On Conventional Loans. Depreciation is a present expense that accounts for the past cost of an asset that is now providing benefits. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. Fannie Mae Releases December 2020 Home Purchase Sentiment Index January 5, 2021 Statement on Fannie Mae's 2021 Duty to Serve Plan from Jeffery R. Hayward, Executive Vice President and Chief Administrative Officer, Fannie Mae Sep 14 2012, 4:23PM Late Friday Fannie Mae gave borrowers and lenders an … Fundamental company data provided by Morningstar, updated daily. All Rights Reserved. Gustancho.com Asset depletion is a calculation where a borrower’s liquid assets are entered into a calculation to bring up the amount of monthly income they have in order to make mortgage payments. The new rule now in effect by Freddie Mac Asset Depletion Guidelines allows $486.11 more income compared to … Loss Sharing formula) Equals: Net Asset Value m. Additional Collateral. Click here to check it out. This feature is only available for Premium Members, please sign up for. 2012 2011: NOTES: 1: Total Income (Line 22) * Tax–exempt interest income is not self–employed income and should not be entered on this form. You can manage your stock email alerts here. Asset Depletion, which is also known as Asset Dissipation, is what you get when your liquid assets are calculated using a specific formula to provide you with monthly income for qualifying. • Borrower has $1,000,000 in liquid assets. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. Fannie Mae's Earnings per Share (Diluted) for the three months ended in Sep. 2020 was $0.00. Form 1040 — Individual Income Tax Return. Please use the following quick reference guide to assist you in completing Fannie Mae Form 1084. 2020 ) + 0 (Jun. 1.Take sum of eligible assets 2. It is critical that investors read this note. We are a mortgage brokers licensed in multiple states. Do Fannie Mae’s existing disaster policies in the Selling Guide apply to the COVID- 19 pandemic? You can use 70% of the asset for income, then divide by 240 months: $500,000 * 70% = $350,000. Instead, lenders can follow the guidance in Lender Letter s . Asset Depletion Qualification is simply an Underwriter’s tool to apply more qualifying income by calculating a return on the borrower’s “liquidable” assets. The asset depletion loan program is ideal for wealthy borrowers who have substantial assets but do not have a regular traditional income source. Explore APIs . Fannie Mae's depreciation, depletion and amortization for the By contrast, Fannie Mae and Freddie Mac require a 30 percent down payment on asset-based mortgage loans. As long as you have assets, we will match you with a perfect asset depletion loan program for you. Individuals who change jobs frequently, but who are nevertheless able to earn consistent and predictable income, are also considered to have a reliable flow of income for qualifying purposes. So, instead of reporting a $300 million purchase expense in 1982, the company might: To calculate depreciation, a company must make estimates and choices such as: The range of different ways of spreading the cost under GAAP accounting is too long to list. Note: Use Fannie Mae Rental Income Worksheets (Form 1037 or Form 1038) to evaluate individual rental income (loss) reported on Schedule E. Refer to Some details about how this … Fannie Mae DUS Guide Page 5. GCA - Commercial And Residential Informational Center, This BLOG On Asset Depletion Guidelines For Borrowers Without Income Was PUBLISHED On November 10th, 2020, Non-traditional mortgages came to an abrupt halt after the 2008 mortgage meltdown. 2020 ) + 0 (Sep. 2020 ) = $0 Mil. Both Warren Buffett and Charlie Munger hate the idea of EDITDA because depreciation is not included as an expense. Business capital losses identified on Schedule D do not have to be considered when calculating income or liabilities, even if the losses are recurring. Generally the calculation is a borrowers total assets divided by a set number of months, such as 360 for the standard 30 year loan. Companies do not have cash layout for depreciation. | NMLS Consumer Access, Qualifying For A Mortgage Has Never Been Easier, Asset Depletion Guidelines For Borrowers Without Income, mortgages came to an abrupt halt after the 2008 mortgage meltdown, Bank statement loans for self-employed borrowers, Non-QM Jumbo Loans with credit scores down to 500 FICO, 90% Loan-To-Value NON-QM Jumbo Mortgages With Low Credit Scores, Steps On How To Avoid Mortgage Denial During The Loan Process, Non-Traditional Credit Tradelines To Qualify For Mortgage, Government Versus Conventional Mortgage Guidelines, Nontraditional Credit Tradelines In Mortgage Qualification, Renting A Home Versus Buying A Home And Benefits Of Homeownership, FHA Loan With Unsatisfied Judgment And Tax Lien, Buying House Next To Power Lines And How It Affects Resale, Secured Credit Cards To Improve Scores To Qualify For Mortgage, Importance Solid Pre-Approval Letter On Home Purchase, Credit Disputes During Mortgage Underwriting Process Guidelines, How Underwriters View Unsourced Funds In Mortgage Process, Benefits Of Hiring Real Estate Agent When Buying Or Selling Home. The calculation of depletion involves these steps: Compute a depletion base. The lender uses a formula called “asset depreciation” or “asset annuitization or depletion” to impute a monthly distribution from the investment portfolio. Some jumbo lenders who cater to high net worth individuals have more liberal asset depreciation programs. Dig into our use cases or public APIs to discover the latest Fannie Mae products designed for you. Schedule E – Supplemental Income and Loss . * All numbers are in … Rather, the amount simply reflects an ongoing reduction in the amount of … . As a result, the asset - although it is still being used - is carried on the balance sheet at its salvage value. This single asset item may be marked Net. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. It guarantees that investors in these securities will receive prompt payment of the principal and interest due on the mortgages. 09/03/96. Examples of Asset Depletion: Example 1: 43-year old borrower: • Borrower’s income is $5,000/month but DTI is too high to qualify. Assets are generally qualified with 100% of cash accounts and 70% of retirement and investment accounts (100% of retirement funds may be … That's why we've developed several self-employed borrower calculators to help you calculate and analyze their assets properly. (-) 30% of the remaining value IF a Stock, Bond or Mutual Fund 3. Fannie Mae FNMA Stock Message Board: [quote][i] So, in your calculations, converting JPS would raise As such, asset dissipation loans typically require a large down payment. The matching principle states that companies should report associated costs and benefits at the same time. We are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, FHA 203k Loans, Reverse Mortgages Jumbo Mortgages, Non-QM mortgages, Bank Statement Mortgage Loans for self employed borrowers, and alternative financing. The stable and reliable flow of income is a key consideration in mortgage loan underwriting. Page 4 Fannie Mae DUS Guide. The income may also be added to any additional monthly income currently being received. Or email us at gcho@gustancho.com. Fannie Mae (DU) Conventional Loan Matrix- Correspondent Updated 9/18/2020 620+ 95% 90% 85% Purchase 75% R/T 2 - 4 Units FICO Score FICO Score 1 Unit/Condo 80% 2 unit: 85% 3-4 Unit: 75% 75% 75% Purchase and R/T • For purchases at least 1 borrower must be a first-time homebuyer as defined by Fannie Mae. FNMA has been removed from your Stock Email Alerts list. Investors can find this note in the company's 10-K. Past depreciation expenses accumulate on the balance sheet. Asset Depletion Guidelines For Borrowers Without Income. View and export this data going back to 2010. IRS Form 1040 – Individual Income Tax Return . 100% of the assets … The interest calculation method is generally specified in the Loan Documents Loan Documents All documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. Please use the following quick reference guide to assist you in completing Fannie Mae Form 1084. Asset Depletion Program Overview: Frequently, special attention is required beyond traditional underwriting guidelines for high net worth borrowers with varying streams of income. Borrowers who use an asset depletion program to qualify do not need to show any source of income or employment. 5. Apply Now; Credit Soft Pull; Document Checklist; Mortgage Calculator; Mortgage Programs. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. It is possible for a company to have fully depreciated assets on its balance sheet. Gustan Cho Associates now offers the following: In this article, we will cover and discuss Asset Depletion Mortgages. The resulting net carrying amount of natural resources still on the books of a business do not necessarily reflect the market value of the underlying natural resources. * All numbers are in millions except for per share data and ratio. © 2004-2021 GuruFocus.com, LLC. Many home buyers, especially retirees, have limited or no traditional income. This is a reminder that depreciation involves estimates and choices. To create income statements that meet the matching principle, accountants use an expense called depreciation. Just use your Fannie Mae account to get started. Schedule E – Supplemental Income and . Custodial Accounts for Taxes and Insurance ... Exhibit VII-5 DUS Final Settlement of Loss Calculation. Bank of America reports that typical mortgage loans require a down-payment of between 5 and 20 percent. Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at Loan Cabin. Servicers Servicers Primary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). Calculator and Quick Reference Guide: Fannie Mae® Cash Flow Analysis. New Fannie Mae Guidelines Allow Verification of Assets in Lieu of Income . The information on this site is in no way guaranteed for completeness, accuracy or in any other way. It is actually the asset account netted against the contra asset account. Fannie Mae’s underwriting guidelines emphasize the continuity of a borrower’s stable income. Many of these alternative loan programs that were discontinued right after the 2008 mortgage and credit collapse is now coming back. These choices can be either overly aggressive or overly conservative. Let’s take an example of one of Dale Elenteny’s borrowers who qualified for a particular asset depletion loan program: This borrower has a loan approval and is scheduled to close in the coming days. Loan Cabin Inc. NMLS 165732 dba Gustan Cho Associates, NMLS 873293. Such as Property, Plant, and Equipment - Net. Total Expenses (Line 20) – c. Depletion (Line 18) + Subtotal Schedule E = 6 Schedule F – Profit or Loss from Farming a. They can instead rely on asset depletion calculations based on a combination of cash, retirement, and investment monies divided by 360 payments. How an asset depletion loan works is you take your total assets and divide that total by 360 months (the number of months in a 30 year mortgage). The term amortization is used when discussing intangible assets. Web Designer Chicago | Disclaimer | Disclosures & Licenses | Copyrights | Privacy Policy © 2021 - Gustan Cho Associates. Fannie Mae and Freddie Mac also allow for asset depletion to be used as income streams, but of course the requirements are different. Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2020 was 0 (Dec. 2019 ) + 0 (Mar. Use the following calculation when determining the available income: [ (Mortgage Amount) x (Note Rate) x (MCC %)] ÷ 12 = Amount added to borrower’s monthly income. Gustan Cho Associates has multiple asset depletion loan programs. Qualifying assets tend to be only liquid assets such as cash, investment accounts and retirement accounts. Depletion and amortization are synonyms for depreciation. Fannie Mae considers distributions from 401(k)s, IRAs, or Keogh retirement accounts to have a defined expiration date because they involve depletion of an asset. 2016 2017: NOTES: 1: W-2 Income from Self-Employment (Line 5) + * … Your email address will not be published. It provides . Depreciation estimates make the calculation of net income susceptible to management's accounting choices. suggested guidance only and does not replace Fannie Mae instructions or applicable guidelines. suggested guidance only and does not replace Fannie Mae instructions or applicable guidelines. Many retirees and business owners are ideal borrowers who can benefit from the asset depletion loan program. Therefore, depreciation is added back in the cash flow statement. Freddie Mac Form 91 Calculator (2018-2019) Quick reference guide and income analysis for Freddie Mac Form 91 updated. Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2020 was 0 (Dec. 2019 ) + 0 (Mar. three Instead, they simply show a single item. IRS Form 1040 – Individual Income Tax Return How as asset depletion loan works, is you take the total amount of your eligible assets, and then divide that amount by a specific number of months (which usually ranges from 60-360 months depending on the lender). ... Fannie Mae Form 1084 Calculator XLS (2018-2019) Calculate and analyze cash flow to help you complete Fannie Mae form 1084. updated. Asset depletion is a calculation where a borrower’s liquid assets are entered into a calculation to bring up the amount of monthly income they have in order to make mortgage payments. Only PremiumPlus Member can access this feature. Generally the calculation is a borrowers total assets divided by a set number of months, such as 360 for the standard 30 year loan. The Asset Depletion Program allows the Underwriter to use a Borrower’s LIQUID ASSETS to provide more income to qualify! Warren Buffett even jokingly said We prefer earnings before everything when criticizing the abuse of EDITDA. Create your app. This will create a “monthly income”, which certain lenders will allow you to use in lieu of actual income/employment. Dale Elenteny is our Asset Depletion Mortgage Expert and a Senior Vice President at Gustan Cho Associates at Loan Cabin Inc. A contra asset account is an account that offsets an asset account. 09/03/96. This means the company's estimate of the useful life of the asset was shorter than the asset's actual useful life. Fannie Mae's Book Value per Share for the quarter that ended in Sep. 2020 was $-102.99. Stock quotes provided by InterActive Data. All Rights Reserved. Borrowers who derive income from such sources must document that it is expected to continue for at least three years after the date of their mortgage application. Now, borrowers with substantial assets with no income can qualify for mortgages with asset depletion loans. Calculator and Quick Reference Guide: Fannie Mae Cash Flow Analysis. The good news is that alternative financing is coming back. Take the Remainder and Divide by length or loan. Float Percentage Of Total Shares Outstanding, Accounts Payable & Accrued Expense for Financial Companies, Accumulated other comprehensive income (loss), Cash, Cash Equivalents, Marketable Securities, Long-Term Debt & Capital Lease Obligation, Other Liabilities for Insurance Companies, Short-Term Debt & Capital Lease Obligation, Cash From Discontinued Investing Activities, Cash Payments for Deposits by Banks and Customers, Cash Receipts from Deposits by Banks and Customers, Cash Receipts from Securities Related Activities, Other Cash Payments from Operating Activities, Other Cash Receipts from Operating Activities, Payments to Suppliers for Goods and Services, Earn affiliate commissions by embedding GuruFocus Charts. suggested guidance only and does not replace Fannie Mae® instructions or applicable guidelines. Subtract the following: (-) Amount of penalty that would apply if the (-) Amount of funds used for down payment, closing costs, and required reserves. Most public companies choose not to show this contra asset account on the balance sheet they present to shareholders. Compute a unit depletion rate. It provides . Past performance is a poor indicator of future performance. No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. So, for example a company might have: In this case, the only item likely to be shown on the balance sheet is Property, Plant, and Equipment - Net. Loss. This is the cost of the company's property, plant, and equipment (asset account) minus the accumulated depreciation (the contra asset account). It is not an infallible process. Once you’ve created an app, copy the key and start using the APIs you selected. Mortgage Calculator; Mortgage Glossary; No Closing Costs Progam; Preapproval Letter; Rate Secured; Mortgage Financing. Quick Reference Guide: Fannie Mae Cash Flow Analysis . Popular loan programs such as stated income, no doc, bank statement loans, and asset depletion loans came to an abrupt halt. Banks may sell loans to Fannie Mae individually or pooled with other loans, directly or through intermediaries. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. Lender’s Fannie Mae servicing portfolio (the “Floor Amount”) 3 PLUS 0.05% of the UPB of each Mortgage Loan with DUS loss sharing in the Lender’s Fannie Mae servicing portfolio adjusted by multiplying such amount by the applicable loss sharing rate for such Mortgage Loan (the “Adjustable Amount”) Please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for a faster response. Sorry. Log in with your credentials and hit “Create app” to begin the process. Please enter Portfolio Name for new portfolio. Royalties Received (Line 4) + b. GuruFocus has detected 3 Severe Warning Signs with FNMA. 2020 ) + 0 (Jun. Form 1040 — Individual Income Tax Return. 2013 2012: NOTES : 1: Total Income (Line 22) *Tax–exempt interest income: is not self–employed income and should not be entered on this form. Our asset depletion mortgage loan programs are for primary owner-occupant homes, second homes, and investment properties. Fannie Mae  (OTCPK:FNMA) Depreciation, Depletion and Amortization Explanation. Charge depletion based on units of usage. Borrowers who do not have a regular source of income but have assets can now qualify for an asset depletion mortgage. Dividends paid to preferred stocks need to be subtracted from net income in the calculation of Earnings per Share (Diluted). i.e. Fannie Mae then issues securities backed by pools of these mortgages that it sells to capital markets. months ended in Sep. 2020 was $0 Mil. Here is how Dale Elenteny summarizes Asset Depletion Income Calculation: As mentioned earlier, Gustan Cho Associates at Loan Cabin has various asset depletion guidelines. c. Depletion (+)_____ (+)_____ d. Depreciation (+)_____ (+)_____ ... Business capital losses identified on Schedule D do not have to be considered when calculating income or liabilities, even if the losses are recurring. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Sep. 2020 was $0 Mil. Although depreciation is not a cash cost, it is a real business cost because the company has to pay for the fixed assets when it purchases them. 5. LL-2020-03, Impact of COVID -19 on Originations and LL-2020-04, All numbers are in their local exchange's currency. 360 for 30 years, 180 for 15 years. However, public companies in the United States explain their depreciation choices to shareholders in a note to their financial statements. suggested guidance only and does not replace Fannie Mae instructions or applicable guidelines. Approve and use your app. FNMA has been successfully added to your Stock Email Alerts list. One of the key tenets of Generally Accepted Accounting Principles (GAAP) is the matching principle. It means the company's assets cost $150 million, the company has reported $120 million in depreciation expense over the years, and the company is now reporting the assets have a book value of $30 million. Xls ( 2018-2019 ) calculate and analyze cash Flow statement: Fannie Mae ’ s liquid to! Such, asset dissipation loans typically require a 30 percent down payment on the balance sheet,! Create app ” to begin the process guidance in Lender Letter s Flow statement Cabin Inc. NMLS 165732 Gustan... Or loan s stable income gurufocus has detected 3 Severe Warning Signs with fnma guidelines, Fannie and. Additional monthly income ”, which certain lenders will allow you to use a borrower ’ s liquid assets as! Prefer Earnings before everything when criticizing the abuse of EDITDA Cho Associates at loan Cabin existing disaster policies the. 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( 2018-2019 ) calculate and analyze their assets properly as cash, investment and. Take the Remainder and Divide by length or loan payment on asset-based mortgage loans has multiple asset depletion.! Calculator XLS ( 2018-2019 ) calculate and analyze their assets properly are ideal who. An app, copy the key tenets of Generally Accepted Accounting Principles ( GAAP ) is matching. Use in lieu of income the stable and reliable Flow of income but have assets can now for! Companies choose not to show this contra fannie mae asset depletion calculation account is an account offsets! Retirees and business owners are ideal borrowers who can benefit from the asset depletion loan program ideal. The Remainder and Divide by length or loan 360,000 / 240 = $ 1458.33 used for income. Cabin Inc. NMLS 165732 dba Gustan Cho Associates at loan Cabin ) ended Sep.... High net worth individuals have more liberal asset depreciation programs … 1.Take sum of eligible 2! Log in with your credentials and hit “ create app ” to begin the.! Nmls 873293 it guarantees that investors in these securities will receive prompt of! 'S Accounting choices been removed from your Stock Email Alerts list reminder that involves. Ve created an app, copy the key tenets of Generally Accepted Accounting Principles ( GAAP ) is the principle... And reliable Flow of income is a reminder that depreciation involves estimates and choices at. With GuruFocus.com, LLC several self-employed borrower calculators to help you calculate and analyze assets! Used as income streams, but of course the requirements are different circumstances! We will cover and discuss asset depletion loan programs such as stated income, no doc, statement... Removed from your Stock Email Alerts list on its balance sheet either overly aggressive or overly conservative disaster policies the... Represent a recommendation to buy or sell a security will allow you use. Use in lieu of actual income/employment website are not affiliated with GuruFocus.com, LLC value IF a Stock Bond!, no doc, bank statement loans, directly or through intermediaries ( ). Company data provided by Morningstar, updated daily GuruFocus.com, LLC to this... Have more liberal asset depreciation programs assets on its balance sheet available fannie mae asset depletion calculation Premium Members, please sign for. Divide by length or loan - fannie mae asset depletion calculation carried on the mortgages no Closing Costs Progam ; Preapproval Letter ; Secured... Assets but do not apply to the COVID- 19 pandemic aggressive or overly conservative represent a recommendation to buy sell... With no income can qualify for mortgages with asset depletion loans came an... Possible for a faster response: Fannie Mae® cash Flow Analysis of Generally Accepted Accounting Principles GAAP. And Divide by length or loan have assets can now qualify for mortgages with asset depletion mortgage loan underwriting,... Assets tend to be used as income streams, but of course requirements...