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we're gonna talk about the entire platform here as far as financial assessments concerned from beginning to the end so we'll cover the loan officers processors and underwriters all in one shot I am gonna make this as real as possible without populating the address and so on let's go ahead and put in a date of birth I'll have the way we're gonna run this is they'll have a primary borrower an on borrowing spouse and another household member to show that they're living within the property we'll put under names and mortgages now I will go ahead and add an on borrowing spouse alright and we'll go ahead and add the other household member beautiful alright so across one 1960 so now I'm going to go click on a loan screen I again this is not going to go through the entire standard loan officer training or processor training or concentrating primary on financial assessment so I've selected the product and now let's go ahead and jump right into it so from a loan officer side when I won't officers gathering data they're going to click on either the processing input screen but I always recommend the phrasal service the screen because there are some specific pieces of data that is required to be entered let's talk about that data so first is a living area square footage the reason why this is important because this will calculate the utilities and maintenance cost based on a hot guidelines for calculation on expenses then we're going to populate the homeowners insurance or the home insurance and taxes this is a monthly cost and a loan officer should go in and put in the monthly cost for the home insurance and for the taxes they're being applied to the property once these three pieces are entered let's go ahead and jump right and your financial assessment so we'll start with data collections in data collections we first see that we now have the square footage that we can enter either in a processing input screen or an appraisal services screen which automatically gave us the calculations for utilities and maintenance monthly expense calculation from here we need to indicate the family size now the family size is the total number of household members for the property that's being refinanced in this case I've indicated three members we have myself my wife and let's just say my son in the household someone I indicate three members using the zip code that was entered for the property that is required it would automatically calculate the residual income requirements based on the region and number of household members from here it's pretty basic we have housing payment history whether the mortgage or rent free yes no or three times back there question mark the number of months the property has been mortgage or rent free mortgage was modified and whether the 12 months of housing payment history is acceptable I want to bring something in regards to where you're ever going to ask if something is new or whether something is mortgage or rent free to ask you for the last twelve months of data whether for the last 12 months the property has been getting no mortgage payments needed to go on a property because the property is it has paid off or it's not being rent for more than twelve months so that point you would indicate the loan officer or the processor at this point will indicate whether the property is mortgage or rent free for the number of months indicated and whether of course the mortgage was more to fight the other section we have here is scheduled of real estate owned I want to bring clearly on this so this does not get asked in a future this is not the property that's being refinanced this is the property that the borrower may go outside of the property that's being refinanced such as vacation homes Beach homes whatever the case may be at this point the loan officer will quickly ask the borrower whether they have an own any other properties if they do they can click an ad then indicate whether the property is sold prior sale a single-family or the type of property that it is indicate that counts number creditors name if they have that information in front of them but the big thing is present market value original mortgage amount balance of mortgages and the liens against the property if the property is being rented what is the current rental income from that will be subtracted the mortgage payments insurance maintenance taxes and miscellaneous items giving the borrower the net rental income which then could be used as an asset as or as and as an income if it's an existing if it's an FHA loan they will be able to indicate that as an FHA loan and of course if the rental income is lower than all the maintenance insurance mortgage payments taxes that are being applied then it would be indicated as a liability which you would then be used against the borrower for calculations of expenses at the bottom you have some specific questions our taxes delinquent is homeowners insurance you and again I want to bring this clearly as far as anything that's ever being asked for you if something is new it is less than 12 months old so if all of a sudden the homeowners insurance being applied to the property is six months old then yes it would be considered as new any documentation that is needed for indicating that can be attached to the paper clip located right of the question itself that's all there really is to know about data collections you can add as many properties as the borrower has and the totals will be combined automatically for you the only thing that needs to be done manually is the net rental income where the loan officer will just get a calculator get the gross rental minus the mortgage insurance maintenance taxes giving you the net rental income all right so from here let's jump into borrowers credit all right so what do we need to know about borrowers credit so the first huge thing I want to let everybody know that I know everybody has been wondering if anybody has heard my recording with the previous session not the loan officer session that we did yesterday but the one that was done about a month ago I've said probably a dozen times that the credit will not Auto populate into credit accounts well the positive news is it will if you use CoreLogic which is going to be our automated integration system then you would just simply select order credit you already have the primary borrower listed here the won't officer at that point will click on order credit and the credit report will pull it into reverse vision making it simple stress-free and making sure the data is accurate so I always find one thing I would rather under promise and over deliver than over promise and under deliver so the positive is that we are expecting all the credit accounts from the borrower's credit to auto pull in into the software making your life a whole lot easier that being said the service provider to report type water populates for you the credit reporting agency will not just like using any other screens within a reverse vision right quick utilization is key so you will need to populate the consumer reporting agency used which then you would just simply right click click a new consumer reporting agency and you will populate the information as needed you wouldn't simply click on save for future use this will then be available for anybody if it's done in a corporate level for anybody that is also operating in a corporate level so just simply drop down and select the consumer reporting agency and of course if it's a branch office the ladder for the branch offices and then anybody else has signed in that branch office will be able to simply drop down and select the credit reporting agency that would apply in a case you're not planting to you or planning to use CoreLogic for your credits we will open up the service provider and report type fields for you to manually edit and you will be able to type in who order the credits and when was it ordered the dating system is here through an automated system the credit order date water populate the credit received date and credit expiration date may need to be entered manually at first but hopefully within time we'll also populate those fields so if I order it today credit report received today as well I would then put to us 90 d for days and it would populate automatically 90 days from the credit received date to credit report expiration date the report will auto populate on the top right hand side of the corner where you see the little paperclip all right let's go a little bit further so from here you have the three credit scores now this is one of the general questions that is asked well how does the overall score populate based on a lenders defined settings this is very important if you are a broker or principal agent where you're using the corresponding lenders product or the lender sparked at that point the lenders defined settings will define the overall credit score whether they want to use Experian Equifax or transunion score whether they want to use the highest scored the lowest score or the combination of the three scores divided by three equal in a number so you we'll define what the overall score will populate as based on a three credit scores that will be pulled in into the system then you have some basic questions delinquent federal tax death whether there's any federal tax than the way twenties that would need to be answered manually yes/no or back to the question mark most of the time we're not gonna expect our own officer to do this unless otherwise advised by the lender so if you are a broker and the lender tells you we want you to look at the credit score or credit report and indicate whether the winkin federal tax that then that's what you need to do working with your lender from the software perspective this function is available for loan officers processors and of course underwriters who does it within each company's workflow will be defined internally if a non-traditional history is required the loan officer to processor will then check the box for non traditional history required and indicate whether sufficient credit references were provided with the communication to show that information which will then be attached at a paper clip right to the right you have the CA I VRS screening system that is specifically designed for the back office the back office should know what this is used for so no further information we provide it and then of course the two other questions is FHA insurance claims found and the link when federal non-tax that's found based on financial assessment regulatory based on how some of these questions are answered will automatically determine whether the borrower will automatically be disqualified from a reverse mortgage now in a case where there are bankruptcy if there is a bankruptcy we have an option for chapter 7 which is a really straightforward bankruptcy and then of course a chapter 13 with a chapter 13 there could be judgment where a judge could state that a monthly payment amount is required for specific sum which then a monthly payment payment amount will be entered based on that judgment at that point that would also be calculated with expenses if the bar were reestablishes good credit that could be indicated and if the borrower decided not to choose to incur a new credit obligations that would also need to be specified if the borrower would say credit score is very low and they decide not to go and rebuild their credit score then that could be easily indicated there as well satisfactory payment performance and permission from court for mortgage again two basic questions whether the loan officer is going to answer them or the processor that will determine by the internal company's workflow from the credit report once the credit report is pulled and it's analyzed the other names found will not Auto populate which means that if there is an account that pulls them that instead of unique raw suppose then URI or whatever other name it shows on there this will need to be indicated manually so the loan office sort of processor at that point we'll review the credit report and if any other aliases are found under the credit report that will be populated there I do not want you to get us confused with a signature tab for legal vesting ATA also known as or notary acknowledgment section of security instrument this is not relating to borrower's credit other names found oldest is asking you if account was opened under the same social security number but under instead of UT might be URI indicate that who does it with an account of within each company will be determined by each winders workflow hopefully that makes sense to everybody all right let's go further credit accounts because I'm not using an integration we're not pulling in our made a credit report I'm gonna show you how the credit accounts would work how to populate them manually if needed and how to essentially work with credit accounts alright so what you're gonna do is you're gonna click on Add Account this is gonna populate the information from an automated system for you the only thing you might not populate keep in mind is the account name so in this case I want to populate this information manually and show you how this works so we have an account name I'm going to specify a car loan what type of an account is it it's an automobile what type of dad category so you have four options installment that revolving that mortgage debt and open that if you do not know what these four options aren't how they're applied please google them we will give you all the information that you need and explain to you what each dead and where how it would be applied so in this case it's an installment debt mortgage payment type its installment primary respitory used so I know I just purchased the car about a year and a half ago or so and that was used as a Equifax report so if the credit report does not popular that automatically take a look at the credit report if all three accounts credit reports were used select one of the three you're not gonna go wrong and of course we have an T M C R which stands for non traditional credit report essentially if non-traditional credit report was applied then at that point you would indicate it as that when was that count opened account opened was O 7 2013 oh seven twenty five twenty woops 2013 total on state liability is ninety five hundred dollars what was the credit amount when it was first opened was twenty two thousand dollars and monthly payment amount is two hundred and seventy five dollars now we automatically put in a check box too crude as Spence and financial assessment we're a command for loan officers not to uncheck that box unless absolutely sure that it needs to not be included in that report and for some reason it did not populate the information that I pulled and originally no big deal so I'll just read put it really quickly and here we go from here you have some basic questions the link Qin scenes in the past 12 to 24 months here's how this works and I want to make sure everybody stays with me and this because we've done some of these trainings on a personal basis and it seems like there was a little bit of confusion if you put in the week 1 sees in the past 24 months let's say for 30 days that was a delinquency no past 24 months it would automatically keep that as 24 months and will not transfer that for the 12 months so the way this works is you have 12 to 0 24 to 12 if you put this to 1 then this would say that since it's 24 to 0 and 12 to 0 that if it was one day within the past 12 months that means that was one delayed Contino past 24 months but if there was only one those between the past 24 months then and in the past 12 months that was zeroes and it would keep as 0 I want to make sure everybody understands this and know you if it chose 1 in the last 12 months you cannot zero out 1 in the last 24 months this will correlate equally and of course if you have let's say Q in the past 24 months and 1 in the past 12 months then of course it would stay it that way then you have 4 questions that may or may not apply to a specific credit account the questions are is delinquent FHA mortgage is the ones with FHA mortgage investment property disputed the Wregget ory account and resolved disputed account as it may apply the loan officer or the processor will answer these questions need it under each account you have show special account data within each section you I have an ability to answer questions paid prior to closing to be paid at closing valid payment plan established and sub Orient agreement if a valid payment plan has established they will be able to indicate the payment plan monthly amount in this case I'm gonna I would say indicate you seventy-five the moment you put in there mount under the payment plan amount with valid payments when established this section monthly payment amount will become grayed out so you cannot adjust it any longer under the section the way to eliminate it is you would zero the South which then will make this as an open field to reenter data as needed you may also indicate to use as 5% of the total balance as payment amount at that point it would automatically calculate based on a five percent of the balance in this case again I'm going to zero this out and just put 275 here I'm gonna add one more account and this account is gonna be a credit card if I can spell card at this point you would indicate that is a credit card the type of debt in this case will be revolving debt primary respiratory used was Experian open account was Oh 2 or 1 2010 total unpaid liability is $1,500 high credit amount is basically what they can borrow against on that credit card and I paid 500 hours a month for that automatically included expenses is checked and then any special account data is also available to indicate it as needed we're also going to come back really quickly to another screen to show you how that delinquencies will reflect in the borrower's credit scanner a credit screen in just a second someone indicates one for 60 days and that's all now bottom right hand side under credit results well I'm sorry bottom left hand side we'll start from there this is only available for underwriters so an underwriter will review all the credit accounts and indicates whether it's acceptable acceptable with extenuating circumstances or not acceptable this section will not be available for anybody except the underwriter and on the right hand side based on a total number of delinquencies so all the credit accounts indicated you will see that total number of 30-day delinquencies 60-day delinquencies and knighted with cookies for past 1224 months as well as the total revolving payments total installment payments and if there are any payments that are being excluded will indicated that it as that and any other payments see expenses for breakdown for any other payments and expenses is really gonna break this down to one expenses to reverse vision but also on the financial assessment to understand what other payments can be included as other payments on how they're being applied so make sure that you review the financial assessment mortgagee letter to understand how and when should the other payments be applied through the system that being said view edit account details now again this is purely based on each individual's company's workflow if a lender states that a loan officer needs to populate this information then a loan officer will be populating the information on each account but what we do based on some of the discussions with some of the lenders we understand that this might be done by the processor by gathering all the required information for each of that counts as needed if again each company's work for may vary please work with yoga lender close in hand to make sure you understand who is going to be doing what but every time I ever say who is going to be doing it that means 2x disabilities available from both sides by the loan officer as well as by the processor in sections where I stayed this is only for underwriters that means the section is going to be grayed out and we'll only be able to be defined by the company underwriter all right so that being said I'm done if we go back to credit accounts this section is completely grayed out you cannot make any changes and this is coming from credit accounts so whatever the credit account pulls in will automatically transfer over to borrower's credit I'm not going to talk about numbering spouse card information or other household credit information until the end of the training because of specific workflow that I like to keep it as that being said let's jump into incomes with incomes it's very simple for a loan officer to simply go and add default income sources and the base income sources that are defined by the lender to auto populate will auto populate into the software now that being said the list can be expended by the lender so when you drop down and select or you looking for a specific account an income source and you're not seeing it please contact your lender your lenders administrator will go in and add a specific income source that you may not find here but we did try to give you a broad range of income sources just select from that being said from here now we're going to populate some amounts first pension and retirement we're going to indicate that at seven hundred and fifty dollars surf security we're also going to indicate that at seven hundred and fifty dollars and then we get to an employment type so with employment you have multiple options to select from salary hourly full-time part-time overtime bonuses seasonal and so on what I want to talk about is self employment because self-employment is nestle one more or less where a specific credit report will need to be ordered which is a corporation S corp credit this credit will not be able to be offered currently by reverse vision so your lender should know where to go to obtain this special credit report and they will go ahead red to indicate the borrower's income yeah when we're talking about a self-employment and this is another reason why it's so important for this credit report when a borrower is talking or a loan officer is talking to a borrower or a borrower can easily say oh yeah I make a half a million dollars a month but unless that information could be validated then it makes no valuable aspect or no a valuable source so at this point I'm not gonna put half a million dollars a month of course I'm just going to simply put in let's say $2,000 a month and self-employment is sales from here once you have populated your incomes it is very important for a loan officer to click on source validate for each of the accounts even though these accounts truly have not been validated yet they need to make sure they couldn't source validate it for them to calculate as a total income of the borrower now at that point of course the processor will go women gather the information for each of the account to make sure the information is reflected correctly which then the source validated date will probably change to the new validation date but if the loan officer does not double-click in source validated for each of the accounts they will not calculate which then the residual income will probably be greater than what is needed for the borrower to get the reverse mortgage because of a simple mistake done by not putting in a date for the validation of the account only the underwriter can approve each individual account and of course we have a section for an employment for Rivera fication date that must be done prior to loans closing that will also be done by the underwriter right before closing ok so now we have all that information if any other incomes needs to be applied again they can simply click on add additional income drop-down select the income that the borrower may be getting and indicate the amount of that income if they populate the annual amount the monthly amount automatically correlate and if the factor is the monthly amount any amount automatically be calculated as well in this case I'm just going to keep three income sources ok let's jump into asset dissipation as a dissipation again basic concept of incomes the lender will define the default assets that would auto populate into the software additional assets can be added based on a need so there is no limitation of how many assets can be added as many as the borrower has I'm gonna use only specific assets here so I'm going to remove private savings clubs I'm gonna remove the certificate of deposit I'm going to keep everything else so let's talk about savings account so when a borrower's talking to the loan officer they're gonna ask them some basic questions how much money do you currently having the same use account great we have twenty five thousand dollars how much my idea when you're checking account twenty-five hundred dollars what are your tax retirement accounts let's say there's $50,000 in tax retirement now anytime it's a tax account it will be subjected to federal taxes the HUD indicated the national average for tax rate is 15% unless there are documentation to state otherwise then that would be changed a loan officer will then go in or a processor will go in and change the tax rate to a different number so seven percent 5% 1% whatever it may be but since the national average what hot defines is 15% same thing is like basically the property appreciation rate it's 4% based on how to find settings we're in Nevada it might be 1% versus New York it might be 4 percent so again Regents may vary but the default is the same and unless they're the commutation to state otherwise keep it at 15% non-tax retirements let's say there's 10,000 stocks and bonds we have none and cash on hand 5 bucks I like to keep 5 bucks and Yallah thing I don't think this will buy a McDonald's these days but besides the point ok so with these accounts again we recommend that these accounts are validated by the loan officer but we have created a little bit of a different scheme here where a loan officer can simply go in and check this box on a bottom right hand side which states include on validated asset amounts by simply checking this box this will automatically include all of these accounts as a total sum - of course the tax rate that's being applied which would then give you the total discounted volume for these accounts would be - the funds needed to close so this is a heck of a purchase and their funds that are needed to close then this will be subtracted from the total discounted volume giving you the adjusted discounted volume that adjust the discounted value will then be divided by the life expectancy of the youngest borrower in months based on a tallk calculation giving the total monthly income from assets now I also want to bring one of the things to everybody's attention there is a question that we believe is going to scare some people not dissipate well first of all HUD does not want the bar were to liquidate every single account to get a reverse mortgage absolutely not all this really means is if the borrower is short too close they're doing a heck of a purchase their lien on their property it's higher than the principal limit that is being given to them then at that point when they need to bring money to closing all it shows us do they have money that they can pull out for them to bring to closing for the loan to close again they do not do it they do not need to liquidate every single account just because it says the dissipate no so they would indicate no do not dissipate no which our basically says if they do need money to break the closing then they would look at which account they want to liquidate you have that cash available for the loan to close but that some more aspect where a borrower should know the bad money that they will need to bring to closing if they're short to close if they want to get a reverse mortgage or higher on product so hopefully everybody understands and everybody can explain to their loan officers that do not freak out they do not need to liquidate every single account again under each account their view and edit account details based on each company's workflow whether this is going to be done by the loan officer or the processor what we're really looking based on some of the feedback we got it does vary but the loan officer will plug in the data to make sure that that is as accurate as possible the processor will then gather all the information for each of their talent and the underwriter at that point will go in and validate all the accounts make sure they're accurate and approve them as meet it all right now the way we're going to do this I'm going to skip expenses I'm going to go with the property charges and then we're gonna go back to expenses to see how it all ties together so kind of make this easy transitional workflow exactly what we showed on a loan officer training yesterday so everybody is on the same page and nobody's getting any different information from one training to another the other thing I did want to mention which is important again anytime you see approved this is only for underwriters no one else will be able to indicate the updates except the underwriter so just so you're aware if you're a processor you don't have to underwrite a role you will not be able to approve that count hopefully everybody isn't with me on this all right and of course if any other assets needs to be added just simply click on add asset additional line will appear that they can leave the borrower may be has multiple savings accounts they can indicate it just that and also renumber these assets as needed so if they want to show cash in hand in third place they can put number three here renumber and then it would renumber based on the information based on a number system that you want to put in there is no specific order or reason it's just how somebody might want to see these accounts show nothing more than that all right property charges so property charges is also a very very simple and very actually had my opinion very simple screen to work with you cannot add additional property charges because this is gonna populate into a document as you see it here that's why you cannot remember in order you cannot add additional or remove any of the charges listed here if there is no charge that's being applied to that property keep it zero as simple as that you have some questions that are being asked for specific pick areas where whether the tax exempt or waste whether taxes deferred whether the taxes are being paid directly by borrower which actually is a very important one because financial assessment regulations states that if your residual income is within eighty 1 to 99 percent and you've been paying your taxes out of your own account but not over an escrow that could actually help with an approval of that loan and your underwriters the underwriters that are here should already know all this by heart because you have read reread and read again their financial mortgagee letters which we are written not in the easiest way possible to understand but it is important to understand it so you know exactly what needs to be done and how certain questions as well as way payments are going to be applied when there is a residual income shortfall all right again any time you're being asked if something is new this is being indicated whether it's 12 months or less if it is then it is considered a new to that property what we're gonna do is we're gonna have a couple of small things so I actually do live in a flood insurance owned which is scary enough more expensive than the hazard insurance that I'm paying for which I'm going to indicate the flood insurance I do have a chilly which seems to go up every year and I've only lived in a property for three years and every year it seems like they figure out how to raise it which HOA and myself will be having a conversation sure enough about that the way we look at account expenses in general is we're always going to take the worst possible scenarios so they do not need to be validated they will automatically be applied to the expenses of that property and that borrower which means that the actual validation will be done usually by the processor pulling in all the information for each account and again that proof sections or only designed for underwriters at the bottom left-hand side you have again only for underwriters acceptable acceptable with extenuating circumstances and not acceptable now one thing I will ask from everybody to make sure we're all using the same terminology when talking about financial assessment and through this entire training process compensating factors is your cash flow extenuating circumstances are you're really late payments so when we're talking about compensating factors it's your additional cash flow when we're talking about extenuating circumstances it's specific reasons why something may if an element or other reasons that may be applied to those extenuating circumstances so make sure we're all on the same page there and make sure terminology we're all gonna use this the same to the right hand side you have total monthly property charges total monthly income now we are going to make this change so I'm going to say this right off the bat and so nobody will be asking questions that I had the training of this where Kearney says property charges as percent of monthly income this is no longer correct the correct field is going to be property taxes as percentage of monthly income which is different than property charges we are going to make that change before financial assessment mandatory release so just giving you a heads up on that nothing more to say there property charge payment history analysis approved and expired is also only for underwriters no one else will be able to populate this from information except underwriters they'll be working through the system okay now we're going to jump one screen back and we're going to talk about expenses one of the reasons why I went forward and backwards like that is because one of the things I want you to keep an eye here on is all these fields are grayed out you cannot change them you cannot manipulate them you cannot do anything with them because they're all coming from other screens where are they coming from let's talk about that a little bit property charges well that's simple we just talked about property charges utilities and maintenance well that's coming from either where was entered in the appraisal services stream or processing input screen whatever is easier for the loan officer and that then calculates 2.14 which is HUD direct calculation for utilities and maintenance cost basement square footage and that's where that number is coming from and then of course your installment your revolving that is all coming from your credit accounts based on the total sum of credit accounts and a type of debt category that it is it would be shown here that doesn't mean that this is the only expenses that you can have here you can click on it or a loan officer may click on add default monthly expenses that will then Auto populate additional expense these expenses are federal taxes job expenses alimony and child support FICA and contains contingent liabilities now if additional expenses needs to be added and they're not listed again a company administrator can add as many additional expenses as they need based on the need of the borrower one of the things I always like to make fun of is alimony and child support I haven't met a lot of people over the age of 62 that have alimony and child support but then again you know this is it could happen I guess maybe in a rare instance but it is there so if it does apply then I won't officer will indicate it as that now the other thing is under contingent liabilities as you can see the little X is straight out no big deal don't freak out over it just select a different one and then you can just delete it off if it doesn't apply to the borrower but additional monthly expenses can be added the great thing is also on a bottom right hand side we automatically give you calculations which are total monthly expenses we plus the total monthly incomes giving you the residual income and the residual income requirements based on a number of household members if there is a gap you will see the sum of the gap which is the difference between the income a residual income and the required income okay so that's the expenses and let's go into cash flow this is where it's going to become interesting why do I say that well the loan officer can view the screen and they will get their baseline results which shows you a total income minus the total expenses giving me the residual income with the requirement income if there's a shortfall we would give you the sum of the shortfall was the percentage whether they fit in between the 81 to 99 70 to 80 and so on so it would actually show you the percentage of the shortfall if let's say it was 81 to 99 then at that point the loan officer and we are telling loan officers before doing pulling the non borrowing spouse or other household credit contact the lender have the lender review the file to see if it's needed if it is needed then the loan officer will go back to borrower's credit and click on add non borrowing spouse credit information now it's gonna give them a warning the morning States the following non-boring spouse credit information or credit report for the number of spouse you only be pulled if the person's income and expenses will be used to establish the compensating factors for residual income gaps or to reduce the family size that created the residual income requirements they will then say yes from there the credit accounts they will click on order credit click on order credit button here this will pull in the non borrowing spouses credit accounts which will then loan officer will go and add additional incomes for now the non borrowing spouse let's say employment they will then put in shared what do they do I'll expect there are salary full time they made $2,500 a month they've been employed and actually forgot to put an employment here but everybody knows how to put the time of employment how long somebody have been employed somewhere six years and three months source validated and then based on so how would this work then you have $2,500 right we go back to cash flow under credit accounts they have with say five hundred hours a month that is being subtracted from them so this is a manual calculation I want everybody to be aware of that and this will be done by the underwriters to calculate this information manually so they take the twenty five hundred dollars minus the expenses for the property and expenses under the credit accounts so let's say will be a thousand dollars so now or let's say another 500 there so now there is a thousand dollars this thousand dollars would then give them what you have an option to do two things either to add it to the total income or to subtract the number of household members to reduce it by one which created the residual income gap so going into data collections and putting in then two which will then lower the residual income requirements by that one person because their income over exceeds the income requirements to that one individual but of course everybody here is completely aware of how this all works and have read the mortgagee letter in and out to understand exactly how this is being applied and when when not to use it that's as far as I'm gonna go there from this point the residual income results are also only available for underwriters when an underwriter was going to indicate acceptable acceptable with compensating factors which as I've mentioned before what is compensating factors it's your cash flow so whatever the additional cash flow was applied then they would indicate add compensating factors they would specify NBS credit was pulled and added to the results with applied compensating factors and attach any documentation that may be needed to that compensating factor section cash flow results income analysis approved and expires again only underwriters will be able to populate this data within this section let's go into the most fun screen of all assessment results I love this screen so for anybody here that's a processor or that's sitting in as a loan officer none of this will be available to you only for underwriters keep that in mind results residual income results credit history results properly charge payment history results again only underwriter approved approved approved expires expires expires extenuating circumstances late payments why were there way payments maybe a borrower went to the hospital and you know couldn't pay his bills for a month and a half that could be considered as extenuating circumstances but I'm not sure to tell you what they are mortgagee letter does please read the mortgagee letter which will tell you everything need to know as what could be applied for thing drop down property charge or credit history because technically speaking count if you wanted to do then you have financial assessment results at the bottom borrower passes financial assessment borrower passes due to extenuating circumstances or compensating factors applied and borrower fails financial assessment if you indicate fails at the bottom of the screen you will see the section being on great so if its power passes well why do you need to check any of these boxes you don't but if they're fail you will need to indicate the reason of the fail insufficient cash flow insufficient errs is your income demonstrate the lack of willingness to pay the monthly obligations whatever the reason is and if none of those defaults apply then indicate other and type in your own as needed as simple as that to the right property charge funding now this is where the calculations come into place how do these calculations work so what do you have fully funded life expectancy of satisfied Barbara left a fully funded life expectancy satisfied partially funded life expectancy satisfied and lender establishes property charge funding satisfied all right partially funded self I would start there if you're partially funded set aside is 75% or closer to the fully funded life expectancy satisfied then at that point you should use the fully funded X been set aside I'm not gonna explain to you why the mortgagee letter does that for me please read the mortgagee letter and you will understand why you need to use the fully funded versus the partially funded if the partially funded a sum is 75% or more to the fully funded if you use the fully funded then at that point very simple it takes your real estate taxes hazard insurance flood insurance adjust that by 120 percent and then uses that number with the expected rate plus the cruel rate plus the monthly compounding rate multiplying that times your life expectancy of the youngest borrower and month giving you your calculations for wife expect me satisfied total and first years life expenses set aside applied to that loan so we have done the math for you if you have financial planners that are really broke this down themselves please check our math please make sure them our math matches yours if it doesn't please provide an exact break ground of what calculations were used how they were applied with approval rates and expected rates plus monthly total rates the whole nine yards and we will send that to our developer to validate and compare if we are wrong we will make the change and then you compare your calculations to ours maybe you've made a mistake on a number off or ran off somewhere but of course we're all perfect nobody ever makes mistakes so we've done doesn't everybody wish to help you true huh but we have rented the math over and over again and based on all of our calculations our calculations are correct if you have any idea to believe otherwise please provide us yours if borrow were elected to do a fully funded set aside it's the same thing if fully funded satisfied is required the state numbers will populate and of course if a lender is to establish the property charge funding set aside then at that point they will populate the first year set aside amount and after the first year set a set amount based on how much the lender wants to put into the set aside for the property charges funding okay that is the gist of financial assessment but before we end here I do want to bring one more thing to the point here because this is not going to be available for loan officers we're going to have a section and a comparison screen where let's give it a second for it to load what would happen is basically very simple let me just add a few more products here as you can see here where you have the set-aside accounts we're going to have four more sections into this section into this area here the first area is going to be basically a drop down to show where a loan officer will be able to drop down and select partially funded next to fully funded next to no satisfied is required next to they want to establish a satisfied then the next section is going to show the first year set aside and the total set aside so all this these four sections will be available before the financial assessment implementation date which we told our loan officers and yesterday's training and we'll keep on telling them that so they don't have to worry about it how are they going to show this to the borrower this is all going to be done with them on screen with a simple pull down and selecting the one that they need to show that's pretty much it folks I am going to stop right here