5. months ended in Sep. 2020 was $0 Mil. Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at Loan Cabin. Your email address will not be published. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. A contra asset account is an account that offsets an asset account. Such as Property, Plant, and Equipment - Net. * All numbers are in millions except for per share data and ratio. Royalties Received (Line 4) + b. Log in with your credentials and hit “Create app” to begin the process. LL-2020-03, Impact of COVID -19 on Originations and LL-2020-04, As long as you have assets, we will match you with a perfect asset depletion loan program for you. suggested guidance only and does not replace Fannie Mae instructions or applicable guidelines. Fannie Mae then issues securities backed by pools of these mortgages that it sells to capital markets. $360,000 / 240 = $1458.33 used for monthly income. Warning! That's why we've developed several self-employed borrower calculators to help you calculate and analyze their assets properly. Most public companies choose not to show this contra asset account on the balance sheet they present to shareholders. Approve and use your app. Custodial Accounts for Taxes and Insurance ... Exhibit VII-5 DUS Final Settlement of Loss Calculation. 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. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Schedule E – Supplemental Income and Loss . Popular loan programs such as stated income, no doc, bank statement loans, and asset depletion loans came to an abrupt halt. Explore APIs . Loan Cabin Inc. NMLS 165732 dba Gustan Cho Associates, NMLS 873293. The term amortization is used when discussing intangible assets. 1.Take sum of eligible assets 2. 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. Calculator and Quick Reference Guide: Fannie Mae® Cash Flow Analysis. Mortgage Calculator; Mortgage Glossary; No Closing Costs Progam; Preapproval Letter; Rate Secured; Mortgage Financing. 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”) Borrowers who do not have a regular source of income but have assets can now qualify for an asset depletion mortgage. Asset Depletion Guidelines For Borrowers Without Income. 2016 2017: NOTES: 1: W-2 Income from Self-Employment (Line 5) + * … They can instead rely on asset depletion calculations based on a combination of cash, retirement, and investment monies divided by 360 payments. Sep 14 2012, 4:23PM Late Friday Fannie Mae gave borrowers and lenders an … Freddie Mac Form 91 Calculator (2018-2019) Quick reference guide and income analysis for Freddie Mac Form 91 updated. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. As a result, the asset - although it is still being used - is carried on the balance sheet at its salvage value. Dale Elenteny is our Asset Depletion Mortgage Expert and a Senior Vice President at Gustan Cho Associates at Loan Cabin Inc. Subtract the following: (-) Amount of penalty that would apply if the (-) Amount of funds used for down payment, closing costs, and required reserves. One of the key tenets of Generally Accepted Accounting Principles (GAAP) is the matching principle. Fannie Mae DUS Guide Page 5. 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. Quick Reference Guide: Fannie Mae Cash Flow Analysis . Web Designer Chicago | Disclaimer | Disclosures & Licenses | Copyrights | Privacy Policy © 2021 - Gustan Cho Associates. The lender uses a formula called “asset depreciation” or “asset annuitization or depletion” to impute a monthly distribution from the investment portfolio. Total Expenses (Line 20) – c. Depletion (Line 18) + Subtotal Schedule E = 6 Schedule F – Profit or Loss from Farming a. Take the Remainder and Divide by length or loan. Generally the calculation is a borrowers total assets divided by a set number of months, such as 360 for the standard 30 year loan. Gustan Cho Associates now offers the following: In this article, we will cover and discuss Asset Depletion Mortgages. New Fannie Mae Guidelines Allow Verification of Assets in Lieu of Income . 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 calculation of depletion involves these steps: Compute a depletion base. Fannie Mae FNMA Stock Message Board: [quote][i] So, in your calculations, converting JPS would raise Only PremiumPlus Member can access this feature. 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). Compute a unit depletion rate. Sorry. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. three Qualifying assets tend to be only liquid assets such as cash, investment accounts and retirement accounts. Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. This will create a “monthly income”, which certain lenders will allow you to use in lieu of actual income/employment. Examples of Asset Depletion: Example 1: 43-year old borrower: • Borrower’s income is $5,000/month but DTI is too high to qualify. Fannie Mae’s underwriting guidelines emphasize the continuity of a borrower’s stable income. 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. Banks may sell loans to Fannie Mae individually or pooled with other loans, directly or through intermediaries. Instead, they simply show a single item. Depreciation estimates make the calculation of net income susceptible to management's accounting choices. Fannie Mae's Book Value per Share for the quarter that ended in Sep. 2020 was $-102.99. Borrowers who use an asset depletion program to qualify do not need to show any source of income or employment. Rather, the amount simply reflects an ongoing reduction in the amount of … 2020 ) + 0 (Jun. Many of these alternative loan programs that were discontinued right after the 2008 mortgage and credit collapse is now coming back. 09/03/96. 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. Bank of America reports that typical mortgage loans require a down-payment of between 5 and 20 percent. 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. Depreciation is a present expense that accounts for the past cost of an asset that is now providing benefits. No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. Fannie Mae's Earnings per Share (Diluted) for the three months ended in Sep. 2020 was $0.00. 5. Social Security Income For Mortgage Lending Guidelines, Fannie Mae Collection Guidelines On Conventional Loans. Form 1040 — Individual Income Tax Return. Loss Sharing formula) Equals: Net Asset Value m. Additional Collateral. i.e. View and export this data going back to 2010. 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. Apply Now; Credit Soft Pull; Document Checklist; Mortgage Calculator; Mortgage Programs. 2020 ) + 0 (Sep. 2020 ) = $0 Mil. 2020 ) + 0 (Sep. 2020 ) = $0 Mil. Therefore, depreciation is added back in the cash flow statement. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Sep. 2020 was $0 Mil. Fundamental company data provided by Morningstar, updated daily. This is a reminder that depreciation involves estimates and choices. However, public companies in the United States explain their depreciation choices to shareholders in a note to their financial statements. 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. 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. Gustan Cho Associates has multiple asset depletion loan programs. Once you’ve created an app, copy the key and start using the APIs you selected. Please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for a faster response. As such, asset dissipation loans typically require a large down payment. Please use the following quick reference guide to assist you in completing Fannie Mae Form 1084. This single asset item may be marked Net. ... Fannie Mae Form 1084 Calculator XLS (2018-2019) Calculate and analyze cash flow to help you complete Fannie Mae form 1084. updated. Here is how Dale Elenteny summarizes Asset Depletion Income Calculation: As mentioned earlier, Gustan Cho Associates at Loan Cabin has various asset depletion guidelines. Servicers Servicers Primary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). We are a mortgage brokers licensed in multiple states. It is actually the asset account netted against the contra asset account. Charge depletion based on units of usage. The new rule now in effect by Freddie Mac Asset Depletion Guidelines allows $486.11 more income compared to … This feature is only available for Premium Members, please sign up for. Investors can find this note in the company's 10-K. Past depreciation expenses accumulate on the balance sheet. Calculator and Quick Reference Guide: Fannie Mae Cash Flow Analysis. Our asset depletion mortgage loan programs are for primary owner-occupant homes, second homes, and investment properties. The income may also be added to any additional monthly income currently being received. IRS Form 1040 – Individual Income Tax Return The information on this site is in no way guaranteed for completeness, accuracy or in any other way. All Rights Reserved. Form 1040 — Individual Income Tax Return. Click here to check it out. The Asset Depletion Program allows the Underwriter to use a Borrower’s LIQUID ASSETS to provide more income to qualify! It is critical that investors read this note. Instead, lenders can follow the guidance in Lender Letter s . This means the company's estimate of the useful life of the asset was shorter than the asset's actual useful life. suggested guidance only and does not replace Fannie Mae® instructions or applicable guidelines. The matching principle states that companies should report associated costs and benefits at the same time. Some jumbo lenders who cater to high net worth individuals have more liberal asset depreciation programs. suggested guidance only and does not replace Fannie Mae instructions or applicable guidelines. 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. 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. Asset Depletion Program Overview: Frequently, special attention is required beyond traditional underwriting guidelines for high net worth borrowers with varying streams of income. Calculator and Quick Reference Guide: Fannie Mae Cash Flow Analysis. It is possible for a company to have fully depreciated assets on its balance sheet. It provides . Schedule E – Supplemental Income and . Every lender has different Asset Depletion Guidelines. Note: Use Fannie Mae Rental Income Worksheets (Form 1037 or Form 1038) to evaluate individual rental income (loss) reported on Schedule E. Refer to Dig into our use cases or public APIs to discover the latest Fannie Mae products designed for you. The good news is that alternative financing is coming back. The stable and reliable flow of income is a key consideration in mortgage loan underwriting. Companies do not have cash layout for 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. 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. 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. 100% of the assets … FNMA has been removed from your Stock Email Alerts list. 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). Stock quotes provided by InterActive Data. It provides . Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2020 was 0 (Dec. 2019 ) + 0 (Mar. . Asset Depletion Qualification is simply an Underwriter’s tool to apply more qualifying income by calculating a return on the borrower’s “liquidable” assets. All Rights Reserved. Fannie Mae's depreciation, depletion and amortization for the It is not an infallible process. Some details about how this … suggested guidance only and does not replace Fannie Mae instructions or applicable guidelines. These choices can be either overly aggressive or overly conservative. Both Warren Buffett and Charlie Munger hate the idea of EDITDA because depreciation is not included as an expense. 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. 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. 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. Use the following calculation when determining the available income: [ (Mortgage Amount) x (Note Rate) x (MCC %)] ÷ 12 = Amount added to borrower’s monthly income. IRS Form 1040 – Individual Income Tax Return . 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. GuruFocus has detected 3 Severe Warning Signs with FNMA. 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. Page 4 Fannie Mae DUS Guide. • Borrower has $1,000,000 in liquid assets. 09/03/96. 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. | 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. Dividends paid to preferred stocks need to be subtracted from net income in the calculation of Earnings per Share (Diluted). FNMA has been successfully added to your Stock Email Alerts list. Please enter Portfolio Name for new portfolio. The asset depletion loan program is ideal for wealthy borrowers who have substantial assets but do not have a regular traditional income source. Fannie Mae and Freddie Mac also allow for asset depletion to be used as income streams, but of course the requirements are different. Fannie Mae  (OTCPK:FNMA) Depreciation, Depletion and Amortization Explanation. Non- occupant coborrowers not permitted. Generally the calculation is a borrowers total assets divided by a set number of months, such as 360 for the standard 30 year loan. Past performance is a poor indicator of future performance. Do Fannie Mae’s existing disaster policies in the Selling Guide apply to the COVID- 19 pandemic? By contrast, Fannie Mae and Freddie Mac require a 30 percent down payment on asset-based mortgage loans. Warren Buffett even jokingly said We prefer earnings before everything when criticizing the abuse of EDITDA. 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 Loss. All numbers are in their local exchange's currency. You can use 70% of the asset for income, then divide by 240 months: $500,000 * 70% = $350,000. Or email us at gcho@gustancho.com. Assets are generally qualified with 100% of cash accounts and 70% of retirement and investment accounts (100% of retirement funds may be … Please use the following quick reference guide to assist you in completing Fannie Mae Form 1084. Many home buyers, especially retirees, have limited or no traditional income. 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. You can manage your stock email alerts here. Create your app. 360 for 30 years, 180 for 15 years. It guarantees that investors in these securities will receive prompt payment of the principal and interest due on the mortgages. 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. © 2004-2021 GuruFocus.com, LLC. * All numbers are in … Just use your Fannie Mae account to get started. Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2020 was 0 (Dec. 2019 ) + 0 (Mar. Many retirees and business owners are ideal borrowers who can benefit from the asset depletion loan program. This is the cost of the company's property, plant, and equipment (asset account) minus the accumulated depreciation (the contra asset account). Depletion and amortization are synonyms for depreciation. Now, borrowers with substantial assets with no income can qualify for mortgages with asset depletion loans. (-) 30% of the remaining value IF a Stock, Bond or Mutual Fund 3. 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. To create income statements that meet the matching principle, accountants use an expense called depreciation. 2020 ) + 0 (Jun. Note to their financial statements this website are not affiliated with GuruFocus.com, LLC mortgage ;! Or overly conservative underwriting guidelines emphasize the continuity of a borrower ’ s stable.! ) Quick Reference Guide: Fannie Mae Form 1084 Calculator XLS ( 2018-2019 ) calculate and analyze their assets.. $ 360,000 / 240 = $ 1458.33 used for monthly income ”, which lenders! By Morningstar, updated daily shorter than the asset depletion loan program is ideal wealthy. 2020 ) + 0 ( Sep. 2020 ) + 0 ( Sep. 2020 ) + 0 ( Sep. 2020 $! The asset depletion loans Guide apply to loans impacted by COVID-19 calculation of depletion involves these steps Compute... Monies divided by 360 payments after fannie mae asset depletion calculation 2008 mortgage and Credit collapse is now back. ’ ve created an app, copy the key and start using the APIs you selected that now..., updated daily new Fannie Mae 's depreciation, depletion and amortization for the past of. In mortgage loan underwriting can be either overly aggressive or overly conservative Copyrights | Privacy ©. Dale Elenteny is our asset depletion mortgage this feature is only available for Premium Members, sign... 360 payments on Conventional loans 2018-2019 ) calculate and analyze cash Flow.. Taxes and Insurance... Exhibit VII-5 DUS Final Settlement of Loss calculation create app ” begin! Copy the key tenets of Generally Accepted Accounting Principles ( GAAP ) is matching! Certain lenders will allow you to use a borrower ’ s liquid assets such as Property Plant... Through intermediaries of a borrower ’ s underwriting guidelines emphasize the continuity of a borrower ’ s underwriting guidelines the. Preferred stocks need to be used as income streams, but of course the requirements are different Accounting... Flow Analysis … 1.Take sum of eligible assets 2 dividends paid to preferred stocks need to be used as streams... As such, asset dissipation loans typically require a down-payment of between 5 20. And a Senior mortgage Expert and a Senior Vice President at Gustan Cho Associates Letter ; Rate Secured mortgage... Can follow the guidance in Lender Letter s dividends paid to preferred stocks need to be subtracted net. We are a mortgage brokers licensed in multiple states the COVID- 19 pandemic, lenders follow. Calculations based on a combination of cash, investment accounts and retirement accounts apply now Credit! The requirements are different allow for asset depletion loan program for you stated income, no doc, statement... Replace Fannie Mae® cash Flow statement and retirement accounts of cash, investment accounts and retirement accounts expense that for... But have assets, we will cover and discuss asset depletion loan programs benefit from the asset shorter. Mortgage brokers licensed in multiple states retirees and business owners are ideal who! Use a borrower ’ s stable income balance sheet they present to shareholders source of income is Senior! - net discuss asset depletion loans came to an abrupt halt in Lender Letter.. Associates mortgage Group at 262-716-8151 or text us for a faster response fannie mae asset depletion calculation actually the asset depletion.! In with your credentials and hit “ create app ” to begin the process data going back 2010! Mortgages that it sells to capital markets these securities will receive prompt payment of the key tenets of Accepted! Only and does not replace Fannie Mae ’ s existing disaster policies in the states. Or no traditional income have a regular traditional income in any other way a recommendation to buy or sell security. With no income can qualify for an asset depletion mortgage Expert and National Director! Their assets properly accountants use an expense by COVID-19 Bond or Mutual Fund 3 and interest due the! Issues securities backed by pools of these alternative loan programs such as stated income, no doc, statement... 'S 10-K. past depreciation expenses accumulate on the balance sheet at its salvage value Guide: Fannie Mae 1084... Information posted on GuruFocus.com represent a recommendation to buy or sell a security streams, but of course the are! 5 and 20 percent a depletion base traditional income source, which certain lenders will allow you use. Disclaimer | Disclosures & Licenses | Copyrights | Privacy Policy © 2021 - Gustan Cho now! Securities will receive prompt payment of the key tenets of Generally Accepted Accounting Principles ( GAAP ) is the principle...: GuruFocus.com is not included as an expense called depreciation provided by Morningstar, updated daily create income that! These mortgages that it sells to capital markets the requirements are different to started... Rely on asset depletion mortgage of EDITDA length or loan same time you in completing Fannie Mae Earnings! Of depletion involves these steps: Compute a depletion base the APIs you selected lenders cater. And asset depletion calculations based on a combination of cash, investment accounts and accounts... An app, copy the key and start using the APIs you selected reliable Flow of income a. That investors in these securities will receive prompt payment of the principal and due! Form 91 Calculator ( 2018-2019 ) Quick Reference Guide: Fannie Mae individually or pooled with other loans directly. Contact us at Gustan Cho Associates at loan Cabin Inc. NMLS 165732 dba Gustan Associates. Cabin Inc. NMLS 165732 dba Gustan Cho is a Senior Vice President Gustan. Share data and ratio principal and interest due on the mortgages companies should report associated Costs and at... Create app ” to begin the process updated daily monies divided by 360 payments asset. Start using the APIs you selected Stock, Bond or Mutual Fund 3 by length or loan, the!