The stable and reliable flow of income is a key consideration in mortgage loan underwriting. 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). Stock quotes provided by InterActive Data. * All numbers are in … 2020 ) + 0 (Sep. 2020 ) = $0 Mil. Take the Remainder and Divide by length or loan. Dig into our use cases or public APIs to discover the latest Fannie Mae products designed for you. Create your app. Some details about how this … Banks may sell loans to Fannie Mae individually or pooled with other loans, directly or through intermediaries. 100% of the assets … Explore APIs . * All numbers are in millions except for per share data and ratio. 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. Calculator and Quick Reference Guide: Fannie Mae® Cash Flow Analysis. 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. Now, borrowers with substantial assets with no income can qualify for mortgages with asset depletion loans. Schedule E – Supplemental Income and Loss . Your email address will not be published. Fannie Mae FNMA Stock Message Board: [quote][i] So, in your calculations, converting JPS would raise suggested guidance only and does not replace Fannie Mae® instructions or applicable guidelines. They can instead rely on asset depletion calculations based on a combination of cash, retirement, and investment monies divided by 360 payments. Non- occupant coborrowers not permitted. Charge depletion based on units of usage. New Fannie Mae Guidelines Allow Verification of Assets in Lieu of Income . Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Instead, they simply show a single item. Companies do not have cash layout for depreciation. Generally the calculation is a borrowers total assets divided by a set number of months, such as 360 for the standard 30 year loan. Popular loan programs such as stated income, no doc, bank statement loans, and asset depletion loans came to an abrupt halt. Depreciation estimates make the calculation of net income susceptible to management's accounting choices. Many retirees and business owners are ideal borrowers who can benefit from the asset depletion loan program. Royalties Received (Line 4) + b. You can manage your stock email alerts here. 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. Fannie Mae  (OTCPK:FNMA) Depreciation, Depletion and Amortization Explanation. 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. The matching principle states that companies should report associated costs and benefits at the same time. No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. These choices can be either overly aggressive or overly conservative. Log in with your credentials and hit “Create app” to begin the process. Instead, lenders can follow the guidance in Lender Letter s . Fannie Mae's Book Value per Share for the quarter that ended in Sep. 2020 was $-102.99. Asset Depletion Program Overview: Frequently, special attention is required beyond traditional underwriting guidelines for high net worth borrowers with varying streams of income. Fannie Mae DUS Guide Page 5. Loan Cabin Inc. NMLS 165732 dba Gustan Cho Associates, NMLS 873293. 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. i.e. Do Fannie Mae’s existing disaster policies in the Selling Guide apply to the COVID- 19 pandemic? 360 for 30 years, 180 for 15 years. 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’s underwriting guidelines emphasize the continuity of a borrower’s stable income. Every lender has different Asset Depletion Guidelines. Quick Reference Guide: Fannie Mae Cash Flow Analysis . 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. 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. This will create a “monthly income”, which certain lenders will allow you to use in lieu of actual income/employment. The Asset Depletion Program allows the Underwriter to use a Borrower’s LIQUID ASSETS to provide more income to qualify! FNMA has been successfully added to your Stock Email Alerts list. 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. 09/03/96. You can use 70% of the asset for income, then divide by 240 months: $500,000 * 70% = $350,000. 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. Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at Loan Cabin. Depreciation is a present expense that accounts for the past cost of an asset that is now providing benefits. Please use the following quick reference guide to assist you in completing Fannie Mae Form 1084. Depletion and amortization are synonyms for depreciation. Gustan Cho Associates has multiple asset depletion loan programs. It is actually the asset account netted against the contra asset account. Subtract the following: (-) Amount of penalty that would apply if the (-) Amount of funds used for down payment, closing costs, and required reserves. Mortgage Calculator; Mortgage Glossary; No Closing Costs Progam; Preapproval Letter; Rate Secured; Mortgage Financing. Gustan Cho Associates now offers the following: In this article, we will cover and discuss Asset Depletion Mortgages. 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. The asset depletion loan program is ideal for wealthy borrowers who have substantial assets but do not have a regular traditional income source. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Sep. 2020 was $0 Mil. The term amortization is used when discussing intangible assets. 2020 ) + 0 (Jun. Assets are generally qualified with 100% of cash accounts and 70% of retirement and investment accounts (100% of retirement funds may be … Many of these alternative loan programs that were discontinued right after the 2008 mortgage and credit collapse is now coming back. 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. All Rights Reserved. GuruFocus has detected 3 Severe Warning Signs with FNMA. 2020 ) + 0 (Jun. © 2004-2021 GuruFocus.com, LLC. One of the key tenets of Generally Accepted Accounting Principles (GAAP) is the matching principle. Only PremiumPlus Member can access this feature. Loss. Fannie Mae's Earnings per Share (Diluted) for the three months ended in Sep. 2020 was $0.00. Page 4 Fannie Mae DUS Guide. That's why we've developed several self-employed borrower calculators to help you calculate and analyze their assets properly. Schedule E – Supplemental Income and . Qualifying assets tend to be only liquid assets such as cash, investment accounts and retirement accounts. 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. 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. A contra asset account is an account that offsets an asset account. As a result, the asset - although it is still being used - is carried on the balance sheet at its salvage value. Fundamental company data provided by Morningstar, updated daily. 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.