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Underwriting Guidelines Genworth Mortgage Insurance underwriters include: Genworth Mortgage Insurance Corporation Genworth Residential Mortgage Insurance Corporation of North Carolina Genworth Residential Mortgage Assurance Corporation May 14, 2012 (Revised) 5274758.0512

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Page 1: 5/6 Image Template Underwriting Guidelines...Jun 29, 2012  · 1.6.1 Fannie Mae’s Desktop Underwriter® and Freddie Mac’s Loan Prospector® (05/14/12) ..... 5 1.6.2 Other

Underwriting GuidelinesGenworth Mortgage Insurance underwriters include: Genworth Mortgage Insurance Corporation Genworth Residential Mortgage Insurance Corporation of North CarolinaGenworth Residential Mortgage Assurance Corporation

May 14, 2012 (Revised)

5274758.0512

5/6 Image Template

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Genworth Underwriting Guidelines Updates effective May 14, 2012 (Revised)

Genworth Mortgage Insurance Underwriting Guidelines © 2012 Genworth Financial, Inc. All Rights Reserved

Topic Sections Current Guideline New Guideline

Counseling Saver 7.3

A description of the Counseling Saver program is found in our underwriting guidelines although the program is not currently offered.

Removed program description

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Table of Contents

Genworth Mortgage Insurance Underwriting Guidelines Page 1 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

1  INTRODUCTION (02/16/10) ............................................................................................................... 4 1.1  Geographic Guidelines (11/01/05) .................................................................................................. 4 1.2  Portfolio Dispersion (05/02/11) ........................................................................................................ 4 1.3  Affordable Housing (05/05/08)......................................................................................................... 4 1.4  Homeowners Protection Act (11/01/05) .......................................................................................... 5 1.5  Fair Lending (11/01/05) ................................................................................................................... 5 1.6  Approved Automated Underwriting Systems ................................................................................... 5 

1.6.1  Fannie Mae’s Desktop Underwriter® and Freddie Mac’s Loan Prospector® (05/14/12) ........................ 5 1.6.2  Other Approved Automated Underwriting Systems (04/27/09) ............................................................ 7 

1.7  Retail and Non-Retail Originations (05/14/12) ................................................................................. 7 

2  INELIGIBLE LOAN FEATURES (07/11/11) ....................................................................................... 8 

3  DOCUMENTATION REQUIREMENTS (05/14/12) ............................................................................. 9 3.1  Ineligible Documentation Types .................................................................................................... 11 

4  STANDARD GUIDELINES FOR LOAN ELIGIBILITY ..................................................................... 12 4.1  LTV/Loan Limits (05/14/12) ........................................................................................................... 12 

4.1.1  All Markets except Florida: ................................................................................................................. 12 4.1.2  LTV 95.01 – 97% ............................................................................................................................... 12 4.1.3  Florida1 .............................................................................................................................................. 13 

4.2  1 Unit with Loan Amounts > GSE Conforming Limit (05/14/12) .................................................... 13 4.3  LTV/CLTV/GLTV/TLTV (07/11/11) ................................................................................................ 14 

4.3.1  Maximum CLTV ................................................................................................................................. 14 4.3.2  Types of Subordinate Financing ........................................................................................................ 14 4.3.3  LTV/CLTV/GLTV/TLTV ...................................................................................................................... 14 

4.4  Refinance Transactions ................................................................................................................. 14 4.4.1  Rate/Term Refinance Definition (05/02/11)........................................................................................ 14 4.4.2  Cash-out Refinances (05/14/12) ........................................................................................................ 15 4.4.3  Fannie Mae DU Refi Plus™ and Refi Plus™ and Freddie Mac Relief Refinancesm Programs (03/23/09)........................................................................................................................................................... 15 4.4.4  Subordinate Liens, Home Equity Lines of Credit & Junior Liens (09/21/09)....................................... 15 4.4.5  Continuity of Obligation for Refinance Transactions (11/17/08) ......................................................... 15 4.4.6  Fannie Mae’s Delayed Financing Exception (05/14/12) ..................................................................... 15 

4.5  Adjustable Rate Mortgages (02/04/08) .......................................................................................... 16 4.5.1  ARM Index ......................................................................................................................................... 16 4.5.2  Five Year Fixed Period ARM ............................................................................................................. 16 4.5.3  Lifetime Caps on ARM Loans (02/16/10) ........................................................................................... 16 4.5.4  Minimum Initial Fixed Period (05/02/11) ............................................................................................ 16 4.5.5  Per Adjustment Caps on ARM Loans (05/02/11) ............................................................................... 16 4.5.6  Qualifying Rate on ARMs (04/27/09) ................................................................................................. 16 4.5.7  Interest Rate Shortfall (09/21/09) ....................................................................................................... 16 4.5.8  Potential Negative Amortization ......................................................................................................... 16 4.5.9  Scheduled Negative Amortization ...................................................................................................... 16 4.5.10  Graduated Payment Mortgage (09/21/09) ......................................................................................... 16 

4.6  Temporary Buydowns (07/11/11) .................................................................................................. 16 4.7  Balloons/Call Options (11/05/05) ................................................................................................... 17 4.8  Relocation Loans (05/14/12) ......................................................................................................... 17 

4.8.1  Employer Relocation Programs ......................................................................................................... 17 4.8.2  Military Relocation ............................................................................................................................. 17 

4.9  Financed Mortgage Insurance (07/11/11) ..................................................................................... 18 4.9.1  GLTV ................................................................................................................................................. 18 

5  STANDARD GUIDELINES FOR BORROWER ELIGIBILITY .......................................................... 19 5.1  Eligible Borrowers (11/01/05) ........................................................................................................ 19 

5.1.1  Non-Permanent Resident Alien ......................................................................................................... 19 5.1.2  Permanent Resident Aliens ............................................................................................................... 19 5.1.3  Foreign Nationals ............................................................................................................................... 19 

5.2  Occupancy Status ......................................................................................................................... 19 5.2.1  Primary Residence (05/14/12) ........................................................................................................... 19 5.2.2  Second Homes (09/21/09) ................................................................................................................. 19 5.2.3  Investment Properties (04/27/09) ....................................................................................................... 19 

5.3  Qualifying Ratios (05/14/12) .......................................................................................................... 20 5.3.1  Debt-to-Income Ratio (DTI) ................................................................................................................ 20 5.3.2  DTI 41.01 -45% .................................................................................................................................. 20 

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Table of Contents

Genworth Mortgage Insurance Underwriting Guidelines Page 2 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

5.3.3  Non-occupying Co-borrower .............................................................................................................. 20 5.3.4  Housing Expense to Income Ratio (HDI) ........................................................................................... 20 

5.4  Credit Underwriting (08/11/08) ...................................................................................................... 21 5.5  Credit History: Using Credit Scores (05/14/12) ............................................................................ 21 5.6  Credit History: Using Traditional Credit (05/14/12) ....................................................................... 23 5.7  Credit History: Using Nontraditional Credit (05/14/12) ................................................................. 24 5.8  Collections, Judgments, Garnishments or Liens (06/28/10) ......................................................... 25 5.9  Consumer Credit Counseling (01/02/07) ....................................................................................... 25 5.10 Pending Lawsuits (11/01/05) ......................................................................................................... 25 5.11 Previously Paid Claim (01/02/07) .................................................................................................. 25 5.12 Assets and Liabilities (09/01/09) ................................................................................................... 25 

5.12.1  Source of Funds per Agency Standard Guidelines (11/15/10) ........................................................... 25 5.12.2  Repayment of Debts per Agency Standard Guidelines (02/16/10) .................................................... 26 5.12.3  Borrower’s Required Funds, Gift Funds and Reserves (05/14/12) .................................................... 26 5.12.4  Builder/Seller Contributions (09/21/09) .............................................................................................. 27 5.12.5  Primary Residence Conversion (05/02/11) ........................................................................................ 27 5.12.6  IRS Refunds ...................................................................................................................................... 28 5.12.7  Ineligible Assets ................................................................................................................................. 28 5.12.8  Pooled Savings as Debt .................................................................................................................... 28 5.12.9  Credit and Asset Documentation (12/01/11) ...................................................................................... 28 

5.13 Employment and Income (11/01/05) ............................................................................................. 28 5.13.1  Self-employed Income ....................................................................................................................... 28 5.13.2  Salaried or Other Income (04/12/10) ................................................................................................. 29 5.13.3  New Employment Income (09/01/09) ................................................................................................. 29 5.13.4  Employment Gap ............................................................................................................................... 29 5.13.5  Foreign Income .................................................................................................................................. 29 5.13.6  Deferred Income ................................................................................................................................ 29 5.13.7  Education Benefits ............................................................................................................................. 29 5.13.8  Trailing Co-Borrower Income (09/01/09) ............................................................................................ 29 5.13.9  Non-Occupant Co-Borrowers (05/14/12) ........................................................................................... 29 5.13.10  Temporary Leave Income (05/14/12) ............................................................................................ 30 5.13.11  Income and Employment Documentation (05/14/12) .................................................................... 30 

6  STANDARD GUIDELINES FOR PROPERTY AND APPRAISALS ................................................ 31 6.1  Ownership (11/01/05) .................................................................................................................... 31 6.2  Eligible Property Types (05/02/11) ................................................................................................ 31 

6.2.1  Energy- Efficient Properties ............................................................................................................... 31 6.2.2  Mixed Use Properties ........................................................................................................................ 31 

6.3  Ineligible Properties (04/12/10)...................................................................................................... 31 6.4  Geographic Guidelines (07/11/11) ................................................................................................ 31 6.5  Detached PUDs and Detached Condominiums (12/01/11) ........................................................... 32 

6.5.1  Detached PUDs and Detached Condominiums LTV/Loan Limits and Guidelines ............................. 32 6.5.2  Detached PUDs ................................................................................................................................. 32 6.5.3  Detached (Site) Condominiums ......................................................................................................... 32 

6.6  Attached PUDs and Attached Condominiums (05/14/12) ............................................................. 32 6.6.1  LTV/Loan Limits and Attached Condominiums and Attached PUDs Guidelines ................................ 32 6.6.2  Attached PUD Unit ............................................................................................................................. 32 6.6.3  Attached PUD Project Type (05/14/12) .............................................................................................. 33 6.6.4  Attached Condominiums .................................................................................................................... 33 6.6.5  Condominium Project Types .............................................................................................................. 33 

6.7  Attached Condominium Eligibility Requirements (05/14/12) ......................................................... 34 6.7.1  Attached Condominium Eligibility Requirements ............................................................................... 34 6.7.2  Leasehold Condominiums ................................................................................................................. 34 6.7.3  2-4 Unit Condo Projects ..................................................................................................................... 34 

6.8  Project Concentration (05/02/11) .................................................................................................. 34 6.9  Cooperative Units Eligibility (05/02/11) ......................................................................................... 35 6.10 Manufactured Housing (11/15/10) ................................................................................................. 36 6.11 Two Individual Residential Dwellings on One Lot (11/01/05) ........................................................ 36 6.12 Acreage and Land Value (05/14/12) ............................................................................................. 36 6.13 Rural and Unique Homes (02/16/10) ............................................................................................. 36 6.14 Declining Property Values (05/02/11) ............................................................................................ 37 6.15 Non-Arm’s Length Transactions (01/02/07) .................................................................................. 37 6.16 Maximum Genworth Insured Properties (07/11/11) ...................................................................... 37 6.17 Renovation Mortgages (05/02/11) ................................................................................................. 37 

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Table of Contents

Genworth Mortgage Insurance Underwriting Guidelines Page 3 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

6.17.1  Renovation Programs ........................................................................................................................ 37 6.17.2  Energy Improvement Features .......................................................................................................... 37 6.17.3  Completion Escrows .......................................................................................................................... 38 

6.18 Property Flipping (05/14/12) .......................................................................................................... 38 6.18.1  Short Sale Purchase (05/14/12) ......................................................................................................... 38 

6.19 Appraisal Documentation and Age (05/14/12) .............................................................................. 39 

7  PRODUCTS GUIDELINES ............................................................................................................... 41 7.1  Genworth-Insured Refinance Program (12/01/11) ........................................................................ 41 

7.1.1  GSE HARP-Eligible Refinance Option ............................................................................................... 41 7.1.2  Non-GSE Refinance Option (05/14/12) ............................................................................................. 42 7.1.3  Genworth-Insured Streamlined Refinance Option ............................................................................. 43 

7.2  Genworth Affordable Housing Guidelines (05/14/12) .................................................................... 46 7.3  This section has been removed (05/14/12 (revised)) .................................................................... 48 7.4  Pledged Assets (07/11/11) ............................................................................................................ 48 7.5  Construction to Permanent Loan (05/14/12) ................................................................................. 50 

8  COMMITMENT/CERTIFICATE ......................................................................................................... 53 8.1  Changes Prior to Certification: Requiring Prior Approval (05/02/11)............................................ 53 8.2  Changes Prior to Certification: Not Requiring Prior Approval (05/02/11) ..................................... 53 8.3  Modifications (03/23/09) ................................................................................................................ 53 8.4  Closed Loans (11/17/08) ............................................................................................................... 53 8.5  Pre-Qualifications (05/02/11) ......................................................................................................... 53 8.6  Certificate Activation (05/02/11) .................................................................................................... 54 

8.6.1  Zero Monthly Commitments ............................................................................................................... 54 8.6.2  All Other Premium Plans (Monthly, Single Premium, Split Premium): ............................................... 54 

8.7  Changes after Certification (01/07/08) .......................................................................................... 54 8.7.1  Loan Sales ......................................................................................................................................... 54 8.7.2  Waivers .............................................................................................................................................. 54 8.7.3  Reinstatement of a Canceled Certificate ........................................................................................... 54 8.7.4  Assumptions ...................................................................................................................................... 54 8.7.5  Terms/Extensions/Reinstatement of Expired Commitments (11/15/10) ............................................. 55 8.7.6  Partial Releases (10/06/08) ............................................................................................................... 55 8.7.7  Servicing Transfers (05/02/11) ........................................................................................................... 55 

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Genworth Mortgage Insurance Underwriting Guidelines Page 4 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

1 Introduction (02/16/10) In our continuing commitment to quality and in an effort to simplify the underwriting process for our customers, borrowers and investors in the secondary market, we at Genworth Mortgage Insurance have streamlined our underwriting guidelines. Genworth promotes clarity and understanding in our guidelines. We will insure loans that are manually underwritten or are underwritten by an approved automated underwriting system. Manually Underwritten Loans We generally align with Fannie Mae and Freddie Mac guidelines (Agency standard) to ensure simplicity in the underwriting process. Agency standards are defined as either Fannie Mae’s or Freddie Mac’s most currently published Selling or Seller’s Guide guidelines. Underwrite your loans to Agency standards with the exceptions and additional requirements/clarifications in this manual and your loan will be eligible for our insurance. Underwritten by an Approved Automated Underwriting System Genworth will also insure loans that are underwritten by an approved automated underwriting system (AUS). Section 1.6 Approved Automated Underwriting Systems describes our acceptance of these system’s guidelines and documentation. Guideline variances granted by Fannie Mae and Freddie Mac are outside of published Selling/Seller’s Guide guidelines. Delegated MI (EXCEL®) lenders must submit the variance to Genworth for written approval to obtain a program approval or submit each loan to Genworth for underwriting. Non-delegated lenders must submit each loan for underwriting. When Genworth’s underwriting manual is “silent” and does not address a guideline, the lender must follow Agency standard guidelines. If you typically adhere to Fannie Mae guidelines for underwriting, follow Fannie Mae’s Selling Guide guidelines when we are silent. Likewise, follow Freddie Mac’s Sellers Guide guidelines if you typically adhere to Freddie Mac guidelines. For all other situations, follow the more conservative of the agencies guidelines. We recognize that not every loan falls within these guidelines and may deserve special consideration. Loans outside of our guidelines may benefit from the flexibility in underwriting provided by our underwriters and must be submitted to Genworth for a full package underwrite. 1.1 Geographic Guidelines (11/01/05) Genworth continues to monitor market conditions for economic factors that may be unfavorable for the housing market and may pose considerable risk to long-term collateral values. Our Geographic Guidelines, set forth in Section 6.4, are applied to all loans. These guidelines are subject to change as warranted by local economic conditions. 1.2 Portfolio Dispersion (05/02/11) Our Risk Management team monitors the dispersion of our customers’ portfolios. Genworth periodically reviews a customer’s performance, geographic distribution, mix of loan characteristics, project concentration, loan origination sources, and concentration of high risk products and compares the results to Genworth’s portfolio actual and targeted mix and performance. On occasion, Genworth may also review a customer’s operational policies and processes. As necessary, observations and suggestions will be shared with our customers. 1.3 Affordable Housing (05/05/08) Genworth has a special commitment to serve low-to-moderate income buyers through our Community Home Buyer, Affordable Housing, and Emerging Markets efforts. We work closely with our customers by providing mortgage insurance on affordable housing programs and products that help them to meet the needs of diverse markets. These programs may result from partnerships with local and state housing finance agencies and nonprofit community organizations throughout the country. We also work very closely with local governments and community groups to better understand the markets through working with local appraisers, and partnering in neighborhood developments and re-developments.

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Genworth Mortgage Insurance Underwriting Guidelines Page 5 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

While Genworth has made a strong commitment to affordable housing, we have not reduced our commitment to sound risk management practices. We wish to partner with our customers who share Genworth’s dedication to high quality affordable housing lending. Our affordable housing guidelines are found in Section 7.2. 1.4 Homeowners Protection Act (11/01/05) The Homeowners Protection Act (HPA), which applies to loans closed on or after July 29, 1999, addresses private mortgage insurance disclosure and cancellation. It provides for cancellation of mortgage insurance when certain conditions are met and requires disclosure at origination and during loan servicing. Genworth has taken all steps to be fully compliant with the law. 1.5 Fair Lending (11/01/05) It is Genworth’s policy to provide all creditworthy applicants equal access to the capital, products, services and expertise of the corporation and its employees without regard to race, color, sex, religion, national origin, handicap, familial status, age, marital status, sexual orientation, geographic location or any other prohibited basis as defined by federal and state law. We require appraisers to report neighborhood and property conditions in factual and specific terms; to be impartial and specific in describing favorable or unfavorable factors; and to avoid the use of subjective, racial or stereotypical terms, phrases, or comments in the appraisal report. We do not designate certain areas as “acceptable” or “unacceptable”. Genworth does not “red line”. 1.6 Approved Automated Underwriting Systems 1.6.1 Fannie Mae’s Desktop Underwriter® and Freddie Mac’s Loan Prospector® (05/14/12) Genworth will insure most loans that are processed through Fannie Mae’s Desktop Underwriter (DU)® and Freddie Mac’s Loan Prospector (LP) automated underwriting systems (Agency AUS). Our approval is conditioned on:

The recommendation or risk classification is based on accurate and verified data; The loan is underwritten according to the guidelines detailed in the Agency AUS findings or

feedback report; The loan is documented according to the standards specified in the Agency AUS findings or

feedback report; and All terms have been met and the loan is eligible for investor delivery.

Desktop Underwriter®, DU® and MyCommunity® are registered trademarks of Fannie Mae. Refi Plus™ and DU Refi Plus™ are trademarks of Fannie Mae. Loan Prospector® and Home Possible® are registered trademarks of Freddie Mac. Freddie Mac Relief Refinancesm is a service mark of Freddie Mac.

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Genworth Mortgage Insurance Underwriting Guidelines Page 6 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

1.6.1.1 Genworth Guideline Overlays While the Agency AUS standards may be different from Genworth’s underwriting guidelines, they supersede Genworth’s guidelines provided the loan meets the terms above and these Genworth guidelines (Section numbers appear in parentheses): Ineligible Loan Features (2) Documentation Requirements (3) LTV/Loan Limits (4.1) 1 Unit with Loan Amounts > GSE Conforming Limit (4.2): Note: Reserves may follow the Agency

AUS requirement for DU Approve/Eligible and LP Accept Eligible LTV/CLTV/GLTV/TLTV (4.3) Qualifying Ratios (5.3) Tradelines (5.5): Note: Tradelines may follow the Agency AUS requirement for DU

Approve/Eligible and LP Accept Eligible Borrower’s Own Funds, Gifts and Reserves (5.12.3): Note: Reserves may follow the Agency

AUS requirement for DU Approve/Eligible and LP Accept Eligible, except for Primary Residence Conversions

Primary Residence Conversion (5.12.5) Geographic Guidelines (6.4) Attached PUDs and Attached Condominiums (6.6) Attached Condominium Eligibility Requirements (6.7) Project Concentration (6.8) Acreage and Land Value (6.12) Rural and Unique Homes (6.13) Maximum Genworth Insured Properties (6.16) Property Flipping (6.18) Genworth-Insured Refinance Program (7.1) Construction to Permanent Loan (7.5) Product or program restrictions, applicable to Agency AUS loans

Loans that do not meet the Agency AUS underwriting requirements must be manually underwritten to our standard underwriting guidelines.

Many Agency AUS loans have features that make the loan eligible for a Genworth product or program with special underwriting guidelines. When this is the case, the product guidelines address any product specific requirements that apply to Agency AUS loans. Unless a difference is noted in the product guidelines, follow the guidelines outlined in this section for all products.

1.6.1.2 Guideline Variances Guideline variances granted by Fannie Mae and Freddie Mac are outside of published Selling/Seller’s Guide guidelines. Delegated MI (EXCEL®) lenders must submit the variance to Genworth for written approval to obtain a program approval or submit each loan to Genworth for underwriting. Non-delegated lenders must submit each loan for underwriting.

1.6.1.3 Insurable Recommendations and Risk Classifications We will insure the following recommendations and risk classifications:

Agency AUS Recommendation or Risk Classification

Desktop Underwriter Approve/Eligible Expanded Approval I/Eligible

Loan Prospector Accept, Eligible for Purchase Caution, A Minus Eligible Caution, Eligible for Purchase

For any of the recommendations and risk classifications listed in the table above that require a manual underwrite by Fannie Mae or Freddie Mac as a component in determining whether the loan meets its

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Genworth Mortgage Insurance Underwriting Guidelines Page 7 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

requirements, the mortgage insurance should be ordered as an AUS loan by providing the AUS result on the mortgage insurance application.

Agency AUS loans are not automatically approved. Prudent underwriting and reasonableness tests should be applied to all loans processed through an AUS. Agency AUS loans submitted to Genworth for underwriting are carefully evaluated and all loan factors are weighed and analyzed prior to decisioning.

1.6.1.4 “Ineligible” for Purchase Loans that are deemed “Ineligible” for purchase by an Agency AUS will be considered for mortgage insurance if the loan meets Genworth’s standard underwriting guidelines. The processing efficiencies and guideline stretches provided by DU and LP may not be applied to the loan. The loan must be manually underwritten according to the applicable Agency’s Selling/Seller’s Guide guidelines and Genworth’s guidelines, without the benefits provided by the AUS. The AUS result should not be provided on the mortgage insurance application when ordering mortgage insurance in these cases. Occasionally, Fannie Mae or Freddie Mac changes guidelines such that a previously “ineligible” condition becomes “eligible” for delivery before DU or LP is modified to reflect the change. These loans also fall under this “ineligible” process.

1.6.1.5 Documentation Evidence of the final AUS evaluation is a required document for the loan file.

Approve/Eligible or Accept/Eligible loans with income or asset documentation relief (stated income or stated asset) provided by standard DU or LP are not considered Alt A as a product or for pricing, provided the loan is documented according to the requirements of standard DU Findings or LP Feedback Report, and the loan application was taken and intended to be a fully documented loan. An Agency AUS loan is considered Alt A if it is documented with less than the income or asset requirements of the reports or the application was taken and intended for Alt A documentation. Alt A loans are ineligible for insurance.

The credit report used by the Agency AUS to determine its recommendation or risk classification is the credit information that the lender must use when determining the representative score for pricing or eligibility.

1.6.2 Other Approved Automated Underwriting Systems (04/27/09) Genworth will insure Approve and Accept loans decisioned by a Genworth-approved non-Agency automated underwriting system. All standard Genworth guidelines and pricing policies apply, unless indicated otherwise in writing by Genworth’s Risk Management. Guideline stretches provided by the AUS are not permitted. Please contact your Genworth Sales Representative for information on approved non-Agency AUS. 1.7 Retail and Non-Retail Originations (05/14/12) For a loan to qualify as a Retail Origination, the entity that orders the mortgage insurance coverage (the Insured) must have performed all of the following loan tasks:

Taking the loan application Processing the loan application Underwriting the loan application for MI eligibility by the Insured, an MSP, or Genworth (Investor

underwriting for compliance to its guidelines is not considered an MI eligibility underwrite) Funding and closing of the loan.

A Mortgage Service Provider (MSP) may be used so long as: (1) the MSP does not take the loan application, (2) the MSP is paid on a fee basis for services performed, and (3) the payment of fees is not contingent on mortgage approval or loan closing. Loans must be funded from a warehouse line in the lender’s name or from the lender’s own funds. Table-funded loans are considered Non-Retail.

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Genworth Mortgage Insurance Underwriting Guidelines Page 8 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

2 Ineligible Loan Features (07/11/11) Loans with any of the following features are ineligible for Genworth mortgage insurance:

LTVs > 97% Investment Property DTI > 45% Alt A documentation (stated and no income/no assets), no doc, reduced doc, lite doc, limited doc Exterior only appraisals (unless DU or LP), AVMs, PIWs, PIAs, and desk reviews Loan Types: ARMs with initial fixed periods < 3 years, balloons with initial terms < 5 years,

interest only, GPMs, negative amortization of any type, pay option ARMs (POA) A Minus Property Types: 3-4 unit, condotels, commercially used properties, unimproved land, time share

units, mobile homes, earth, dome and geothermal properties, working farms, orchards and ranches, kiddie condos, houseboats

Additional geographic restrictions are found in Section 6.4 Geographic Guidelines.

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Genworth Mortgage Insurance Underwriting Guidelines Page 9 of 55 © 2012 Genworth Financial, Inc. All Rights Reserved May 14, 2012 (Revised)

3 Documentation Requirements (05/14/12) Documentation requirements for Agency AUS and manually underwritten loans are described in the following chart. We generally accept the documentation set from DU and LP with a few overlays. Our policy for manually underwritten loans is to:

Follow Fannie Mae’s guidelines when Fannie Mae is the investor or the Fannie Mae Selling Guide is your standard guideline set

Follow Freddie Mac’ s guidelines when Freddie Mac is the investor or the Freddie Mac Sellers Guide is your standard guideline set

Follow the more conservative of the agencies guidelines for all other situations The chart below abbreviates this policy as “Fannie Mae if Fannie Mae, Freddie Mac if Freddie Mac, otherwise more conservative.” In some places, we select either Fannie Mae or Freddie Mac as the “all other” default.

Documentation Desktop Underwriter &

Loan Prospector Manually Underwritten Loans Credit Report Follow the Agency AUS requirements Fannie Mae if Fannie Mae, Freddie

Mac if Freddie Mac, otherwise more conservative

Housing & Rental Follow the Agency AUS requirement

Fannie Mae if Fannie Mae, Freddie Mac if Freddie Mac, otherwise more conservative

When a borrower is not paying for any monthly housing, an explanation should be provided. Documentation supporting the reason for the lack of a recent or current payment should be obtained. In cases where the borrower has been living rent/mortgage free for longer than 6 months, confirmation of residency should be determined by verifying the address through most current bank, credit card, financial or insurance statements

Income & Employment

Follow the Agency AUS requirements

Verbal VOE only is ineligible

Fannie Mae if Fannie Mae, Freddie Mac if Freddie Mac, otherwise more conservative

IRS Form 4506-T, 8821, or 4506

Follow the Agency AUS requirements Follow Freddie Mac if Freddie Mac

Follow Fannie Mae for all others Verbal VOE Verbal VOE is required to be

dated within 30 calendar days prior to the note date for both salaried and self-employed borrowers

Verbal VOE only is ineligible

Verbal VOE is required to be dated within 30 calendar days prior to the note date for both salaried and self-employed borrowers

Assets Follow the Agency AUS requirements Fannie Mae if Fannie Mae, Freddie Mac if Freddie Mac, otherwise more conservative

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Documentation Desktop Underwriter &

Loan Prospector Manually Underwritten Loans Appraisal Interior/Exterior review (URAR) or

2055 Exterior Only, per guidelines below

The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements

A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500

Use of automated valuation models (AVMs), PIWs, PIAs and desk reviews to obtain property values are ineligible

All property evaluations must be completed by a licensed or certified appraiser

Appraisals may be 180 days, for newly constructed homes, however, a re-certification of value must be provided if the appraisal is more than 120 days. If the value has declined, a new, full appraisal is required

GSE HARP-Eligible Refinance: follow agency’s collateral valuation requirements

All property evaluations must have a minimum interior/exterior review

The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements

A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500

Use of automated valuation models (AVMs), PIWs, PIAs, desk reviews, or exterior only appraisals to obtain property values are ineligible

All property evaluations must be completed by a licensed or certified appraiser

Appraisals may be 180 days, for newly constructed homes, however, a re-certification of value must be provided if the appraisal is more than 120 days. If the value has declined, a new, full appraisal is required

GSE HARP-Eligible Refinance (Same Servicer): follow agency’s collateral valuation requirements

2055 Exterior Only Form 2055 Exterior Only may be obtained if permitted by DU or LP for the loan transaction

A 2055 may not be used if the property is currently in foreclosure or is an investor/ institution/bank-owned REO; a full URAR is required.

The appraisal must be upgraded to a full URAR by the lender, or the upgrade may be requested by Genworth, if any of the following conditions exist: Inspection of exterior of dwelling

is reported to be or appears to be in less than average condition

If any 2055 ratings or narrative indicate adverse conditions

The contract or home inspection (if included ) indicate repairs are needed

Ineligible

Appraisal for Construction to Permanent Loans

URAR, “subject to completion” completed by a licensed or certified appraiser at time of Genworth underwrite

The appraisal form and applicable addenda must meet Agency requirements

Appraisal Update and/or Completion Report (Form 1004D/442) completed by appraiser at completion of construction

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Documentation Desktop Underwriter &

Loan Prospector Manually Underwritten Loans A new appraisal may be required at completion of construction if the

appraiser indicates on the 1004D/442 that the value has declined Refer to Section 7.5 for detailed construction to permanent appraisal and

recertification of value requirements Age of Credit Report, Income, Employment, and Asset Documentation

Follow the Agency AUS requirements

GSE HARP-Eligible Refinance: follow the agency’s document age requirement

Follow Freddie Mac if Freddie Mac

Follow Fannie Mae for all others GSE HARP-Eligible Refinance

(Same Servicer): follow the agency’s document age requirement

Electronically generated verifications are acceptable provided the lender represents and warrants the integrity and accuracy of the information. In addition we require:

Verification of significant debts, such as mortgage or installment loans, which are not verified on the credit report or the in-file reports

Applicable Genworth Application to request the mortgage insurance coverage 3.1 Ineligible Documentation Types

Stated Income (SIVA, SISA) Stated Assets (VISA) No Income (NINA, NIVA) “No Doc” All other income, employment, or asset documentation that does not meet published Agency

standard guidelines (e.g. limited doc, lite doc, reduced doc, etc.)

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4 Standard Guidelines for Loan Eligibility 4.1 LTV/Loan Limits (05/14/12) NOTE: Some products may have different LTV/loan amount limits. Please refer to the product descriptions for possible exceptions. 4.1.1 All Markets except Florida:

Primary Property Type LTV/CLTV1 Loan Amount Credit Score

DTI

Purchase & Rate/Term Refinance

Single family, detached & attached

97%2 $417,000 720 41%

< = 95% $417,000

AK & HI: $625,500 660 41%

700 45%

< = 90% $625,500 700 41%

< = 90% FHFA3 (in HI)

700 41%

Condominiums

< = 95% $417,000

AK & HI: $625,500 660 41%

700 45%

< = 90% $625,500 700 41%

< = 90% FHFA3 (in HI)

700 41%

Cooperatives < = 95%/NA $417,000

660 41%

700 45%

< = 90%/NA $625,500 700 41%

Manufactured Housing

< =85% $417,000 660 41%

700 45%

2 units < = 90% $533,850 660 41%

Cash-out Refinance Single family,

detached & attached, Condominiums

< = 85%/NA $417,000 700 41%

Maximum cash-out amount: $200,000

Second Home Property Type4 LTV/CLTV1 Loan Amount Credit Score

Retail DTI

Purchase & Rate/Term Refinance

Single family, detached & attached

< = 90% $417,000 720 41%

1 See Section 4.3 LTV/CLTV/GLTV/TLTV for complete details 2 97% LTV not eligible in NV 3 Loan amounts > $625,500 are allowed for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming as described in Section 4.2 4 Attached condominiums, cooperatives, manufactured housing and 2 units are ineligible for second homes 4.1.2 LTV 95.01 – 97% Primary, purchase and rate/term refinances Minimum 720 credit score Maximum DTI 41% Ineligible in FL and NV Eligible loan types: fixed rate/fixed payment, ARMs with initial adjustments > = 5 years Ineligible with: 3 year ARMs, temporary buydowns, balloons, nontraditional credit, non-occupant co-

borrowers, attached condominiums, cooperatives, manufactured housing For affordable housing guidelines for 95.01 – 97% LTVs, refer to Section 7.2.

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4.1.3 Florida1

Purpose Property Type LTV/CLTV2 Loan Amount Credit Score

DTI

Purchase & Rate/Term Refinance

Single family, detached & attached

< = 95% $417,000 680 41%

< = 90% FHFA3 (in designated markets)

740 41%

Condominiums < = 95% $417,000 680 41%

< = 90% FHFA3 (in designated markets)

740 41%

Manufactured Housing

< =85% $417,000 680 41%

2 units < = 90% $533,850 680 41%

Cash-out Refinance Single family,

detached & attached, Condominiums

< = 85%/NA $417,000 700 41%

Second Home Property Type4 LTV/CLTV2 Loan Amount Credit Score

Retail DTI

Purchase & Rate/Term Refinance

Single family, detached & attached

< = 90% $417,000 720 41%

1 Attached housing in Florida requires a Genworth underwrite 2 See Section 4.3 LTV/CLTV/GLTV/TLTV for complete details 3 Loan amounts > $417,000 are allowed for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming as described in Section 4.2 4 Attached condominiums, cooperatives, manufactured housing and 2 units are ineligible for second homes 4.2 1 Unit with Loan Amounts > GSE Conforming Limit (05/14/12)

1 Unit with Loan Amounts > GSE Conforming Limit Loan Amounts $417,000 - $625,500

Available in all markets except FL. In FL, loan amounts > $417,000 are allowed in FHFA designated markets only

Loan Amounts > $625,500 Genworth will insure the “permanent” high cost loan limits in excess of $625,500 in eligible markets as determined by the FHFA

The FHFA’s “temporary” high cost loan limits that expired on October 1, 2011 remain eligible in those high cost markets on a loan level exception basis, with a Genworth underwrite.

Loan Type Fixed rate/fixed payment Fully amortizing 5/1, 7/1, or 10/1 ARMs

Borrower Contribution Minimum 5% from borrower’s own funds DTI Maximum 41% Reserves DU Approve/Eligible or LP Accept/Eligible: as determined

by AUS, except primary residence conversions All other loans: minimum 6 months verified

Builder/Seller Contributions 3% Nontraditional Credit Ineligible GSE AUS Result DU Approve/Eligible or LP Accept Eligible only if submitted to

DU or LP Documentation Refer to Section 3 Documentation Requirements Florida Attached housing in Florida must be underwritten by GenworthConstruction to Permanent Ineligible Underwriting Notes Loan must meet all other Genworth guidelines

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4.3 LTV/CLTV/GLTV/TLTV (07/11/11) Genworth calculates several ratios to express the relationship between the loan amount, subordinate financing amounts and financed MI with the property value (lesser of purchase price or appraised value). The numerator for each includes:

LTV: Loan amount Combined LTV (CLTV): Loan amount + subordinate financing amounts (second liens or

HELOCS) Gross LTV (GLTV): Loan amount + financed MI premium Total LTV (TLTV): Loan amount + subordinate financing amounts + financed MI premium

Loan amount: Loan amount, including financed amounts for closing costs, prepaids/escrows, etc. but not MI 4.3.1 Maximum CLTV The maximum combined loan-to-value (CLTV) for all products/programs is equal to the maximum LTV of the applicable product and program. 4.3.2 Types of Subordinate Financing Follow Agency standard guidelines for eligible types of subordinate financing. 4.3.3 LTV/CLTV/GLTV/TLTV Purpose LTV CLTV GLTV TLTV

Primary 1 Unit Purchase & Rate/Term Refinance

97%1 97%1 100% 100% 95% 95% 100% 100% 90% 90% 100% 100%

Cash-out Refinance 85% NA NA 85% Primary 2 Units Purchase & Rate/Term Refinance 90% 90% 100% 100% Manufactured Housing

Purchase & Rate/Term Refinance 85% 85% 100% 100%

Second Home Purchase & Rate/Term Refinance 90% 90% 95% 95% 1 97% LTV/CLTV ineligible for FL and NV Note: A loan is ineligible for mortgage insurance in NY if the loan amount /appraised value is < 80%. The LTV/CLTV/GLTV/TLTV table for affordable housing loans is found in Section 7.2. 4.4 Refinance Transactions 4.4.1 Rate/Term Refinance Definition (05/02/11) The mortgage amount for a rate/term refinance may include:

Payoff of unpaid principal balance of the existing first mortgage, Payoff of the outstanding principal balance of subordinate liens securing the property that were

used in whole to acquire the subject property, Paying of closing costs, financing costs, points, prepaids, and Other funds for the borrower’s use not to exceed 2% of the principal amount of the new loan

amount or $2,000, whichever is less “Buyouts” and “special purpose cash-out refinance mortgages” are treated as rate/term refinance transactions provided the Agency conditions are met. Refer to Section 6.17 for the definition of rate/term refinances for a renovation mortgage.

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4.4.2 Cash-out Refinances (05/14/12) The mortgage amount for a cash-out refinance may include:

Payoff of unpaid principal balance of the existing first mortgage, Payoff of the outstanding principal balance of subordinate liens securing the property that were

not used in whole to acquire the subject property, Paying of closing costs, financing costs, points, prepaids, and Other funds for the borrower’s use

Cash Out Refinance Guidelines

Seasoning and Listing History

The following are ineligible for cash out refinance: Properties purchased within the last six (6) months Homes listed for sale within the last six (6) months

LTV Determination

If subject property is owned…

Then the LTV is based on …

6 – 11 months Lesser of the: Original purchase price

plus documented costs of improvements, or

Current appraised value >= 12 months Current appraised value

Subordinate Financing Borrower may pay off subordinate financing in a cash-out refinance transaction. Borrowers may not re-subordinate liens in a cash-out transaction.

Loan Type Fixed rate/fixed payment Fully amortizing ARMs with initial adjustments > = 5 years Balloon with an initial term > = 5 years Ineligible: 3 year ARMs, temporary buydowns

Nontraditional Credit Eligible on a case-by-case basis with a Genworth underwrite DTI 41% Property Types Single family, detached and attached

Condominiums Ineligible: Cooperatives, manufactured housing, 2 units

Construction to Permanent Ineligible Financed MI Ineligible 4.4.3 Fannie Mae DU Refi Plus™ and Refi Plus™ and Freddie Mac Relief Refinancesm Programs

(03/23/09) We will insure Fannie Mae and Freddie Mac’s Home Affordable Refinance programs according to the guidelines in Section 7.1 Genworth-Insured Refinance Program. 4.4.4 Subordinate Liens, Home Equity Lines of Credit & Junior Liens (09/21/09) Borrowers may payoff subordinate financing in a rate/term or cash-out refinance transaction, according to the Agency standard guidelines. Subordinate financing may be re-subordinated in a rate/term refinance, according to Agency standard guidelines. Borrowers may not re-subordinate liens in a cash-out refinance transaction. 4.4.5 Continuity of Obligation for Refinance Transactions (11/17/08) Genworth follows Fannie Mae’s published standard guidelines for continuity of obligation. 4.4.6 Fannie Mae’s Delayed Financing Exception (05/14/12) We will insure cash-out refinances that meet Fannie Mae’s delayed refinancing exception guidelines. Our cash-out refinance guidelines in 4.4.2 also apply, except for the six months seasoning requirement.

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4.5 Adjustable Rate Mortgages (02/04/08) 4.5.1 ARM Index The ARM index rate must be tied to an index that is published, beyond the control of the lender, and easily verified by the borrower. 4.5.2 Five Year Fixed Period ARM Genworth charges fixed payment rates on loans featuring level payments for at least the first five (5) years provided there is no potential for negative amortization during the first five years, no buydown or rate concessions. In addition, borrowers of such loans will be qualified using the fixed payment qualifying ratio. 4.5.3 Lifetime Caps on ARM Loans (02/16/10) Genworth requires lifetime caps not to exceed 6% over the initial rate. 4.5.4 Minimum Initial Fixed Period (05/02/11) The minimum initial fixed rate fixed payment period is thirty-six (36) months. 4.5.5 Per Adjustment Caps on ARM Loans (05/02/11)

Fixed Period

Initial Cap (Max 1st

Adjustment)

Periodic Cap (Max Subsequent

Annual Cap) Lifetime Cap 3 years 3% 2% 6% > = 5 years 6% 2% 6% 4.5.6 Qualifying Rate on ARMs (04/27/09) Follow Agency standard requirements. 4.5.7 Interest Rate Shortfall (09/21/09) The maximum initial interest rate discount from the fully indexed accrual rate (FIAR) is:

Primary Residence: 300 basis points Second Home: 200 basis points

4.5.8 Potential Negative Amortization Loans with a potential negative amortization feature are not eligible for insurance. 4.5.9 Scheduled Negative Amortization Loans with scheduled negative amortization are not eligible for insurance. 4.5.10 Graduated Payment Mortgage (09/21/09) GPMs are not eligible for insurance. 4.6 Temporary Buydowns (07/11/11) Temporary buydowns are eligible as follows:

Occupancy Loan Type Max LTV

Maximum Buydown

Period Qualifying Rate Primary Residence Fixed rate

>= 5 year ARMs 97%1 2-1-0

Follow Agency standard requirements for qualifying rates for buydowns

< = 95% 3-2-1 3 year ARMs < =95% 2-1-0

Second Homes Fixed rate >= 5 year ARMs

< = 90% 3-2-1

3 year ARMs < =90% 2-1-0 1 97% LTV buydown allowed for affordable housing only Temporary buydowns are ineligible for cash-out refinances, 1 unit loan amounts > $417,000, LTV > 95% (unless affordable housing), manufactured housing, and construction to permanent loans.

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4.7 Balloons/Call Options (11/05/05) Genworth will insure mortgage loans featuring balloon payments or call options. The minimum term is five (5) years. The lender, however, must offer the borrower a new loan at market rates in an amount not less than the then outstanding principal balance with no decrease in the amortization period in order for our insurance coverage to continue. At the end of the balloon term, Genworth’s Master Policy requires that an offer of unconditional refinancing or modification be extended to the borrower in order for our insurance coverage to continue. If the borrower is offered a modification of the same note, a Notification of Modification must be submitted to our National Processing Center. If an entirely new note is executed, Genworth’s insurance coverage will continue provided a new signed loan application, a mortgage insurance application, and the Genworth Certificate number for the prior loan are submitted to your local Genworth underwriting office. We reserve the right to adjust the renewal premium or to request a mortgage payment history if the modification or the new loan represents additional coverage or a more risky mortgage type. 4.8 Relocation Loans (05/14/12) 4.8.1 Employer Relocation Programs A relocation loan must have all of the following attributes:

Made to a transferred employee or to a newly hired employee to finance a primary residence at a new location

Made pursuant to a relocation program administered by the corporate employer or its agent Involves a significant employer contribution towards the borrower’s relocation of the lesser of 3%

of the original mortgage principal amount or $7,500 Made by the lender pursuant to a contract or agreement with the employer or its agent

Employer contributions must consist of one or more of the following:

A buydown or subsidy of the mortgage interest rate Payment of the borrower’s closing costs (including loan discount points and origination fees) on

the new and/or the previous residence Funding of a below market rate or no interest bridge loan Payment of the difference between property tax and/or mortgage interest rate obligation on the

employee’s previous residence and new primary residence Funds for moving expenses, temporary housing, house hunting expenses, loss on sale of home,

equity buyout of current mortgage, 4.8.2 Military Relocation The following relocation guidelines are applicable to active military personnel in lieu of the employer relocation program guidelines in Section 4.8.1: A copy of the Permanent Change of Station (PCS) and Basic Housing Allowance (BHA) must be

included in the loan file Primary Residence Conversion guidelines (Section 5.12.5) for reserves and rental income have been

modified for active duty military borrowers whose current primary residence is pending sale or will be converted to a second home or investment property. Guidelines in Section 5.12.5 apply unless noted below:

Military Relocation Reserves and Rental Income

Current Primary Residence pending sale

Two (2) months verified reserves are required for both properties

Conversion to a Second Home

DU and LP loans: Reserves as determined by the AUS but no less than two (2) months for each property

For all other loans: Two (2) months verified reserves are required for both properties

Conversion to an Investment Property

Six month’s reserves are required for both properties Borrower may qualify with up to 75% of the rental income

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4.9 Financed Mortgage Insurance (07/11/11) For loans where the MI premium is financed into the loan amount:

Genworth’s underwriting guidelines are based on the LTV excluding the financed MI premium The LTV category for rates is determined using the loan amount excluding the financed MI

premium The premium amount is calculated using the base loan amount, excluding the financed MI

premium, times the premium rate Split Premium payment option loans follow the same guidelines above. The annualized monthly

premium rate is applied to the base loan amount, excluding the financed upfront premium Financed MI premium is not allowed for cash-out refinance transactions

4.9.1 GLTV The maximum Gross LTV (GLTV), the loan amount + financed MI premium, is as follows: Purpose LTV GLTV Primary 1 Unit

Purchase & Rate/Term Refinance 97%1 100% 95% 100% 90% 100%

Cash-out Refinance 85% NA Primary 2 Units Purchase & Rate/Term Refinance 90% 100% Manufactured Housing

Purchase & Rate/Term Refinance 85% 100%

Second Home Purchase & Rate/Term Refinance 90% 95% 1 97% LTV/CLTV ineligible for FL and NV The LTV/GLTV table for affordable housing loans is found in Section 7.2.

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5 Standard Guidelines for Borrower Eligibility 5.1 Eligible Borrowers (11/01/05) 5.1.1 Non-Permanent Resident Alien Genworth will insure loans to non-permanent resident aliens who apply with a resident alien or a U.S. citizen under the same terms that are available to U.S. citizens. For loans where all the borrowers are non-permanent resident aliens, the borrower must have a two (2) year history of U.S. residency and must meet all standard guidelines for employment and credit history. The lender must have acceptable documentation in the loan file to verify the non-permanent resident alien status. Genworth does not insure borrowers with diplomatic immunity. 5.1.2 Permanent Resident Aliens Genworth will insure loans made to aliens who are lawful permanent residents of the United States under the same terms available to citizens. 5.1.3 Foreign Nationals We do not insure foreign nationals. 5.2 Occupancy Status 5.2.1 Primary Residence (05/14/12) A property is considered a primary residence if it meets the following criteria:

Occupied by the borrower for at least six months out of the year and the address of record for taxes, voter registration, etc.

Located within a reasonable commuting distance to the borrower’s place of employment Borrower declares an intention to occupy the property as a primary residence The property must be occupied by the borrower within sixty (60) days of closing or completion

We will classify as a primary residence a home purchased by a borrower for parents who are unable to work or do not have sufficient income to qualify for a mortgage, subject to these guidelines:

Purchase and rate/term refinance only to a maximum 95% LTV/LTV Borrower must provide an explanation identifying the situation and the need for financing Occupancy by the parent must be documented with an occupancy affidavit signed by parent and

borrower indicating that the parent intends to occupy the property within 60 days of closing If run through DU, messages related to intent to occupy must be addressed

5.2.2 Second Homes (09/21/09) A property is considered a second home if it meets the following criteria:

Is a 1 unit property located a reasonable distance away from the borrower’s primary residence Suitable for year-round occupancy Occupied by the borrower for some portion of the year Available for the borrower’s exclusive use with usage controlled solely by the borrower Must not be rental property, subject to rental pools, timeshare or shared ownership agreements.

No agreements may exist that give a management firm control over the occupancy of the property

5.2.3 Investment Properties (04/27/09) Genworth does not insure investment properties.

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5.3 Qualifying Ratios (05/14/12) It is the lender’s responsibility to document and support the borrower’s capacity to repay monthly debt obligations. 5.3.1 Debt-to-Income Ratio (DTI) Genworth uses a single, total debt-to-income ratio for qualification. We will insure:

41% for all loans, or 41.01 – 45% for loans meeting the criteria described in Section 5.3.2

5.3.2 DTI 41.01 -45%

Occupancy Purpose LTV/CLTV UnitsLoan

Amount Credit Score

Primary Purchase &

Rate/Term Refinance 95% 1 $417,000 700

Ineligible: FL, nontraditional credit, construction to permanent loans, pledged asset loans

DTIs above 41% may not be prudent for every borrower. We recommend a careful assessment of the borrower’s current and past financial profile and overall terms of the loan transaction to determine the reasonableness of a DTI > 41%. The presence of one or more of the following conditions may help compensate for the increased risk:

Borrower has demonstrated the ability to carry a higher housing expense or higher debt level while maintaining a good credit history

Borrower has additional sources of income that were not considered stable for use in qualification Borrower has substantial liquid reserves equal to six months reserves above required reserves Borrower has demonstrated the ability to accumulate savings and to maintain a good credit

history or a non-housing debt-free position Borrower’s new housing payment is no more than 115 - 120% of the prior rental or housing

payment Borrower’s gap between the monthly housing debt (HDI) and DTI is less than 15 points

There may be factors other than those above that you use to support and document the borrower’s capacity to repay monthly obligations. 5.3.3 Non-occupying Co-borrower For loans where a non-occupying co-borrower’s income is used for qualification, DTI is determined as follows:

DTI

DU & LP DTI calculated per the AUS, subject to our ratio requirements to a maximum of 45%

All other loans The occupying borrower’s DTI must meet our ratio requirements to a maximum of 45%

5.3.4 Housing Expense to Income Ratio (HDI) Genworth does not impose a maximum total housing expense-to-income ratio (HDI) but recognizes that a review of the gap between the borrower’s HDI and DTI is a useful tool to help assess the borrower’s capacity to satisfy monthly obligations. When the gap is wide (more than 15 points) prudent underwriting and reasonableness tests should be applied to see if the borrower has managed the level of non-mortgage related debt in the past and maintained a strong credit history. In addition, a borrower, especially a first time homebuyer, with both an HDI and TDI in the 41%-45% range may not be prudent. NOTE: Some products may have different qualifying ratios. Refer to the program descriptions for possible exceptions to these ratios.

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5.4 Credit Underwriting (08/11/08) Genworth will accept any of the following ways to establish a borrower’s credit history for manually underwritten loans:

Using credit scores, or Using a traditional credit history, or Using a nontraditional credit history

We accept the agencies’ documentation guidelines for:

Verification of the borrower’s credit history Payment history documentation

5.5 Credit History: Using Credit Scores (05/14/12) Follow our guidelines for underwriting using credit scores as noted below:

Agency AUS Loans: For DU Approve/Eligible and LP Accept/Eligible, the credit history will be considered acceptable provided the loan meets the guidelines in Section 1.6.1. The credit history for all other recommendations/classifications will be considered acceptable provided the loan meets Section 1.6.1 guidelines and the Tradelines requirements in Section 5.5.

Manually Underwritten Loans: For loans manually underwritten to Fannie Mae or Freddie Mac guidelines for underwriting with credit scores as specified in their Selling or Seller Guides, apply the guidelines below in addition to the Agency guidelines

Using Credit Scores

Number of Credit Scores Credit data should be requested for each borrower from a minimum of two (2) repositories; three (3) repositories are preferred

Tradelines Minimum of three (3) tradelines, open or closed, that have been evaluated at least 12 months

Credit scores not supported by the minimum number of tradelines or do not meet the history requirement must be submitted to Genworth for underwriting. The traditional credit guidelines in Section 5.6 will apply.

Credit scores not supported by the minimum number of tradelines or do not meet the history requirement must be submitted to Genworth for underwriting. Higher pricing will be applied if additional credit references must be obtained from sources outside of the credit report to meet the minimum number and history requirement.

All borrowers on the loan must have a valid credit score. If not, submit the loan to Genworth for underwriting. The traditional credit guidelines in Section 5.6 will apply.

Authorized user tradelines may be used to count towards the minimum tradeline requirement if: The owner of the account is another borrower on the

mortgage, or The account belongs to the borrower’s spouse, or The borrower has been the sole payer on the account

for the last 12 months and can document those payments

Selecting the Representative Credit Score

If… Representative Score is… Three (3) scores are obtained for one borrower

Use the middle score

Three (3) scores are obtained for one borrower and two are identical

Use the identical score

Two (2) scores are obtained Use the lower score

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Using Credit Scores for one borrower Multiple borrowers have three (3) credit scores each

Choose the middle score for each borrower, then

Choose the lowest of all the middle scores

Multiple borrowers have two (2) credit scores each

Choose the lower score for each borrower, then

Choose the lowest of all the lower scores

Example

Credit Scores Borrower 690 700 710 Co-Borrower 675 680 690

In this example, the representative score is 680, as it is the lower of the two middle scores.

Inaccurate Credit File Follow agency guidelines for treatment of inaccurate credit file information

Mortgage/Housing Payment History

No more than 0x30 in the last twelve (12) months No more than 1 x 30 or 0 x 60 in last 24 months A current status

Revolving & Installment Credit

Not currently delinquent

Bankruptcy

Follow Agency standard guidelines and the following: Chapter 13: Two (2) years from discharge date or four (4)

years from dismissal date All other bankruptcy actions: Four (4) years from either

dismissal or discharge Extenuating Circumstances: Two (2) years from

discharge or dismissal date Multiple bankruptcy filings within last 7 years: Five (5)

years from most recent discharge or dismissal; three (3) if extenuating circumstances. Most recent must be extenuating circumstances

Foreclosure

Follow Agency standard guidelines and the following: Seven (7) years from date of completion Extenuating Circumstances: Three (3) years from

completion date. Years 3 – 7: Lesser of 90% LTV or maximum LTV allowed. Purchase allowed for primary residence only. Rate/term refinance allowed for all occupancy types.

Deed-In-Lieu of Foreclosure and Preforeclosure Sale (Short Sale)

Follow Agency standard guidelines and the following: Four (4) years from date of completion: Lesser of 90% or

maximum LTV allowed Seven (7) years from completion: Maximum LTV allowed Extenuating Circumstances: Two (2) years from

completion date. Lesser of 90% or maximum LTV allowedPublic Derogatories Follow Agency standard guidelines Re-established Credit Follow Agency standard guidelines Underwriting Notes File data should be consistent with information in the credit

report and the credit score factor codes should not indicate recent high risk activity, such as: Multiple newly opened accounts, Unrelated credit inquiries, or

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Using Credit Scores Any recently delinquent accounts, especially 60-day or 90-

day late payments A borrower’s payment history should be underwritten using the traditional credit history guidelines below if the borrower did not satisfy all the other credit criteria above. 5.6 Credit History: Using Traditional Credit (05/14/12) The guidelines in this section are not applicable to DU Approve/Eligible or LP Accept/Eligible loans. A traditional credit history should be used when a credit score for a borrower is obtained but the credit lines do not meet the minimum required number (3) of tradelines that have been evaluated at least 12 months or the credit report contains significant inaccuracies. Loans with a traditional credit history require a Genworth underwrite. Genworth will evaluate the borrower’s entire credit history to ascertain the borrower’s willingness to repay obligations. Additional credit references may be requested in some circumstances. Higher pricing will be applied if additional credit references must be obtained from sources outside of the credit report to meet the minimum number and history requirement.

Traditional Credit Credit History Minimum of three (3) credit references. References may be a

combination of tradelines, traditional, nontraditional or a combination of both. All three (3) credit references must have been evaluated for the past twelve (12) months. Higher pricing will be applied if additional credit references must be obtained from sources outside of the credit report to meet the minimum number and history requirement. We will place a great deal of emphasis on the last twelve (12) months of credit and look very closely at the last 24 months, as well as the borrower’s entire credit history to determine willingness to repay obligations.

Payment History Genworth underwriters will generally view the following as an acceptable level of late payments:

Type

Max Nbr of Late Payments in the last 12 Months

Max Nbr of Late Payments in the last 24 Months

Mortgage or Housing Payments

0 x 30 days Mortgage

must be current

1 x 30 days 0 x 60 or

greater days

Installment 1 x 30 days 0 x 60 or

greater days

2 x 30 days 1 x 60 days 0 x 90 days

Revolving 2 x 30 days 0 x 60 or

greater days

2 x 30 days 1 x 60 days 0 x 90 days

When a borrower has occasional and isolated adverse ratings, we will use our best judgment to determine if such late payments affect the borrower’s ability and willingness to repay his/her mortgage in a timely fashion. Genworth evaluates the age of any account that reflects late payments, the frequency and severity of the late payments, the size of the account balance, how long ago the late payments occurred, and the status of the borrower’s other credit accounts. Borrowers who have some adverse ratings should have a sufficient number of

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Traditional Credit other accounts that demonstrate their willingness and ability to meet debt obligations in a timely manner. We will weigh some moderate late consumer credit payments against the loan’s LTV, the borrower’s verified assets and the strength of the subject collateral as well as other risk factors involved in the loan.

Bankruptcy Follow Agency standard guidelines and the following: Chapter 13: Two (2) years from discharge date or four (4)

years from dismissal date All other bankruptcy actions: Four (4) years from either

dismissal or discharge Extenuating Circumstances: Two (2) years from

discharge or dismissal date Multiple bankruptcy filings within last 7 years: Five (5)

year from most recent discharge or dismissal; three (3) if extenuating circumstances. Most recent must be extenuating circumstances

Foreclosure

Follow Agency standard guidelines and the following: Seven (7) years from date of completion Extenuating Circumstances: Three (3) years from

completion date. Years 3 – 7: Lesser of 90% LTV or maximum LTV allowed. Purchase allowed for primary residence only. Rate/term refinance allowed for all occupancy types.

Deed-In-Lieu of Foreclosure and Preforeclosure Sale (Short Sale)

Follow Agency standard guidelines and the following: Four (4) years from date of completion: Lesser of 90% or

maximum LTV allowed Seven (7) years from completion: Maximum LTV allowed Extenuating Circumstances: Two (2) years from

completion date. Lesser of 90% or maximum LTV allowedPublic Derogatories Follow Agency standard guidelines for significant derogatory

credit Credit Inquiries Follow Agency standard guidelines Number and Age of Accounts

Follow Agency standard guidelines

Balances to Limits and Utilization of Revolving Credit

Follow Agency standard guidelines

Explanation and Documentation of Late Payments

Follow Agency standard guidelines

5.7 Credit History: Using Nontraditional Credit (05/14/12) Follow Agency standard guidelines for documenting the credit history if no credit score was obtained from any credit reporting agency due to the absence of credit information. Loans with a nontraditional credit history require a Genworth underwrite.

Primary Residence

Purpose1 Property Type LTV/CLTV UnitsLoan

Amount DTI

Purchase

Single family, detached & attached,

Condominiums, Cooperatives

95% 1 $417,000 41%

1 Refinances are eligible on a case-by-case basis Ineligible: Construction to permanent loans, manufactured housing, 2 units

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5.8 Collections, Judgments, Garnishments or Liens (06/28/10) Collections, charge offs, judgments, garnishments, liens and payment plans for federal and state tax liens must be paid in full prior to closing, especially any debt affecting title. However, we will allow collections and charge offs to remains open to the following maximums:

Up to $250 per account, and Up to $1,000 in the aggregate

Collections in connection to an unforeseen expense should not be viewed as adverse provided that it has been paid in full or a repayment plan has been established and has been paid as agreed for the last twelve (12) months. For construction to permanent loans, all mechanics’ liens, materialmen’s liens or any other liens affecting title must be satisfied prior to activation of MI coverage. 5.9 Consumer Credit Counseling (01/02/07) Some borrowers seek assistance of consumer credit counseling agencies to restructure debts and establish an affordable repayment plan. At the conclusion of credit counseling, the borrower should have:

Re-established credit of a minimum of three (3) accounts, one housing related, with twelve (12) months history, and

No late payments 5.10 Pending Lawsuits (11/01/05) Borrowers who have pending lawsuits may be eligible if they can provide evidence of sufficient malpractice insurance, other means to cover the estimated amount of the potential liability, or a letter from an attorney stating the borrower has no financial liability. 5.11 Previously Paid Claim (01/02/07) Genworth will generally not insure a loan for borrowers on whom we have previously paid a claim. 5.12 Assets and Liabilities (09/01/09) Genworth will accept the following Agency standard underwriting guidelines for eligible sources and verification of borrower funds for downpayment and closing costs and repayment of debt. Our policy is to:

Follow Fannie Mae’s guidelines when Fannie Mae is the investor or the Fannie Mae Selling Guide is your standard guideline set

Follow Freddie Mac’ guidelines when Freddie Mac is the investor or the Freddie Mac Sellers Guide is your standard guideline set

Follow the more conservative of the agencies guidelines for all other situations, unless a specific agency’s guideline is noted to follow for all others

5.12.1 Source of Funds per Agency Standard Guidelines (11/15/10) Borrower’s Own Funds

Borrowed Funds, secured by an asset owned by the borrower

Bridge loans Cash on hand Checking and Savings Accounts Deposits on Sales Contract Mortgage Credit Certificates as Income

(follow Fannie Mae for all others) Rent with Option to Purchase Retirement Accounts (follow Fannie Mae

for all others) Sale of Personal Assets

Sales proceeds from a currently owned home Stocks, Bonds, Mutual Funds (follow Fannie

Mae for all others) Individual Development Accounts Other acceptable sources after borrower’s contributions from borrower’s own funds Credit Card Financing (follow Freddie Mac for

all others) Gifts and Grants Gifts of Equity

Refer to Section 7.5 Construction to Permanent for lot equity guidelines.

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5.12.2 Repayment of Debts per Agency Standard Guidelines (02/16/10)

Alimony and Child Support Bridge Loans Contingent Liabilities Installment Debt Mortgage Credit Certificates as Debt

(follow Fannie Mae for all others) Real Estate Debt Revolving Debt Lines of Credit Student loans and other deferred payments

Satisfaction of Debt to Qualify Subject Property Payment Subordinate Financing Undisclosed Debt Trade Equity, per Fannie Mae guidelines Trust Accounts 401-K as Debt 1031 Exchange

5.12.3 Borrower’s Required Funds, Gift Funds and Reserves (05/14/12) Refer to Section 5.12.5 for reserve requirements for Primary Residence Conversion.

Occupancy Borrower’s1 Own Funds

Gifts Funds Allowed2 Reserves

Primary Residence: Purchase

3% (including FL

affordable housing)

Yes

DU Approve/Eligible and LP Accept/Eligible: as determined by AUS For all other loans: Two (2) months 1 unit with loan amounts > $417,000:

Six (6) months

5% in FL and>$417,000

Primary Residence: Rate/Term Refinance

NA NA

DU Approve/Eligible and LP Accept/Eligible: as determined by AUS For all other loans: 0 months 1 unit with loan amounts > $417,000:

Six (6) months Primary Residence: Cash-out Refinance

NA NA

DU Approve/Eligible and LP Accept/Eligible: as determined by AUS For all other loans: 0 months

Primary Residence 2 Units

5% Yes

DU Approve/Eligible and LP Accept/Eligible: as determined by AUS For all other loans: Rental income is used to qualify Six months Rental income is not used to qualify Purchase: two (2) months Refinance: 0 months

Second Homes

5% Yes

DU Approve/Eligible and LP Accept/Eligible: as determined by AUS For all other loans: Two (2) months

Construction to Permanent

5% or lot equity3

Yes Two (2) months, including DU and LP

1 Borrower’s own funds as defined in Section 5.12.1 2 Gift funds/grant funds are allowed per Agency standard guidelines after borrower’s minimum contribution from own funds 3 Refer to Section 7.5 Construction to Permanent for lot equity guidelines.

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5.12.4 Builder/Seller Contributions (09/21/09) Follow Agency standard guidelines for treatment of builder/seller contributions, subject to these maximum contributions amounts:

Occupancy LTV Max Contribution Primary Residence 90.01 – 97% 3%

< = 90% 6% Second Homes < = 90% 6%

Loan Amount LTV Max Contribution > $417,000 < = 90% 3% Loans with payment abatements are ineligible. Payment abatements are funds provided by an interested party used to offset or fully fund a borrower’s monthly payments. 5.12.5 Primary Residence Conversion (05/02/11)

Guidelines For all intended uses of current Primary Residence

Borrower must qualify with both the current and proposed mortgage payments

No mortgage delinquencies in prior twelve (12) months Current Primary Residence pending sale

Six (6) months verified reserves are required for both properties

Copy of executed Contract for Sale Reserves may be reduced to two (2) months for both

properties if there is a minimum of 30% documented equity in the existing property (determined by a valid appraisal, AVM, or BPO, minus outstanding liens.)

Conversion to a Second Home

DU and LP loans: Reserves as determined by the AUS but no less than two (2) months for each property

For all other loans: Six 6) months reserves for each property

Reserves may be reduced to two (2) months for both properties if there is a minimum of 30% documented equity in the existing property (determined by a valid appraisal, AVM, or BPO, minus outstanding liens.)

Conversion to an Investment Property

Six (6) months verified reserves are required for both properties

Copy of the fully executed rental/lease agreement Proof of security deposit from the tenant and deposit into

the borrower’s account Borrower may qualify with up to 75% of the rental income

if there is documented equity of at least 30% in the existing property (determined by a valid appraisal, AVM, or BPO, minus outstanding liens.). If the 30% equity in the property cannot be documented, rental income may not be used to offset the mortgage payment

Genworth Insured Current Primary Residence

A Genworth insured current primary residence may be converted to a second home or investment property provided: Our guidelines are met, and Genworth's risk exposure does not exceed $300,000 per

borrower and no more than one primary residence, one second home and two investment properties are insured for the borrower

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5.12.6 IRS Refunds Refund checks from either the IRS or a State Revenue Department are acceptable sources of funds. Satisfactory documentation includes:

Copies of the refund check Proof of increase in deposit accounts Copies of borrower’s federal/state income tax returns

5.12.7 Ineligible Assets

Repayment of debt from family or friends Shared equity

5.12.8 Pooled Savings as Debt Payments on loans against a pooled savings debt will not be considered as a debt when determining qualifying ratios. 5.12.9 Credit and Asset Documentation (12/01/11) This excerpt from Section 3 Documentation Requirements highlights our documentation requirements for credit and assets. Refer to Section 3 for a complete discussion of loan file documentation.

Documentation Desktop Underwriter & Loan

Prospector Manually Underwritten Credit Report Follow the Agency AUS requirements Fannie Mae if Fannie Mae, Freddie

Mac if Freddie Mac, otherwise more conservative

Assets Follow the Agency AUS requirements Fannie Mae if Fannie Mae, Freddie Mac if Freddie Mac, otherwise more conservative

Age of Credit and Asset Documentation

Follow the Agency AUS requirements

GSE HARP-Eligible Refinance: follow the agency’s document age requirement

Follow Freddie Mac if Freddie Mac

Follow Fannie Mae for all others GSE HARP-Eligible Refinance

(Same Servicer): follow the agency’s document age requirement

5.13 Employment and Income (11/01/05) The borrower’s ability to repay the mortgage debt in a timely fashion is a major underwriting criterion. Like collateral value and credit, the borrower’s income and employment history play an important role in determining if the loan is an insurable risk for Genworth. Although Genworth values stability of income more than stability of employment, to consider income or employment to be stable, two (2) years of receipt should be documented. If less than two (2) years are documented, we require that the borrower’s income be:

Adequately verified Stable Likely to continue Sufficient to repay the mortgage debt

5.13.1 Self-employed Income We underwrite all self-employed income and cash flow to Agency standard guidelines and documentation.

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5.13.2 Salaried or Other Income (04/12/10) For borrowers that are salaried or otherwise not self-employed, Genworth accepts income calculations as defined by Agency standard underwriting guidelines for the following sources of income as long as there is a documented history of receipt and such income is likely to continue for at least three (3) years:

Automobile Allowances Alimony and Child Support Boarder Income Bonus Income Commission Income Foster Care Income Interest and Dividends Military Income Mortgage Interest Differential Payments Non-taxable Income Section 8 Income Notes Receivable

Overtime Part Time or Second Job Income Rental Income from Investment Property Rental Income for Primary 2 Unit Property,

(follow Fannie Mae for all others) Retirement Income Social Security Benefits Tip Income Trust Income Unemployment Benefits VA Benefits Welfare Benefits

Other types of income such as disability, pension income and other incomes not listed may be eligible as long as they can be properly verified and receipt is likely to continue. 5.13.3 New Employment Income (09/01/09) Follow Agency standard guidelines when the borrower has been employed for less than two years and was previously attending school or a training program. Employment should be sufficiently documented (e.g., employment contract). The underwriter should relate the borrower’s education/training to future income potential, employment opportunities, and employment stability. 5.13.4 Employment Gap Agency standard documentation is acceptable. 5.13.5 Foreign Income Income may be earned in the U.S. or a foreign country and may be paid in U.S. or foreign currency. Qualification ratios using foreign income will be determined by utilizing 75% of the current exchange rate to compensate for potential currency fluctuation. 5.13.6 Deferred Income Deferred income not presently available may not be used to qualify borrowers. 5.13.7 Education Benefits Education or scholarship benefits are not acceptable as effective income because educational expenses offset the benefits. 5.13.8 Trailing Co-Borrower Income (09/01/09) Trailing co-borrower income may not be used as qualifying income. 5.13.9 Non-Occupant Co-Borrowers (05/14/12) We allow income from non-occupant co-borrowers to qualify the borrower for 95% and less LTV subject to the following parameters:

Non-occupying co-borrower must not be an interested party to the transaction and sign the note and deed of trust

Occupying borrower must have 5% own funds as downpayment Occupying borrower must demonstrate reasonable capacity and willingness to make mortgage

payments Reserves must be documented from occupying borrower’s own funds DTI requirements for loans with a non-occupant co-borrower are located in Section 5.3.3 Primary residence only

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5.13.10 Temporary Leave Income (05/14/12) Follow Fannie Mae or Freddie Mac’s guidelines for qualifying borrowers on temporary leave from current employment. Use of assets as supplemental income for qualification is permitted with a Genworth Underwrite. 5.13.11 Income and Employment Documentation (05/14/12) This excerpt from Section 3 Documentation Requirements highlights our documentation requirements for income and employment. Refer to Section 3 for a complete discussion of loan file documentation.

Documentation Desktop Underwriter & Loan

Prospector Manually Underwritten Loans Income & Employment

Follow the Agency AUS requirements

Verbal VOE only is ineligible

Fannie Mae if Fannie Mae, Freddie Mac if Freddie Mac, otherwise more conservative

IRS Form 4506-T, 8821, or 4506

Follow the Agency AUS requirements Follow Freddie Mac if Freddie Mac

Follow Fannie Mae for all others Verbal VOE Verbal VOE is required to be

dated within 30 calendar days prior to the note date for both salaried and self-employed borrowers

Verbal VOE only is ineligible

Verbal VOE is required to be dated within 30 calendar days prior to the note date for both salaried and self-employed borrowers

Age of Income and Employment Documentation

Follow the Agency AUS requirements

GSE HARP-Eligible Refinance: follow the agency’s document age requirement

Follow Freddie Mac if Freddie Mac

Follow Fannie Mae for all others GSE HARP-Eligible Refinance

(Same Servicer): follow the agency’s document age requirement

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6 Standard Guidelines for Property and Appraisals 6.1 Ownership (11/01/05) Genworth will accept loans with the following forms of ownership under Agency standard guidelines:

Fee Simple estate InterVivos Trusts Leasehold Estates Loans to natural persons only. Corporation, partnership, or associations may be eligible for

special programs approved by Genworth. 6.2 Eligible Property Types (05/02/11) Genworth will provide mortgage insurance coverage for the following property types

Single family, detached Condominiums, detached and attached PUDs, detached and attached

(townhomes, row homes, patio homes) units

Cooperatives Modular and Panelized Factory Built Housing Manufactured Housing 2 units

6.2.1 Energy- Efficient Properties Genworth does not grant ratio exceptions in excess of the standard 41% or 45%, as applicable, due to a property’s energy efficiency or energy efficient items. Variances for adjustments to income for anticipated energy savings are also not allowed. 6.2.2 Mixed Use Properties Genworth will accept mixed-used properties when underwritten to Agency standard guidelines. 6.3 Ineligible Properties (04/12/10)

Commercially used properties Earth, dome, and geothermal properties Unimproved land Working farms, orchards and ranches Time share units Kiddie condos 3 – 4 units Houseboats Mobile Homes Condotels

6.4 Geographic Guidelines (07/11/11)

State Restrictions Florida > 95% LTV ineligible

Minimum 680 credit score; for loan amounts > $417,000 minimum 740 credit score

Maximum DTI 41% Borrower contribution: 5% minimum from

borrower’s own funds, 3% affordable housing

Attached condos and attached PUDs require a Genworth underwrite

Nevada > 95% LTV ineligible New York Ineligible if the loan amount/appraised value is

< 80% Puerto Rico, Guam and the Virgin Islands Ineligible for mortgage insurance

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6.5 Detached PUDs and Detached Condominiums (12/01/11) 6.5.1 Detached PUDs and Detached Condominiums LTV/Loan Limits and Guidelines Apply Genworth’s LTV/Loan Limit guidelines and Attached Condominium and Attached PUD guidelines as follows:

Project Type Type Section 4.1 LTV

Guidelines Detached PUDs and Condo Guidelines

PUD Detached Single family detached Section 6.5.2 Condominium Detached (Site) Single family detached Section 6.5.3 6.5.2 Detached PUDs A detached PUD has the following characteristics:

Mandatory HOA which manages the project HOA owns and maintains the common areas Owners holds title to the lot and improvements

6.5.3 Detached (Site) Condominiums A detached (site) condominium has the following characteristics:

Sites are divided and recorded by condominium documents rather than a plat Buyers receive a warranty deed for their property Owners within the community own, with the other owners, the common areas Owners are responsible for the maintenance of their own properties and landscape Mandatory homeowners association (HOA) which manages the project

The appraisal report should include an addendum describing the project and the specific ownership characteristics/rights of the subject property and state that comparable sales have been used from similar projects. It should be clear in the report that the subject property’s owner owns the entire dwelling and the entire lot as well as the airspace/ground space above and below the subject property. 6.6 Attached PUDs and Attached Condominiums (05/14/12) 6.6.1 LTV/Loan Limits and Attached Condominiums and Attached PUDs Guidelines Apply Genworth’s LTV/Loan Limit guidelines and Attached Condominium and Attached PUD guidelines as follows:

Project Type Type Section 4.1 LTV

Guidelines Attached PUDs and Condo Guidelines

PUD Attached Single family attached Section 6.6.2 Section 6.6.3

Condominium Attached Condominiums Section 6.6.4 Section 6.6.5 Section 6.7

6.6.2 Attached PUD Unit An attached PUD unit (townhomes, row homes, patio homes) in a PUD has the following characteristics:

Located in a project or subdivision which includes common areas Mandatory HOA which manages the project HOA owns and maintains the common areas Owners hold title to the lot and improvements

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6.6.3 Attached PUD Project Type (05/14/12)

Project Type Requirements Fannie Mae Lender Full Review for Attached PUDs

Genworth will accept Fannie Mae’s project approval provided: Lender makes the applicable Fannie Mae project

warranties Lender has no knowledge of any negative

circumstances affecting project eligibility The 1008 marked with a Fannie Mae project

review type code of “E” or “F” will serve as the lender’s rep & warrant that the project meets Fannie Mae’s requirements for Lender Full Review. The PUD information section of the appraisal should also be completed correctly and consistently with the project type

As with all Fannie Mae project reviews, the lender is required to retain documentation that supports the warranty that the project meets Fannie Mae eligibility criteria

6.6.4 Attached Condominiums An attached condominium has the following characteristics:

Units that are individually owned and the common areas, such as hallways and recreational facilities, are jointly owned (usually as "tenants in common") by all the unit owners in the building

A homeowners association that manages the project 6.6.5 Condominium Project Types

Project Type Requirements Fannie Mae PERS Final Approval Fannie Mae CPM Fannie Mae Limited Review

Genworth will accept Fannie Mae’s project approval provided: Lender makes the applicable Fannie Mae project

warranties Lender has no knowledge of any negative

circumstances affecting project eligibility Limited Review: the 1008 marked with a Fannie

Mae project review type code of “P” or “Q” will serve as the lender’s rep & warrant that the project meets Fannie Mae’s requirements for Limited Review.

PERS and CPM: Loan file must include documentation of the project approval.

As with all Fannie Mae project reviews, the lender is required to retain documentation that supports the warranty that the project meets Fannie Mae eligibility criteria.

Fannie Mae Project Eligibility Waivers (PEW)

Fannie Mae approved project eligibility waivers will be considered on a loan-by-loan basis and require a Genworth underwrite

Follow Section 6.7 guidelines Fannie Mae Special Approval Designations

Follow Section 6.7 guidelines

Freddie Mac Streamlined Review Genworth will accept Freddie Mac’s project approval provided: Lender makes the applicable Freddie Mac project

warranties Lender has no knowledge of any negative

circumstances affecting project eligibility

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Project Type Requirements Loan file must include documentation of the

project approval Freddie Mac’s Florida Condominium Effort

Follow Section 6.7 guidelines

All other project types

Follow Section 6.7 guidelines

6.7 Attached Condominium Eligibility Requirements (05/14/12) 6.7.1 Attached Condominium Eligibility Requirements The following guidelines are applicable to attached condominiums:

Project must be warrantable according to Agency general warranty requirements Project must meet the applicable Agency general project requirements, including requirements for

new and established projects Project must not be an ineligible project according to Agency guidelines Investment property concentration is 30% or less 70% presale requirement; 100% for 2-4 unit projects No single entity may own more than 10% of the total units in the project Well-managed by HOA or professional management company No more than 15% of the units may be more than 30 or more days delinquent on HOA fees HOA budget is adequate, provide for funding of replacement reserves for capital expenditures

and deferred maintenance of at least 10% of the budget and provide for insurance deductible amounts

No more than 20% of the total square footage can be used for nonresidential purposes Project design and unit size are appropriate of the location and market. Common areas and

amenities must be competitive in the marketplace Projects in pending litigation, arbitration or mediations or other dispute are ineligible if the dispute

involves the safety, structural soundness, habitability or functional use of the project. Projects with unacceptable environmental conditions, such as proximity to hazardous/noxious

waste sites, are ineligible 6.7.2 Leasehold Condominiums A leasehold condominium is acceptable according if the if the guidelines in Section 6.7.1 (as applicable) and the following are met:

The leasehold should be typical to the area and market-accepted. The appraiser should state this in the appraisal report

Comparable sales should have the same type of ownership, properly reflecting market value, marketability and market acceptance

The comparable sales should be leasehold and have similar lease terms The term of the leasehold should extend out past the term of the loan. This may vary depending

upon investor requirements 6.7.3 2-4 Unit Condo Projects A 2-4 unit condominium project is eligible if the guidelines in Section 6.7.1 (as applicable) and the following are met:

Presale requirement is 100% Investor concentration: 30% (no investment units allowed in 2-3 units; 1 investment unit allowed

in 4 unit) Genworth will insure a maximum of 1 unit in a 2 or 3 unit project and a maximum of 2 units in a 4

unit project All units and common areas are complete No entity may own more than one unit

6.8 Project Concentration (05/02/11) Genworth’s maximum exposure in a project is generally limited to of 33% of the units within a condominium project. Additional units will be considered on a case-by-case basis.

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6.9 Cooperative Units Eligibility (05/02/11) The lender must obtain a Cooperative Unit Master Policy from Genworth in order to obtain mortgage insurance for cooperative unit loans. Genworth accepts cooperative units for underwriting which meet Agency guidelines for:

Maximum number of units Maximum number of loans per project Presale restrictions Investor concentration Delinquency Pro-rata share of project mortgage

Cooperative Units Eligibility Requirements

Acceptable Locations The cooperative unit must be located in an area where this form of ownership has demonstrated market acceptance. Acceptable locations include: New York: the five boroughs of New York City, Long

Island, Nassau, and Suffolk Counties, and Westchester, Rockland, and some Dutchess Counties

Northern New Jersey Connecticut Washington, D.C., including portions for Maryland and

Virginia outside the D.C. area Boston, MA Philadelphia, PA Chicago, IL

Subordinate Financing Ineligible Minimum Square Footage Genworth does not have a minimum square footage

requirement. All properties, regardless of size, must be supported with comparables of similar size and sales price

Special Requirements for Conversions

New conversions/new construction projects (within the last 12 months): Underlying mortgage must have minimum remaining loan term of five (5) years

Existing Projects: Underlying mortgage must have minimum remaining loan term of two (2) years

Comparables Existing projects greater than two (2) years old: Two (2) comparables from within the project are required where possible as well as one (1) from outside the project

New conversions and new construction: Two (2) comparables from outside the project are required as well as one (1) from inside the project

Flip Tax If the flip tax is over 3% of the appraised value, it is deducted from the appraised value and the LTV is based on the adjusted amount

Blanket Mortgage New projects must have a remaining loan term of at least 5 years on the blanket mortgage

Existing projects must have a minimum remaining term of at least 3 years on the blanket mortgage

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6.10 Manufactured Housing (11/15/10) Manufactured housing must meet Agency guidelines with the following additional requirements:

Manufactured Housing Requirements Loan Types Fixed rate, fixed payment

Positively amortizing ARMs with initial adjustments > = 7 yrs

Ineligible: Temporary buydowns, balloons Nontraditional Credit Ineligible Minimum Property Requirements

Loans must meet Agency guidelines for manufactured housing and the following additional requirements: Legally classified and assessed/taxed as real property and

owned in fee simple. No leaseholds are permitted Zoned residential Doublewide design or greater Property and land must be financed under one mortgage Ten acres (10) or less; land value should not exceed 35%

of the property’s appraised value. Outbuildings or additional structures cannot contribute more than 5% to total value

Property must meet state and local building codes Must be permanently attached to a foundation that meets

the manufacturer’s requirements and state and local codes. Wheels, axles, and towing hitch must be removed.

For subdivisions, refer to Section 6.7.1 Appraisal Considerations The unit must have the general appearance and functional

utility of a conventional site built home The appraisal must address local demand, marketability,

and supply of manufactured housing in the area, as well as the quality of construction

6.11 Two Individual Residential Dwellings on One Lot (11/01/05) We will review loans for underwriting that contain two (2) individual residential dwellings such as a unit above a detached garage, guest house or basement apartment if the following guidelines apply:

Appraiser must address the impact to the value and marketability and the value must be supported

The property and its improvements must constitute a legally permissible use of land The legal description must describe the property as one (1) parcel The property must be taxed as one (1) parcel No income from a second unit can be considered in the borrower qualifications The appraiser should provide at least one (1) comparable containing two (2) residential dwellings

on one (1) lot Appraisers must comment and document that properties similar to the subject are typical and

marketable for the area. 6.12 Acreage and Land Value (05/14/12) Genworth will not insure residences situated on more than ten (10) acres of land. Properties with acreage exceeding 10 acres must be submitted to Genworth for underwriting consideration, including DU and LP loans. Land should not exceed 35% of the appraised value of the property. Although exceptions can be made, we will ensure that the land-to-value ratio is not excessive for residential properties in the local market and that the property is completely residential in nature. The appraiser must comment and document that properties similar to the subject are typical and marketable for the area. 6.13 Rural and Unique Homes (02/16/10) Properties in urban/suburban areas are typically easier to evaluate since there are multiple, recent and proximate comparables available. Rural, resort and mountain properties can pose valuation problems since, by their very nature, comparables are difficult to find. Unique homes or one-of-a kind luxury

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residences present the same problems and require a Genworth underwrite. Such homes are difficult to evaluate, and an accurate value depends on a rather small market, which can be considerably more volatile than the traditional home market. We will underwrite all such loans carefully to ensure both value and marketability. We will closely review both the comparables used and the condition of the subject property. 6.14 Declining Property Values (05/02/11) Properties located in neighborhoods experiencing declining values, an oversupply of homes for sale, and marketing times in excess of six (6) months represent a higher risk of loss of equity for the borrower. These properties require additional scrutiny of the appraisal, e.g. use of recent sales, sales and financing concessions. Genworth monitors internal and external housing market data and may identify certain markets as Declining or Distressed Markets. There are no markets currently identified as Declining or Distressed. 6.15 Non-Arm’s Length Transactions (01/02/07) A non-arm’s length transaction exists where there is a direct relationship, such as family members, close friends, employers, or employees, between the borrower and another party to the transaction. These other parties include, but are not limited to, the property seller, builder, broker, appraiser, closing agent, etc. Such transactions may not yield a fair or accurate market value. If the subject property sale is between related parties or is otherwise not an arm’s length transaction, such relationship should be disclosed and addressed on the appraisal. The underwriter should be careful to ensure that true and accurate value has been established. 6.16 Maximum Genworth Insured Properties (07/11/11) Genworth will insure a maximum of $300,000 aggregate risk exposure* for a borrower and only one primary residence and one second home per borrower. No more than one EAI or LP Caution loan per borrower. Refer to Section 5.12.5 Primary Residence Conversion for guidelines for the maximum number of insured properties when a Genworth insured current primary residence is converting to a second home or investment property. * Risk exposure = loan amount x coverage % 6.17 Renovation Mortgages (05/02/11) Genworth will insure renovation loans that provide the borrower with funds to cover the costs to renovate, remodel or repair an existing property.

The loan must be submitted to Genworth for underwriting It must be identified as a “renovation” on the mortgage insurance application The commitment term for renovation loans is 120 days.

6.17.1 Renovation Programs We will insure Agency renovation mortgage programs, such as Fannie Mae Homestyle Renovation, according to published Fannie Mae Selling Guide or Freddie Mac Seller Guide guidelines and documentation with the following overlays:

Genworth’s guidelines (LTV, loan amount, DTI, reserves, borrower funds, etc.) apply to each loan. The requirements listed above are also applicable

The borrower must be an individual; no corporations, not-for-profits, or agencies allowed The borrower may not be the contractor or provide repairs as a “do-it-yourself” option A recertification of the property value by an appraiser is required in addition to the certificate of

completion if the original appraisal is more than 120 days old at completion. The recertification of value must be added to the loan file documentation

6.17.2 Energy Improvement Features Genworth will insure programs that are targeted to borrowers who are financing the costs of energy improvements for an existing property, such as Fannie Mae’s Energy Improvement Features, according to published Fannie Mae Selling Guide guidelines and documentation, including:

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Financing the improvements for a purchase and rate/term refinance transaction, calculation of LTV and cash-back limitation to the borrower

Maximum financed energy improvements is 10% of the as-completed appraised value of the property

An energy report prepared by a Home Energy Rating Systems (HERS) energy rater Lender management of the escrow account and monitoring the completion of the work within 180

days of loan closing Documentation of the completion of the work by the appraiser

The following Genworth overlays apply:

Genworth’s guidelines (LTV, loan amount, DTI, reserves, borrower funds, etc.) apply to each loan. The loan must be submitted to Genworth for underwriting, as described above.

The borrower may not be the contractor or provide the improvements as “do-it-yourself”. Sweat equity is not allowed.

A recertification of the property value by an appraiser is required in addition to the certificate of completion if the original appraisal is more than 120 days old at completion. The recertification of value must be added to the loan file documentation.

6.17.3 Completion Escrows Genworth will insure loans with completion escrows provided the lender has the ability to escrow for the renovation and repairs. Follow Fannie Mae or Freddie Mac guidelines for the establishment and disbursement of the account funds and/or the Agency’s guidelines for the specific renovation program. The Commitment/Certificate issued by Genworth will be conditioned for the escrowed funds and disbursement only for completed repairs and improvements. 6.18 Property Flipping (05/14/12) A property flip occurs when a recently purchased property is quickly resold for a profit by the seller. The short time frame between the acquisition and resale coupled with an increase in the property value are signs that a flip may have occurred.

Properties resold within 6 months must be underwritten by Genworth. The HUD-1 statement and original appraisal, if available, is required in the new loan file.

Property seller must be “owner of record” according to publicly available information and is supported by loan file documentation

No back-to-back, simultaneous closings, or double closings, or assignment of contract for sale Increases in the property value must be explained, documented and supported by a new

appraisal. Improvements and renovations must be substantiated with receipts, contractor invoices, building permits and/or detailed information reflected by the appraiser/appraisal

The transactions below would not be considered flips. Sales of:

A recently inherited property A property acquired through a divorce settlement A property acquired through an employer relocation program A property resold by a lender, servicer, or MI company that was acquired through foreclosure or

deed-in-lieu 6.18.1 Short Sale Purchase (05/14/12) Transactions involving the purchase of a short sale property require the following loan file documentation:

A fully executed short sale addendum to the sales contract submitted with the loan file A letter from the current mortgage servicer indicating all terms for the short sale A signed short sale affidavit wherein the parties to the transaction attest that the sale constitutes

an “arm’s length transaction” and there are no agreements between the seller and the borrower for the seller to remain in the property or later obtain title or ownership of the property

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6.19 Appraisal Documentation and Age (05/14/12) This excerpt from Section 3 Documentation Requirements highlights our documentation requirements for appraisals. Refer to Section 3 for a complete discussion of loan file documentation.

Documentation Desktop Underwriter &

Loan Prospector Manually Underwritten Loans Appraisal Interior/Exterior review (URAR) or

2055 Exterior Only, per guidelines below

The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements

A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500

Use of automated valuation models (AVMs), PIWs, PIAs and desk reviews to obtain property values are ineligible

All property evaluations must be completed by a licensed or certified appraiser

Appraisals may be 180 days, for newly constructed homes, however, a re-certification of value must be provided if the appraisal is more than 120 days. If the value has declined, a new, full appraisal is required

GSE HARP-Eligible Refinance: follow agency’s collateral valuation requirements

All property evaluations must have a minimum interior/exterior review

The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements

A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500

Use of automated valuation models (AVMs), PIWs, PIAs, desk reviews, or exterior only appraisals to obtain property values are ineligible

All property evaluations must be completed by a licensed or certified appraiser

Appraisals may be 180 days, for newly constructed homes, however, a re-certification of value must be provided if the appraisal is more than 120 days. If the value has declined, a new, full appraisal is required

GSE HARP-Eligible Refinance (Same Servicer): follow agency’s collateral valuation requirements

2055 Exterior Only Form 2055 Exterior Only may be obtained if permitted by DU or LP for the loan transaction

A 2055 may not be used if the property is currently in foreclosure or is an investor/ institution/bank-owned REO; a full URAR is required.

The appraisal must be upgraded to a full URAR by the lender, or the upgrade may be requested by Genworth, if any of the following conditions exist: Inspection of exterior of dwelling

is reported to be or appears to be in less than average condition

If any 2055 ratings or narrative indicate adverse conditions

The contract or home inspection (if included ) indicate repairs are needed

Ineligible

Appraisal for Construction to Permanent Loans

URAR, “subject to completion” completed by a licensed or certified appraiser at time of Genworth underwrite

The appraisal form and applicable addenda must meet Agency

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Documentation Desktop Underwriter &

Loan Prospector Manually Underwritten Loans requirements

Appraisal Update and/or Completion Report (Form 1004D/442) completed by appraiser at completion of construction

A new appraisal may be required at completion of construction if the appraiser indicates on the 1004D/442 that the value has declined

Refer to Section 7.5 for detailed construction to permanent appraisal and recertification of value requirements

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7 Products Guidelines 7.1 Genworth-Insured Refinance Program (12/01/11) The Genworth-Insured Refinance Program provides expanded underwriting guidelines for rate/term refinances of Genworth-insured mortgage loans. The term “HARP” is used in our guidelines to encompass these Genworth-insured Fannie Mae and Freddie Mac Home Affordable Refinance programs:

Fannie Mae Refi Plus™ Fannie Mae DU Refi Plus™ Freddie Mac Relief Refinancesm – Same Servicer Freddie Mac Relief Refinancesm – Open Access

A loan is considered “GSE HARP-Eligible” if it is determined by the lender to be eligible for delivery through the agency’s program. Our program has three options, depending on GSE HARP-eligibility and the commitment date of our original commitment. The underwriting guidelines, documentation requirements and mortgage insurance parameters for each option are outlined in the referenced sections:

GSE HARP-Eligible Refinance Option – see Section 7.1.1 Non-GSE Refinance Option – see Section 7.1.2 Genworth-Insured Streamlined Refinance Option – see Section 7.1.3

7.1.1 GSE HARP-Eligible Refinance Option

GSE HARP-Eligible Refinance Option Description Guidelines are specific to GSE HARP Programs:

Fannie Mae Refi Plus Fannie Mae DU Refi Plus Freddie Mac Relief Refi – Same Servicer Freddie Mac Relief Refi – Open Access

Option Criteria Loan must be currently insured by Genworth Both Same Servicer and New Servicers are eligible for this option The lender must determine that the loan meets the all of the applicable

HARP program requirements for Fannie Mae or Freddie Mac Genworth’s original commitment was issued prior to or on May 31, 2009.

The program end date is December 31, 2013 Representations & Warranties to Original Loan File for Genworth

There are no reps & warrants retained on the original loan file The insured represents and warrants that the agency’s applicable HARP

program requirements have been met for the new refinance

Genworth Replacement Commitment/ Certificate

Genworth will modify the existing certificate by issuing a replacement Commitment/Certificate with a new certificate number

The premium rate (in basis points) of the existing certificate will be applied to the Replacement Commitment/Certificate

The coverage percentage applied of the existing certificate will be applied to the Replacement Commitment/Certificate

The commitment term is 180 days Guidelines and Documentation

Follow the guidelines and documentation requirements of the agency’s applicable HARP program

DU Refi Plus recommendations and Relief Refinance Mortgages – Open Access risk classifications must be underwritten according to the agency’s program requirements. A copy of the final DU or LP report must be placed in the loan file

To determine the property value, the lender can use any of the appraisal forms, inspection reports or means that are acceptable for the applicable HARP program for that specific loan

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GSE HARP-Eligible Refinance Property Valuation Representations & Warranties to Genworth on New Loan

The lender must meet the agency’s applicable HARP program guidelines for property valuation/collateral assessment for the new refinance

PIW & HVE: No rep and warrant for the property value, condition or marketability

For all other valuation methods, Genworth will not require the lender to rep and warrant the property value or marketability of the new refinance

MI Ordering Follow the instructions on the GSE HARP-Eligible Refinance Form 7.1.2 Non-GSE Refinance Option (05/14/12)

Non-GSE Refinance Option Description Guidelines are specific for rate/term refinances where Fannie Mae and

Freddie Mac are not the investor on the original loan Option Criteria Loan must be currently insured by Genworth

Only Same Servicers are eligible for this option Genworth’s original commitment was issued prior to or on May 31,

2009. The program end date is December 31, 2013 Representations & Warranties to Original Loan File for Genworth

There are no reps & warrants retained on the original loan file

Genworth Replacement Commitment/Certificate

Genworth will modify the existing certificate by issuing a replacement Commitment/Certificate with a new certificate number

The premium rate (in basis points) of the existing certificate will be applied to the Replacement Commitment/Certificate

The coverage percentage applied of the existing certificate will be applied to the Replacement Commitment/Certificate

The commitment term is 180 days

Borrower Benefit

Reduce the borrower’s monthly P&I payment Reduce the interest rate Replace an ARM with a fixed rate Reduce the amortization period

New Loan Amount

New loan amount may include the following: Payoff of existing first mortgage The lesser of 5% or $5,000 in related closing costs, prepaids and

escrows. For loan amounts > $417,000, it is the lesser of 5% or $10,000

Borrower may receive no more than $250 cash back at closing All other sums in excess of this amount must be applied as a principal

curtailment Maximum LTV/CLTV No maximum LTV/CLTV

Subordinate Financing All existing subordinate financing must be re-subordinated and may not

be paid off in the new transaction No new subordinate financing may be obtained

Occupancy All original occupancies are eligible Occupancy changes are permitted

Property Type Same as original Property Type

Loan Type Fixed rate fixed payment Fully amortizing ARM: 5yr, 7yr, 10yr

Loan Term Max 40 year term Loan term may only decrease from the original loan term

Minimum Credit Score No minimum

Mortgage Payment History

Mortgage is current No delinquency in last 90 days No more than 1 x 30 in last 12 months

Maximum DTI None

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Non-GSE Refinance Borrowers are not required to re-qualify, however, the lender must

determine that the borrower has a reasonable ability to repay his/her total debt obligations

Borrower Eligibility

All borrowers on the new refinance must be the same as the borrowers on the original loan unless a divorce or death occurred

The loan file should contain the documentation to explain the drop and show the remaining borrower has made the mortgage payments for 12 months

A borrower may be added provided the original borrower(s) remain on the loan

GSE AUS Result

Loans are not required to have a GSE AUS decision. If provided, the result must be: DU Approve/Eligible or EAI/Eligible. Refer with Caution/IV and

Ineligible recommendations are also acceptable if the Feedback reason for the recommendation (example: LTV) meets our Non-GSE Refinance guidelines

LP Accept Eligible, Caution A Minus Eligible or Caution Eligible

Documentation

New 1003 New 1008 New credit report Verbal VOE Use income and asset amounts stated on the 1003

Appraisal

New appraisal report: FNMA 1004 / FHLMC 70 for 1 unit properties FNMA 2055/FHLMC 2055 if permitted by DU or LP for the loan

transaction FNMA 1073 / FHLMC 465 for condo units A Field Review (Form 2000/Form 1032) is required for loan amounts >

$625,500 Property Valuation Representations & Warranties to Genworth on New Loan

Genworth will not require the lender to rep and warrant the property value or marketability of the new refinance

Genworth will require the lender to rep and warrant the condition of the property

MI Processing Follow the instructions on the GSE HARP-Eligible Refinance Form 7.1.3 Genworth-Insured Streamlined Refinance Option

Genworth-Insured Streamlined Refinance Option Description Guidelines are for all other Genworth-insured rate/term refinances Option Criteria Loan must be currently insured by Genworth

Both Same Servicer and New Servicers are eligible for this option Representations & Warranties to Original Loan File for Genworth

There are no reps & warrants retained on the original loan file

Commitment/ Certificate

A new commitment/certificate will be issued for the new refinance Premium rates in effect at the time of new MI application will be applied Coverage % on the new refinance may not increase from the original

coverage % Coverage % may decrease

Borrower Benefit

Reduce the borrower’s monthly P&I payment Reduce the interest rate Replace an ARM with a fixed rate Reduce the amortization period

New Loan Amount New loan amount must be less than or equal to the original insured amount

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Genworth-Insured Streamlined Refinance Amounts that may be included in the new loan amount are described in

Section 4.4.1 Rate/Term Refinance Definition Maximum LTV/CLTV Maximum 105% LTV

No maximum CLTV NOTE: Check State Restrictions for LTVs > = 100.01% for limitations

State Restrictions for LTVs > = 100.01%

Restriction State LTV > 100%: Loan Type must be fixed rate fixed payment (no ARMs, including 5yr, 7yr, 10yr ARMs)

All states

LTV > 100%: Max base LTV of 100% without financed closing costs, prepaids, and/or MI. Borrower can finance amounts (not to exceed $5,000) over 100% up to the state’s max LTV (103% or 105%) to cover closing costs, prepaid items and/or MI

All states

LTV = 103%: Max base LTV of 100% without financed closing costs, prepaids, and/or MI. Borrower can finance amounts (not to exceed $5,000) over 100% up to a max LTV of 103% to cover closing costs, prepaid items and/or MI

AZ, CA, ID, IL, MO, NJ, NY, OH

Cooperatives Max 100% LTV NY

Subordinate Financing

Payoff of subordinate liens securing the property that were used in whole to acquire the property is permitted in the new transaction, subject to the limitation of the new loan amount not exceeding the original insured amount

Occupancy Same as original occupancy Can shift from second home or investment property to primary Shifts from primary to second or investment on an exception basis

Property Type Same as original Property Type

Loan Type Fixed rate fixed payment Fully amortizing ARM: 5yr, 7yr, 10yr

Loan Term Max 40 year term Loan term may only decrease from the original loan term

Minimum Credit Score

620

Mortgage Payment History

Mortgage is current 0 x 30 in last 12 months

Seasoning Twelve (12) months seasoning Maximum DTI 45%

Borrower Eligibility

All borrowers on the new refinance must be the same as the borrowers on the original loan unless a divorce or death occurred

The loan file should contain the documentation to explain the drop and show the remaining borrower has made the mortgage payments for 12 months

A borrower may be added provided the original borrower(s) remain on the loan

GSE AUS Result

Loans are not required to have a GSE AUS decision. If provided, the result must be: DU Approve/Eligible or EAI/Eligible LP Accept Eligible, Caution A Minus Eligible or Caution Eligible

Documentation

Same Servicer New 1003 New 1008 New credit report Verbal VOE and 1 paystub

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Genworth-Insured Streamlined Refinance Use asset amounts as stated on the 1003 New Servicer Full documentation

Appraisal

New appraisal report: FNMA 1004 / FHLMC 70 for 1 unit properties FNMA 2055/FHLMC 2055 if permitted by DU or LP for the loan transaction FNMA 1073 / FHLMC 465 for condo units A Field Review (Form 2000/Form 1032) is required for loan amounts >

$625,500 Property Valuation Representations & Warranties to Genworth on New Loan

Genworth will require the lender to rep and warrant the property value, condition and marketability of the new refinance

Underwriting Notes Loan must meet all other standard Genworth guidelines MI Processing Follow the instructions on either the Delegated (EXCEL) Application or

Genworth Underwrite – Full Package Submission Application

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7.2 Genworth Affordable Housing Guidelines (05/14/12)

Affordable Housing Requirements Primary Residence, Purchase and Rate/Term Refinance

Property Type LTV/CLTV Loan

Amount Credit Score

DTI

All Markets except Florida

Single family, detached & attached

97%/100%1 $417,000 680 41%

Single family, detached & attached

< = 95%/100% $417,000 660 41%

700 45%

Condominiums < = 95%/100% $417,000 660 41%

700 45%

Cooperatives < = 95%/NA $417,000 660 41%

700 45%

Manufactured Housing < =85%/85% $417,000 660 41%

700 45%

2 units < = 90%/90% $533,850 660 41%

Florida2

Single family, detached & attached

< = 95%/100% $417,000 680 41%

Condominiums < = 95%/100% $417,000 680 41%

Manufactured Housing 85%/85% $417,000 680 41%

2 units < = 90%/90% $533,850 680 41% 1 97% LTV not eligible in NV 2 Attached housing in Florida requires a Genworth underwrite

General Requirements

Maximum 100% of Area Median Income (AMI) as defined by HUD, unless the property is located in a high cost area where a higher AMI is permitted. The income limit may be exceeded if the property is located in an “underserved area” as determined by HUD

Homebuyer education is required for first time homebuyers

Agency affordable housing programs are subject to the above referenced guidelines

Subordinate Financing Subordinate financing must meet Fannie Mae’s Community Second or Freddie Mac’s Affordable Second guidelines

LTV/CLTV/GLTV/TLTV

LTV CLTV GLTV TLTV

1 unit 97% 100% 100% 100% 1 unit 95% 100% 100% 100% Manufactured Hsg 85% 85% 100% 100% 2 unit 90% 90% 100% 100%

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Affordable Housing Requirements

Primary Residence, Purchase and Rate/Term Refinance Loan Types Fixed rate/fixed payment

Fully amortizing ARMs with initial adjustments > = 5 yrs (Manufactured Housing > = 7 yrs)

Temporary buydowns Borrower Contribution Minimum 3% from borrower’s own funds Nontraditional Credit Maximum 95% LTV. Nontraditional credit must be

underwritten by Genworth Construction to Permanent

Refer to Section 7.5 for guidelines

Underwriting Notes Loan must meet all other standard Genworth guidelines

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7.3 This section has been removed (05/14/12 (revised)) 7.4 Pledged Assets (07/11/11)

Pledged Assets

Occupancy/Purpose Property Type

Max LTV before pledge

Max LTV net of pledge

Loan Amount DTI

Credit Score

Purchase & Rate/Term

Single family, detached & attached,

condominimum

100% 95% $417,000 41% 680

Pledge Funds Source Pledge funds may be pledged by the borrower (first party) or

third party (immediate family member) Borrower’s Own Funds Pledge from borrower’s own funds: if the 5% pledge is

from the borrower, no additional contribution is required, except reserves

Pledge from third party (immediate family member): if the pledge funds are provided by a third party, the borrower is required to make a 3% contribution from own funds, in addition to reserves

Subordinate Financing Not permitted Loan Types Eligible loan types:

Fixed rate fixed payment ARMs with initial adjustments >= 5 years Ineligible loan types 3 year ARMs Temporary buydowns Balloons

Downpayment None required, if pledge funds are from the borrower (first party)

Sources of Funds In addition to the borrower’s own funds, these sources are acceptable for closing costs and prepaids: Gifts from relative, domestic partner, fiancé, fiancée,

church, municipality, public agency, or nonprofit (other than a credit union)

Grants from an employer, public agency or nonprofit organization

Unsecured borrowed funds from a nonprofit, employer, government municipality or relative

Borrower funds secured by an asset per Agency guidelines

Reserves Purchase: 2 months reserves PITI from borrower’s own funds, including DU and LP

Rate/Term: For DU and LP, verify reserves as determined by the AUS. For non-DU and LP, 0 months

Property Types Ineligible: cooperatives, manufactured housing, 2 units Pledge Agreement The pledged asset agreement in use by the lender for

execution by the pledgor (borrower) must contain the following

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Pledged Assets basic terms: Pledge may be first party pledge or third party pledge The lender must perfect a senior security interest in the

collateral, with the right vesting in the investor or servicer to foreclose on or otherwise liquidate the collateral in the event of borrower default

Neither the pledgor nor any other party is allowed to access or impair the security interest in the pledged assets

Pledge Release The pledge will not be released until either loan payoff or cancellation of MI. However, Genworth may consider the release of the pledge under the following terms: May be considered after 7 years for a 30 year mortgage

and after 5 years for a 25 year mortgage The mortgagor must be current on loan payments with no

delinquencies in the last 12 months Based on a current appraisal acceptable to Genworth, the

current LTV of the related loan must be less than the original net LTV (i.e., the LTV of the loan less the amount of the pledge)

Documentation: the following documents must be submitted to the National Processing Center (NPC): letter of request, current appraisal (within the last 120 days), and a loan payment history showing current principal balance and activity for the last 12 months

Genworth’s agreement to allow the release of the pledge will not waive its rights to deduct the total amount of the pledge in the event of a claim settlement

Underwriting Notes Loan must meet all other standard Genworth guidelines

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7.5 Construction to Permanent Loan (05/14/12)

Construction to Permanent Loan

Primary Property Type LTV/CLTV Loan

Amount Credit Score

DTI

Purchase & Rate/Term

Single family, detached

95%/95% $417,000 680 41%

Single Close Description Combines the interim construction financing and the

permanent financing into a single closing Borrower is underwritten and qualified one time according

to the terms of the permanent financing At conclusion of the construction, the loan automatically

converts to a permanent long-term mortgage Two-Close Transactions Genworth will insure the “end loan” or “permanent loan” that is

obtained at time of completion of the construction to replace the interim construction financing. These loans are not considered construction to permanent and follow standard Genworth guidelines.

Construction to Permanent Purchase Transaction

Borrower is not the owner of record of the land prior to the closing of the construction financing LTV Calculation Lesser of: Acquisition cost (purchase price of the lot plus total

documented construction costs), or Appraised value, as completed

Construction to Permanent Rate/Term Refinance Transaction

Borrower is the owner of record of the land prior to the closing of the construction financing.

Land owned >=12 months Land owned < 12 months

Appraised value, as completed

Lesser of: Acquisition cost

(purchase price of the lot plus total documented construction costs) or

Appraised value, as completed

Loan Types Eligible loan types: Fixed rate fixed payment ARMs with initial adjustment > = 5 yrs Note: While the borrower may make interest only payments during the construction phase, the end loan or permanent terms may not be IO. Borrower is qualified with the fully amortizing PITI with the terms of the permanent financing. Ineligible loan types 3 yr ARMs Temporary buydowns

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Construction to Permanent Loan Balloons

Borrower Contribution Minimum 5% borrower own funds or lot equity Lot Equity Lot equity is the value or cost of the land minus the amount

owed on the land. Lot purchased < 12 Months Value or cost of the land is the lower of current appraised value or the original purchase price. Lender must document the purchase of the land (HUD-1) and the transfer of ownership of the land to the borrower. Lot purchased > = 12 Months Value or cost of the land is the current appraised value

Nontraditional Credit Ineligible Reserves DU Approve/Eligible & LP Accept, Eligible: as determined

by DU & LP, except primary residence conversion (see chart below). All other loans:

2 months

Purchase and rate/term refinance Primary residence conversion for current

pending sale or to second home, each property if > = 30% documented equity

6 months

Primary residence conversion for current pending sale or to second home, each property if < 30% documented equity

Primary conversion to investment property, for each property

Borrower/Builder Borrower cannot be the builder/contractor Property Types Ineligible: 2 units, attached housing, condominiums,

cooperatives, manufactured housing Appraisal Documentation URAR, “subject to completion” completed by a licensed or

certified appraiser at time of Genworth underwrite The appraisal form and applicable addenda must meet

Agency requirements Appraisal Update and/or Completion Report (Form

1004D/442) completed by appraiser at completion of construction

A new appraisal may be required at completion of construction if the appraiser indicates on the 1004D/442 that the value has declined

Underwriting Notes Loan must meet all other standard Genworth guidelines MI Underwriting Full loan package must be underwritten by Genworth

Delegated EXCEL delivery is ineligible Commitment Term 12 months

Extensions and reinstatements not permitted. Loan must be resubmitted and will receive current rates and guidelines.

Commitment Condition Commitment and Certificate of Insurance will be issued subject to satisfactory review by Genworth of completion and property value documentation. The condition must be cleared prior to coverage activation.

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Construction to Permanent Loan Coverage During Construction

Mortgage insurance coverage is not provided during the construction phase. No MI premiums are collected during the construction period.

Prior to MI Activation 1. At completion of construction and prior to coverage activation, the lender is required to submit documentation to Genworth to clear the commitment condition. If the original appraisal is: <= 120 days: submit Form 1004D/442 with the

Certification of Completion section completed by the appraiser

> 120 days: submit Form 1004D/442 completed in its entirety by the appraiser. If the appraiser notes that the market value has declined, then a new appraisal is required

2. Lender must update and provide to Genworth the final loan amount and appraised value if these are different than the amounts on the commitment. Final LTV may not exceed 95%.

Terms for Activation of Coverage

1. Construction must be completed at the time of activation as evidenced by acceptance of the property by the borrower (such as a final walk through inspection report) and issuance of a Certificate of Occupancy by the applicable municipality. These documents must be added to the loan file.

2. Loan is ineligible if borrower has any 30-day delinquencies during construction phase. The pay history from the construction phase must be added to the loan file.

3. All mechanics’ liens, materialmen’s liens or any other liens affecting title must be satisfied prior to activation of coverage.

4. Receipt of the loan close date and premium serves as the lender’s representation and warranty that: The borrower had no delinquencies during the

construction phase There are no outstanding liens or any debt affecting

title, and The loan file documentation is complete.

Loan Close Date The loan close date provided to Genworth to activate coverage is the date the loan converts to the permanent financing

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8 Commitment/Certificate Genworth issues a Commitment/Certificate of Insurance for each approved loan. 8.1 Changes Prior to Certification: Requiring Prior Approval (05/02/11) Oftentimes changes are made to a loan after Genworth has issued a Commitment/Certificate. A loan must be re-submitted to Genworth for approval if the changes alter a loan’s eligibility, pricing or any of the terms under which the commitment was issued. Genworth will evaluate the changes and issue an amended Commitment/Certificate if approved. The Commitment/Certificate may be deemed null and void if the new terms result in a loan that no longer meets our eligibility requirements. 8.2 Changes Prior to Certification: Not Requiring Prior Approval (05/02/11) Lenders may make some changes and corrections to the Commitment/Certificate without submitting a new application or receiving prior approval from Genworth:

Changes in renewal premium option (level or amortizing) Decrease in loan amount Typographical corrections to borrower’s name or property address Decrease in the interest rate for fixed rate loan or ARM loan provided the new rate meets

shortfall requirements Changes not requiring prior approval may be made by indicating the correction on the Commitment copy remitted to Genworth. An amended Commitment/Certificate will be issued. 8.3 Modifications (03/23/09) Modification requests should be forwarded to our National Processing Center for prior approval. Modifications of delinquent or potential delinquent loans should be referred to the National Loan Workout Center in Raleigh for review. Refer to specific instructions on our servicing website for U.S. Department of the Treasury Modification Programs. 8.4 Closed Loans (11/17/08) Genworth may insure loans that were closed more than 120 days ago and were previously uninsured (or insured by another mortgage insurer) provided the loan meets our current underwriting guidelines. At a minimum, the following documentation must be submitted to our offices for underwriting:

A copy of the current mortgage payment history. For loans seasoned twelve or more months, the payment history must evidence the last twelve months

Final, verified 1003 and 1008 Current credit report If the appraisal is more than 120 days old, an appraisal update with three new comps is

required. A new appraisal may be used to confirm value Genworth may request additional documentation as deemed necessary for the underwriting

decision Mortgage insurance premiums are based on current rates and collected from original loan closing date. 8.5 Pre-Qualifications (05/02/11) Delegated (EXCEL) loans must be fully documented (including the appraisal), underwritten, and determined to meet current guidelines prior to submission for mortgage insurance. A pre-qualification or credit-only request where the subject property has not been determined must be submitted to our offices for underwriting.

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8.6 Certificate Activation (05/02/11) Use the following instructions to activate the mortgage insurance coverage: 8.6.1 Zero Monthly Commitments Activation requires the submission of a loan close date and can be processed in either of the following ways:

Log on to www.MIServicing.Genworth.com and use the Certilink option to activate coverage. If you need access to the site, please contact the Genworth ActionCenter at 800.444.5664 or [email protected], or

Fax the commitment with the loan close date to 800.866.8708 8.6.2 All Other Premium Plans (Monthly, Single Premium, Split Premium): Activation requires both the submission of a loan close date and the initial premium. The activation can be accomplished in either of the following ways:

If paying via ACH/Wire include the commitment number and loan close date in the reference section of the wire. Email [email protected] with payment information or if multiple commitments are being activated. Contact the Genworth ActionCenter at 800.444.5664 or [email protected] for ACH/Wire instructions, or

If remitting payment via check, please include the commitment certificate and loan close date and mail to the address found in the Activation Instructions on the Commitment

8.7 Changes after Certification (01/07/08) 8.7.1 Loan Sales Our Policy Servicing Department should be advised when you sell a loan and/or transfer its servicing so that our records can be changed. If we are not notified, renewal billings could be sent to the wrong servicer. Appropriate forms can be obtained by calling the Action Center at 800 444.5664. 8.7.2 Waivers In the event a borrower requires a waiver for easements, the lender must be given prior approval by our Policy Servicing Department for insurance to remain in force. The following documentation is required:

Appraiser statement that changes do not adversely affect the property value Survey showing the changes

Genworth’s approval of a waiver is contingent upon such waiver not affecting the title or the marketability of the property. 8.7.3 Reinstatement of a Canceled Certificate Genworth’s Policy Servicing Department will consider reinstating canceled certificates upon a request from the insured. The most recent twelve (12) month payment history or if a loan has not established a twelve (12) month history, the payment history for the life of the loan will be reviewed. The borrower should not be more than 1 x 30 days late in the past twelve (12) months and should not have been delinquent at all within the last three (3) months. Genworth may request additional documentation as deemed necessary. 8.7.4 Assumptions Assumptions on loans that do not release the original borrower from liability require no written approval by Genworth as long as the new borrower qualifies under the insured’s current underwriting guidelines. Lenders should provide Genworth’s Policy Servicing Department with an Assumption Notice. In the event of an assumption with release of liability of the original borrower, a Genworth Assumption Notice form and a complete credit package for the new borrower should be submitted to your local Genworth Mortgage Insurance underwriting office. A new appraisal is not required. The assumption will be underwritten to current guidelines and an amended Certificate of Insurance will be issued.

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Complete packages for assumptions of delinquent or potentially delinquent loans will be referred to the National Loan Workout Center in Raleigh for review to determine acceptance of the new borrower. In some cases, the Insured is obligated to consent to an assumption (e.g., when there is no “due-on-sale” clause in the note and deed of trust, or where the lender is required by applicable law to permit an assumption). Under these circumstances, our coverage on the loan will automatically continue. We will, however, still require the Assumption Notice. 8.7.5 Terms/Extensions/Reinstatement of Expired Commitments (11/15/10) Genworth’s Commitment of Insurance is valid for four (4) months from date of issuance. The term for HARP-Eligible Refinance (Same Servicer) is six (6) months. Our standard commitment term is twelve (12) months for construction-to-permanent loans. Insurance on such loans is subject to the property being completed and sold to the borrower pursuant to the original specifications and plans submitted with the credit package. Existing commitments set to expire will no longer be extended upon request. The loan may be insured as a new transaction with current documentation in accordance with the guidelines and rates in effect as of the new request. 8.7.6 Partial Releases (10/06/08) A release of any portion of the property also requires Genworth’s prior approval. The following documentation should be submitted to our Policy Servicing Department:

Letter outlining the specifics of the release, including why the release is requested, amount of money exchanged, if any

Twelve (12) month payment history Copy of the deed Copy of the mortgage Copy of the original appraisal Survey outlining the property to be released relative to the location of the house New appraisal stating the value of the land released and the impact on the value of the

insured property If the new appraisal of the remaining property indicates no reduction or increase in property value arising from the partial release, Genworth will not require that funds received from the sale of property be applied to the borrower’s principal balance. If the property value is reduced, we reserve the right to deny the request or require the funds to be applied to reduce the outstanding loan balance. In the case of “eminent domain”, a new appraisal is not necessary. 8.7.7 Servicing Transfers (05/02/11) A change in the servicer of a loan due to sale, assignment or transfer is permitted, provided the terms of the Master Policy are met. These servicing transfers can be completed in either of the following ways:

Servicing transfers can be completed on www.MIServicing.Genworth.com and use the Certilink option to transfer servicing. If you need access to the site, please contact the Genworth ActionCenter at 800.444.5664 or [email protected], or

Fax the Servicing Transfer form or the Commitment to 800.866.8708. If you need either form please contact the Genworth ActionCenter at 800.444.5664 or [email protected].