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Effective November 15, 2010

Underwriting Guidelines

Radian

Underwriting

Guidelines

2

Effective: November 15, 2010

Radian Underwriting Guidelines | Revision notes

Revision notes

Revisions for November 15, 2010

• Section1.1B MortgageInsuranceCommitmentDeterminationofthepercentageofmortgageinsurancecoverageissued.

• Section1.3B DelegatedUnderwritingAuthority,andSection2.2G MortgageInsuranceApplicationSubmissionRestrictionsNon-agencyJumboloansareineligiblefornon-delegatedsubmission.

• Section2.3A StandardorAlternativeDocumentationAUSStreamlinedocumentationoptionislimitedtoloanswhichcomplywithagencyloanlimits.Non-agencyJumboloansareexcluded.

• Section2.3B AgencyAUSRemovestherequirementthatAgencyHighBalanceloansubmissionsincludeanAgencyAUS.

• Section2.6 MaximumLoanAmountNon-agencyJumboloanlimitsanddefinition.

• Section2.8A MaximumLoanTermLimits97%LTVandNon-agencyJumbotoamaximum30yearamortization.

• Section2.8B AdjustableRateMortgage(ARM)(1)Initialfixedterm5yearsorgreaterIdentifies97%LTVeligibleforPrime.

• Section2.8B.2 AdjustableRateMortgages–Initialfixedtermoflessthan5years;andSection2.8C InterestOnly;andSection2.8D BalloonTerm97%LTVandNon-agencyJumboareineligible.

• Section2.10C.1andC.2 IneligibleFeatures–Non-traditionalcreditandNon-primecredit97%LTVandNon-agencyJumboareineligible.

• Section4.3 Non-traditionalcreditLimitedtoamaximum95%LTV.

• Section6.1 Borrower’sOwnFundsIdentifiesminimumborrowercontributionrequirementfor97%LTVandNon-agencyJumbo.

• Section7.5A InterestedPartyContributions–FinancingConcessionsIdentifieseligibilityuptoamaximum97%LTV.

• Section8.3 ManufacturedHousingRemovestherequirementthatManufacturedHousingbeaminimumof1000SFofGLA.

• Section8.4 AssessmentofPropertyValueandConditionIdentifiesfieldrevieweligibilityandrequirements.

Rev 20101013


Radian

Underwriting

Guidelines

3 Radian Underwriting Guidelines | Table of Contents

Revision notes . . . . . . . . . . . . . . . . . . . . . 2Revisions for November 15, 2010 . . . . . . . 2

Introduction . . . . . . . . . . . . . . . . . . . . . . . 4Explanation of new guidelines and how to navigate . . . . . . . . . . . . . . . . . . . 4

Section I – Eligibility MatricesPlatinum Primary . . . . . . . . . . . . . . . . . . 6Platinum Second Home . . . . . . . . . . . . . 9Platinum High Balance . . . . . . . . . . . . . 10Platinum Non-Agency Jumbo . . . . . . . 11Platinum Non-Prime . . . . . . . . . . . . . . . 12Standard . . . . . . . . . . . . . . . . . . . . . . . . 13Standard High Balance . . . . . . . . . . . . 14Standard Non-Prime . . . . . . . . . . . . . . . 15

Section II – Policy Chapters1 Commitment and

Underwriting Eligibility . . . . . . . . . . . 171 .1 Mortgage Insurance

Commitment . . . . . . . . . . . . . . . . . . . 171 .2 Maximum Mortgage Insurance

Risk Exposure to One Borrower . . . . 181 .3 Delegated Underwriting Authority . . . 18

2 Mortgage Eligibility . . . . . . . . . . . . . 20Mortgage Insurance Application . . . . . . . 202 .1 Guideline Programs . . . . . . . . . . . . . . 202 .2 Mortgage Insurance

Application Submission . . . . . . . . . . . 202 .3 Documentation . . . . . . . . . . . . . . . . . . 222 .4 Origination Type . . . . . . . . . . . . . . . . 232 .5 Credit Quality Classification . . . . . . . 242 .6 Maximum Loan Amount . . . . . . . . . . . 242 .7 Loan-to-Value (LTV) Ratio . . . . . . . . . . 252 .8 Loan Terms . . . . . . . . . . . . . . . . . . . . . 262 .9 Restrictions . . . . . . . . . . . . . . . . . . . . . 282 .10 Ineligible Features . . . . . . . . . . . . . . 28

3 Borrower Eligibility . . . . . . . . . . . . . 313 .1 Occupancy Status . . . . . . . . . . . . . . . 31

4 Credit Eligibility . . . . . . . . . . . . . . . . . 344 .1 Considerations Outside of

Standard Credit Eligibility . . . . . . . . . 354 .2 Monthly Credit Obligations . . . . . . . . 364 .3 Non-traditional Credit . . . . . . . . . . . . 37

5 Income and Employment Eligibility . . . . . . . . . . . 39Income Sources . . . . . . . . . . . . . . . . . . . . . 395 .1 Earned Income . . . . . . . . . . . . . . . . . . 395 .2 Self-employment . . . . . . . . . . . . . . . . . 415 .3 Retirement Income . . . . . . . . . . . . . . . 415 .4 Other Income/Unearned Income . . . 425 .5 Tax Returns . . . . . . . . . . . . . . . . . . . . . 45

6 Assets . . . . . . . . . . . . . . . . . . . . . . . . . 466 .1 Borrower’s Own Funds . . . . . . . . . . . 466 .2 Additional Eligible

Funding Sources . . . . . . . . . . . . . . . . 486 .3 Reserves . . . . . . . . . . . . . . . . . . . . . . . 49

7 Transaction Eligibility . . . . . . . . . . . . 507 .1 Transaction Types . . . . . . . . . . . . . . . . 507 .2 Installment Land Contracts,

a .k .a ., Contract for Deed . . . . . . . . . 527 .3 Construction Conversion . . . . . . . . . . 527 .4 Property Flips . . . . . . . . . . . . . . . . . . . 547 .5 Interested Party Contributions . . . . . . 54

8 Property Eligibility . . . . . . . . . . . . . . 578 .1 Eligible Property Types . . . . . . . . . . . . 578 .2 Ineligible Property Types . . . . . . . . . . 598 .3 Property Type Definition . . . . . . . . . . . 598 .4 Assessment of Property Value

and Condition . . . . . . . . . . . . . . . . . . 62

Table of Contents

Radian

Underwriting

Guidelines

4


Radian Underwriting Guidelines | Introduction

Introduction

RadianhasbroadenedourunderwritingguidelinestomorecloselyalignourcrediteligibilityandpolicywithFannieMaeandFreddieMacguidelines;aswellasincreasethenumberoftopicsanddetailsaddressed.Thisexpansionofourcreditpolicyisintendedtoprovideclearerdirectiononoureligibilityrequirementsandassistyourunderwritingefforts.

Theserevisedguidelinesfeaturetwosections:

1 . Quick reference eligibility matrix for Platinum and Standard guidelines .

2 . A comprehensive view of Radian’s credit policy separated into chapters and identified by subject matter . Guidelines specific to Radian’s Platinum Program are clearly indicated .

BookmarksdisplayedontheleftsideoftheAdobeAcrobatReader®screencanbeeasilyusedtonavigatethroughthevarioussectionsoftheguidelines.Alleligibilitymatrix(s)andtopicscanbeaccessedbysimplyexpandingandclickingonthebookmarkofthesection,chapterorsubjectmatteryouwishtoreview.

Throughoutthenewguidelines,hyperlinksareprovidedtotakeyoutoanotherareawithintheguidelineswhereyoucanfindadditionalinformationonaparticulartopic.Ifyouclickahyperlink,youmayreturn to your previous placebypressingdownthealt(Microsoft)orcommand(Macintosh)keyandthebackarrowkeyatthesametimeonyourkeyboard.

ShouldyouhaveanyquestionsaboutRadian’sunderwritingguidelines,pleasecontactourCustomerCareteamat877.RADIAN1 (723.4261)oryourRadianrepresentative.

5

Section I – Eligibility Matrices

Radian

Underwriting

Guidelines

6

Platinum Primary

Platinum ProgramPrimary Residence; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount

Minimum Credit Score

Maximum Debt To Income Ratio

Exclusions Specific Exclusions All

Purchase Single FamilyDetached/ Attached

95$417,000; AK & HI

$625,500

680 41

720 45 Interest Only >41 DTI

Rate/Term Refinance

Planned Unit Development

(PUD)

Detached 95$417,000; AK & HI

$625,500

680 41


Attached 95$417,000; AK & HI

$625,500

680 41GSE Non-warrantable; Delegated submission for properties in FL

720 45

Interest Only >41 DTI; GSE Non-warrantable; Delegated submission for properties in FL

Credit score < 720 in

AZ, CA, FL, NV;

Condominium


$625,500

680 41 GSE Non-warrantable

720 45Interest Only >41 DTI; GSE Non-warrantable


$625,500

680 41

Non-Retail originations; Properties located in NV, Guam or Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

LTV > 90% in Guam

720 45

Interest Only >41 DTI; Properties located in NV, Guam or Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

2 Unit 95$533,850

AK; HI $800,775

680 38Interest Only; Non-traditional credit

Co-operative 90$417,000; AK & HI

$625,500

680 41Non-Retail originations; Interest Only; Non-traditional credit; Properties in NV or Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

720 45

Manufactured Housing 90$417,000; AK & HI

$625,500680 41

Non-retail originations; Interest Only; Non-traditional credit

Eligibility Matrices | Platinum Primary / Primary Residence; Prime Credit


Radian

Underwriting

Guidelines

7

Platinum Primary

Platinum ProgramPrimary Residence; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Single FamilyDetached/ Attached

85$417,000; AK & HI

$625,500720 41

Non-Retail

originations;

Properties located in AZ, CA, FL, MI, NV

or Guam;

Interest Only;

Non-traditional credit;

Non-occupant Co-Borrower;

Non-permanent resident alien;

ARMS with initial fixed term < 5 years;

Temporary Buy downs

Cash-Out Refinance


(PUD)


$625,500720 41


$625,500720 41 GSE Non-warrantable

Condominium Detached 85

$417,000; AK & HI


Attached Not Eligible

2 Unit

Not EligibleCo-operativeManufactured Housing

Eligibility Matrices | Platinum Primary / Primary Residence; Prime Credit

Radian

Underwriting

Guidelines

8


Eligibility Matrices | Platinum Primary / Primary Residence; 97% LTV; Prime Credit

Platinum Primary

Platinum ProgramPrimary Residence; 97% LTV; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





97$417,000; AK & HI

$625,500720 41 Interest Only;

Amortization term > 30 years;


Temporary Buy downs;

Balloon Mortgages;

Non-traditional credit

Rate/Term Refinance Planned Unit

Development (PUD)


$625,500720 41


$625,500720 41

GSE Non-warrantable; Delegated submission for properties in FL

Condominium Detached 97$417,000; AK & HI


Condominium Attached

Not Eligible2 Unit

Co-operative

Manufactured Housing

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance

All Property Types Not Eligible


Radian

Underwriting

Guidelines

9

Platinum Second Home

Platinum ProgramSecond Home; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





90$417,000; AK & HI

$625,500720 45 Properties in Florida

or Guam;

Interest Only;



Non-permanent resident alien


Development (PUD)


$625,500720 45



Condominium




$625,500720 45

Non-Retail originations; Properties located in NV; GSE Non-warrantable

2 Unit

Not EligibleCo-operative


PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance


Eligibility Matrices | Platinum Second Home / Second Home; Prime Credit

Radian

Underwriting

Guidelines

10


Platinum High Balance

Platinum ProgramPrimary Residence; High Balance; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





90 FHFA limit up to $729,750

720 45 Interest Only >41 DTICredit score

< 720 in AZ, CA, FL, NV;



Properties located in Guam

85 700 41

Rate/Term Refinance


(PUD)

Detached90 FHFA

limit up to $729,750


85 700 41

Attached

90FHFA


720 45

Interest Only >41 DTI; GSE Non-warrantable; Delegated submission for properties in FL

85 700 41GSE Non-warrantable; Delegated submission for properties in FL

Condominium

Detached

90FHFA


720 45Interest Only >41 DTI; GSE Non-warrantable

85 700 41GSE Non-warrantable; Delegated submission for properties in FL

Attached 90FHFA


720 45

Interest Only >41 DTI; Properties in NV or Miami-Dade; and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

2 Unit



PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance


Eligibility Matrices | Platinum High Balance / Primary Residence; High Balance; Prime Credit


Radian

Underwriting

Guidelines

11 Eligibility Matrices | Primary Residence; Non-Agency Jumbo; Prime Credit

Platinum Non-Agency Jumbo

Platinum ProgramPrimary Residence; Non-Agency Jumbo; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





90

Conforming /FHFA limit + $250,000

up to a maximum of $979,750

760 45

Non-delegated submission;

GSE AUS Streamline

Documentation Option;

Interest Only;

Amortization term > 30 years;


Balloon Mortgages;


Non-permanent resident alien

Rate/Term Refinance


(PUD)

Detached 90



760 45

Attached 90




Condominium

Detached 90




Attached 90



760 45

Properties in NV or Miami-Dade and Broward County FL; GSE Non-warrantable

2 Unit



PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance


Radian

Underwriting

Guidelines

12


Platinum Non-Prime

Platinum ProgramPrimary Residence; Non-Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





95$417,000; AK & HI

$625,500680 41 Credit score

< 720 in AZ, CA, FL, NV;

GSE AUS Streamline


Interest Only;




Properties in Guam


Development (PUD)


$625,500680 41


$625,500680 41


Condominium




$625,500680 41

Non-Retail originations; Properties located in NV or Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

2 Unit



PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance


Eligibility Matrices | Platinum Non-Prime / Primary Residence; Non-Prime Credit


Radian

Underwriting

Guidelines

13

Standard

Standard Program; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





95$417,000; AK & HI

$625,500720 41 Second Homes;

Interest Only;



LTV >90% in Guam


Development (PUD)


$625,500720 41


$625,500720 41


Condominium




$625,500720 41

Non-Retail originations; Properties in NV, Guam or Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

Standard Program; Prime and Non-Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Purchase

Rate/Term Refinance

2 Unit



PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance


Eligibility Matrices | Standard / Prime Credit / Prime and Non-Prime Credit

Radian

Underwriting

Guidelines

14


Eligibility Matrices | Standard / High Balance; Prime Credit

Standard High Balance

Standard Program; High Balance; Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





90FHFA


720 41 Second Homes;

Interest Only;




Properties located in Guam


Development (PUD)

Detached 90FHFA


720 41

Attached 90FHFA


720 41GSE Non-warrantable; Delegated submission for properties in FL

Condominium

Detached 90FHFA



Attached 90FHFA


720 41

Properties in NV, Guam or Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

2 Unit



PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance



Radian

Underwriting

Guidelines

15

Standard Non-Prime

Standard Program; Non-Prime Credit

PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount





90$417,000; AK & HI

$625,500720 41 Second Homes;

GSE AUS Streamline


Interest Only;




Properties in Guam


Development (PUD)


$625,500720 41


$625,500720 41

Delegated submission for properties in FL; GSE Non-warrantable

Condominium




$625,500720 41

Non-Retail originations; Properties in NV, Miami-Dade and Broward County FL; GSE Non-warrantable; Delegated submission for properties in FL

2 Unit



PurposeProperty

Type

Maximum Loan To

Value Ratio

Maximum Loan

Amount




Cash-Out Refinance


Eligibility Matrices | Standard / Non-Prime Credit

Section II – Policy Chapters


Radian

Underwriting

Guidelines

17 Commitment and Underwriting Eligibility | Mortgage Insurance Commitment

Commitment and Underwriting Eligibility1

Mortgage Insurance Commitment 1 .1

A . Term• MortgageinsurancecommitmentsareissuedbyRadianwithacommitmenttermof120days.

• Commitmentexpirationdatescannotbeextended.

B . Coverage• Thepercentageofmortgageinsurancecoverageissuedissubjecttopublishedpricingandbaseduponlenderrequest,withtheexceptionofNon-AgencyJumboloans.

• ThepercentageofmortgageinsurancecoverageissuedspecifictoNon-agencyJumboloansislimitedtotheagencycharterminimumasfollows:

Term 85% LTV 90% LTV≤ 30 years 6% coverage 12% coverage

C . Activation

TheloanmustcloseandthecoveragebeactivatedwithRadian(i.e.,loansmustbecertified)beforethecommitmentexpires.Thiscanbeaccomplishedinoneoftwoways:

(1) Radian’sreceiptoftheinitialpremiumduealongwiththereporteddateonwhichtheloanclosed.

(2) Whenthedeferredpremiumpaymentoptionischosen,reportthedatetoRadianonwhichtheloanclosed.

D . Post-Commitment Data Changes• Aloanmustre-qualifyforamortgageinsurancecommitmentifanyinformationchangespriortotheloanclosingwhichimpactstheloan’squalificationformortgageinsuranceorthetermsunderwhichthecommitmentwasissued.

• Subsequentqualificationisbasedoncurrentpublishedguidelinesatthetimeofre-qualification.Itisnotbasedontheguidelinespublishedatthetimeoftheoriginalmortgageinsuranceapplicationorcommitment.

• AmortgageinsurancecommitmentshallberenderednullandvoidifchangestotheloaninformationresultinaloanthatnolongermeetsRadian’seligibilityguidelines.

Radian

Underwriting

Guidelines

18


Commitment and Underwriting Eligibility | Maximum Mortgage Insurance Risk Exposure / Delegated Underwriting Authority

Maximum Mortgage Insurance Risk Exposure to One Borrower1 .2

Radian will insure the lesser of:• $300,000aggregateinsuredriskexposure,or• Two(2)insuredloans,onlyoneofwhichmaybeaprimaryresidence.

AborrowerpurchasinganewprimaryresidencewhileretainingacurrentRadianinsuredprimaryresidenceiseligibleoncethecurrentprimaryresidencehasbeenoccupiedbytheborrowerforaminimumoftwentyfourmonths.

RiskexposureiscalculatedbyusingtheoriginalloanamountmultipliedbythepercentageofMIcoverage.

For example, a $100,000 mortgage with 25% coverage equals $25,000 mortgage insurance risk exposure .

Delegated Underwriting Authority1 .3

Lenders who have been granted delegated underwriting authority through the receipt of a Radian issued Delegated Underwriting Authority Endorsement

A . Are Expected to: • Usetheirdelegatedunderwritingauthority.• Employprudentjudgmentwhenexercisingtheirdelegatedauthority.• Underwriteallloanspriortoorderingmortgageinsurance.

B . May:• SubmitloanstoaRadianServiceCenterfornon-delegatedunderwritingonanexceptionbasis.Non-agencyJumboloansareineligiblefornon-delegatedsubmission.

• Uponrequest,berequiredtoprovideadditionaldocumentationinsupportofthemortgageinsurancedecision.

C . Are prohibited from: • Exercisingtheirdelegatedauthorityon:

• AloanwhichhasbeensubmittedtoandunderwrittenbyaRadianServiceCenter.

• Loansonattachedcondominiums,attachedPUDsandcooperativesinthestateofFlorida.

• Loansforaborrowerwithnon-traditionalcredit.• PropertyFliptransactions(Propertyrecentlypurchasedbythesellerandre-soldwithin91-180days.)

Link to Transaction Eligibility – Property Flips


Radian

Underwriting

Guidelines

19 Commitment and Underwriting Eligibility | Delegated Underwriting Authority

D . GuidelinesLoan matters which are not specifically addressed within Radian’s published guidelines default to: • StandardFannieMaeguidelinesifthesubmissioncontainsDUUnderwritingFindings.

• StandardFreddieMacguidelinesifthesubmissioncontainsLPUnderwritingFindings.

• ThemorerestrictiveofFannieMae/FreddieMacguidelinesifthelenderdidnotsubmittheloantoanagencyAUSinordertoobtainanunderwritingrecommendation.

E . CommitmentsDelegated commitments may be obtained by:• OrderingthroughRadian’sMIOnline,datatransmissionsystem.TheuseofRadian’sMIOnlinesystem:• Doesnotrelievethelenderofanyrepresentations/warrantiesassociatedwiththeirRadiandelegatedunderwritingauthority.

• RequiresthelenderadheretoRadian’spublishedguidelines.

• EDITransmission

• SubmittingtoaRadianServiceCenter:• Acompleted,signed1008withtheFICO-basedcreditscoreclearlynoted.• AcompletedRadianMortgageInsuranceApplicationidentifyingthesubmittinglender,coveragerequestedandAUSresponse,ifapplicable.

Radian

Underwriting

Guidelines

20


Mortgage Eligibility | Mortgage Insurance Application / Mortgage Insurance Application Submission

Mortgage Eligibility2

Mortgage Insurance Application

Radianacceptsmortgageinsuranceapplications,inaccordancewithpublishedguidelinesonfirstlienmortgagessecuring1–2unitpropertieswithfulldocumentationforbothprimeandnon-primecredit.

Guideline Programs2 .1

A . Standard MortgageinsuranceeligibilityguidelinesaffordedtoallMasterPolicyholders.

B . Platinum Enhancedmortgageinsuranceeligibilityguidelinesforthoseclientsmeetingspecificqualifyingcriteria.PlatinumenhancementsareidentifiedwithintheguidelinesaseligibleforPlatinumProgramonlyandapplyonlytoMasterPolicyholderswhohavebeengrantedPlatinumdesignation.

Mortgage Insurance Application Submission2 .2

A . DateApplicationsmustbesubmittedincompliancewiththesedaterestrictions:• Borrower-PaidMortgageInsurance(BPMI)priortoloanclosing/fundingdate.• Lender-PaidMortgageInsurance(LPMI)priortothefirstpaymentduedate.

B . Underwriting TypeMortgageInsuranceapplicationsmaybesubmitted:

(1) Non-delegated• SubmittoaRadianServiceCenterorRadianon-sitecontractunderwriter.• Loanfiles,includingthirdpartyoriginations,aretobeunderwrittenandapprovedbythesubmittinglenderforinvestorcompliancepriortosubmissionformortgageinsurance.

• LenderswhohaveexecutedanUnderwritingReviewAgreementwithRadianmaysubmitloanfilesforcomplianceunderwritinginadditiontomortgageinsuranceeligibility.

(2) Delegated• RequiresaRadianDelegatedUnderwritingAuthorityEndorsementtothesubmitter’sMasterPolicy.

Commitment and Underwriting Eligibility – Delegated Authority


Radian

Underwriting

Guidelines

21 Mortgage Eligibility | Mortgage Insurance Application Submission

C . Non-delegated Loan PackageRadianwillacceptthefollowingtypesofloanpackagesfornon-delegatedmortgageinsuranceunderwriting:

(1) Complete Loan PackageA property has been selected by the borrower. Both the sales contract and appraisal are provided along with all required credit documents.

• Underwriting approval of a Complete loan package application will result in the issuance of a mortgage insurance commitment.

(2) Credit Only Loan Package A property has been selected by the borrower. Either the sales contract and/or appraisal are not provided.

• Underwriting review of a Credit Only loan package application will result in a suspended mortgage insurance application subject to a satisfactory sales contract and/or appraisal.

(3) Pre-qualification Loan PackageA property has not been selected by the borrower. Therefore the sales contract and appraisal are not provided.

• UnderwritingreviewofaPre-qualification loan package application will result in a suspended mortgage insurance application subject to satisfactory transaction and loan terms, sales contract and appraisal.

D . Loan Package Minimum Documentation RequirementsForallthreetypesofLoanPackages,thefollowingminimumdocumentationisrequiredinordertorenderadecisionontheapplication:

• MortgageInsuranceApplication• Submittinglender’sunderwritingapproval• Complete1003signedbyinterviewer• AUSfindings,ifapplicable• Creditreportincludingsupplementalcreditverifications• Verificationofemploymentandincome• IRSTranscripts,ifobtainedbysubmittinglenderduringtheunderwritingprocess• Verificationofassets• Salescontract(requiredinacompleteloanpackage)• Appraisal(requiredinacompleteloanpackage)

E . Property Identification(1) Complete Loan Package

Mortgageinsuranceapplicationsmustincludethesubjectpropertyaddress,completelegaldescription,andappraisedvalue.

Whenthepropertyisproposedorunderconstruction,orderingtheMIcommitmentwithalotnumberorsubdivisionnameisacceptableaslongasthesubjectproperty’shousenumberandstreetaddressareprovidedatthetimecertificationisrequested.

Radian

Underwriting

Guidelines

22


Mortgage Eligibility | Mortgage Insurance Application Submission / Documentation

(2) Credit Only Loan PackageAlthoughRadiandoesnotrequirethesalescontractand/orpropertyappraisaltobeinthefileatthetimetheMIcommitmentisordered;thelenderisrequiredtoadviseRadianofanychangeinthetransactiontermsorfinalappraisedvalue.

(3) Pre-qualification Loan PackageIntheeventamortgageinsuranceapplicationissubmittedbeforeapropertyhasbeenselected,thepropertyaddressistobeidentifiedasRadian’scorporateaddress:

1601MarketStreetPhiladelphia,PA19103

F . Age of DocumentsAlldocumentationsupportingthemortgageinsuranceapplicationmaynotbemorethan120daysoldonthedatenoteissignedwiththeexceptionoflimitedappraisalrecertificationoptions.Link to Property Eligibility – Appraisals

G . Submission Restrictions(1) Non-Delegated

MortgageloanswiththefollowingfeaturesrequireaNon-delegatedsubmission:• PropertyFliptransaction(propertyrecentlypurchasedbythesellerandre-soldwithin91–180days).

Link to Transaction eligibility – Flip properties• AttachedcondominiumandattachedPUDsandcooperativesinthestateofFlorida.• Borrowerswithanon-traditionalcredithistory.

(2) DelegatedMortgageloanswiththefollowingfeaturerequiresadelegatedsubmission:• Non-agencyJumbo

Documentation2 .3

Radian insures Full Documentation loans only .

A . Standard or Alternative DocumentationRadianrequiresincome,employmentandassetdocumentationdefinedasStandardorAlternativebyFannieMae/FreddieMac.

• Fannie Mae/ Freddie Mac (Agency) AUS Streamlined Documentation Option Radianacceptsincome,employmentandassetdocumentationasstipulatedintheindividualAUSFindingsreportforloanswhichcomplywithAgencyloanlimitsandareoriginatedasfulldocumentationloans.ThisispermittedinlieuofStandardorAlternativeDocumentationasdefinedabove,subjecttothefollowing:

• PrimeCreditOnly


Radian

Underwriting

Guidelines

23 Mortgage Eligibility | Documentation / Origination Type

• LenderhasverifiedtheaccuracyofthedatasubmittedtotheAgencyAUSsystemwhichresultedintheUnderwritingRecommendation.

• AUSUnderwritingRecommendationidentifiestheloanasDUApprove/EligibleorLPAccept/Eligible.

• TheAUSFindingsreportisnotspecifictoaDURefiPlusorLPOpenAccessRefinance.

• Non-agencyJumboloansareexcluded.

Click here for guidelines specific to Radian insured transactions refinanced under HARP/HAMP

B . Agency AUS – Desktop Underwriter (DU) / Loan Prospector (LP) All loans, regardless of the Agency AUS issued Underwriting Recommendation, must meet applicable Radian guidelines.RadiandoesnotrequiretheuseofanAgencyAUSwhenaloanissubmittedformortgageinsurance.

• HoweverifthelendersubmitstheloantoanAgencyAUSandreceivesanUnderwritingRecommendation,themostrecentFindings/FeedbackReportistobeincluded/retainedintheMIsubmissionfileregardlessoftherecommendation.- MortgageinsuranceeligibilityisnotmetbasedsolelyontheUnderwritingRecommendationissuedbyanAgencyAUS.

Origination Type2 .4

Radian distinguishes between the retail and non-retail origination of a mortgage loan . For certain property types and transactions, non-retail originations are ineligible .

A . Retail Origination AloanisdefinedasaretailoriginationwhentheSubmittinglender,OriginatinglenderandInsuredlenderarethesame.

(1) Originating lenderInterviewstheborrower,completesandprocessestheloanapplication.TheretailoriginatinglendermusthaveaRadianMasterPolicybutisnotrequiredtohaveadelegatedunderwritingauthorityendorsement.

(2) Submitting lender:ReviewstheloanformortgageinsuranceeligibilityandrequeststhemortgageinsurancecoveragedirectlyfromRadian.

(3) Insured lenderIdentifiedastheinsuredontheRadianissuedmortgageinsurancecommitmentandcompletesthefundingandclosingofthemortgageloan.

http://www.radian.biz/page?name=HASPSameServicerPerf

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Mortgage Eligibility | Origination Type / Credit Quality Classification / Maximum Loan Amount

AretailoriginatedloanmayutilizefeebasedarmslengthservicesofaMortgageServiceProvideraslongas:• TheMortgageServiceProviderdoesnottaketheloanapplication.• ThefeespaidtotheMortgageServiceProviderarenotcontingentonmortgageapprovalorloanclosing.

B . Non-retail OriginationLoansthatdonotmeetthedefinitionofaretailoriginationasnotedabove,areconsideredanon-retailoriginationformortgageinsuranceeligibilitypurposes.

Thefollowingpropertytypesandtransactionsarenoteligibleforloansdefinedasnon-retailoriginations:

(1) Property Type• Cooperatives• Manufacturedhomes• AttachedCondominiumsinsuredunderStandardProgramEligibility• AttachedCondominiumsinsuredunderPlatinumProgramEligibilitywiththefollowingcharacteristics:- Representativecreditscorelessthan720- Secondhome- Non-PrimeCredit

(2) TransactionsCash-OutRefinance

Credit Quality Classification2 .5

Radianinsures:

• PrimeCredit(“IndustryA”) Link to Eligibility Matrices

• Non-PrimeCredit(“IndustryAMinus“) Link to Eligibility Matrices

Maximum Loan Amount2 .6

Standard Agency Conforming Loan LimitsMaximum Loan Amount

$417,000 One Unit$625,500 One Unit Alaska and Hawaii$533,850 Two Unit $800,775 Two Unit Alaska and Hawaii


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25 Mortgage Eligibility | Maximum Loan Amount / Loan-to-Value (LTV) Ratio

Agency High Balance Loan LimitsMaximum Loan Amount

Up to $729,750 One Unit

EligibilityunderAgencyHighBalanceisrestrictedtoFHFAdesignatedhighcostareasincompliancewithFannieMaeandFreddieMaceligibilityasqualifiedunderthetemporaryincreaseinconformingloanlimitsinhigh-costareas,asdefinedbytheUSDepartmentofHousingandUrbanDevelopment(HUD),andgrantedtoFannieMaeandFreddieMacundertheEconomicStimulusActof2008andtheAmericanRecoveryandReinvestmentActof2009.

Radian’sHighBalanceloanlimitswillalwaysmatchagencyHighBalancelimits,upto$729,750.

Non-Agency Jumbo Loan LimitsMaximum Loan Amount

Agency Conforming or Agency High Balance Loan Limit (maximum $729,750) + $250,000 . Up to a maximum of $979,750 .

ThemaximumloanamounteligibleforinsuranceundertheNon-AgencyJumboloanprogramislimitedto$250,000overthemaximumeligibleagencyloanlimit.FormostareasofthecountrythiswillbelimitedtotheStandardAgencyConformingloanlimit+$250,000.HoweverinFHFAdesignatedhighcostareas,loanamountsuptotheAgencyHighBalanceloanlimit(maximum$729,750)+$250,000areeligible.

PleaserefertotheFHFAwebsitetoidentifydesignatedhighcostareashttp://www .fhfa .gov/Default .aspx?Page=185

Loan-to-Value (LTV) Ratio2 .7

The LTV ratio is defined as the loan amount before any financed mortgage insurance premium is added, divided by the property value .

Thepropertyvalueisdefinedasthelesserof:

• Thecurrentsalesprice,netofanysalesconcessionsorincentivestopurchaseOR• Currentappraisedvalue

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Mortgage Eligibility | Loan-to-Value (LTV) Ratio / Loan Terms

LTV = CLTV = HCLTV not to exceed maximum eligible LTV for program or transaction typeCombined Loan-to Value (CLTV) =

Loan amount of the first mortgage

+ The unpaid balance of any closed end subordinate financing divided by the property value

Home Equity Combined Loan-to Value (HCLTV) =

Loan amount of the first mortgage

+ The balance of any closed end subordinate financing

+ The undrawn amount of the credit line available on a HELOC divided by the property value

A . Combined Loan-to-Value (CLTV and HCLTV)/ Subordinate FinancingTheCLTVandHCLTVmayneverexceedthemaximumeligibleLTVfortheprogramortransactiontype.• Purchase and Cash-Out Refinance transactions

• Radiandoesnotinsurepurchaseorcash-outrefinancetransactionswithsimultaneoussubordinatemortgageliensorsecondaryfinancing.

• Radiandoesallowaborrowertoreceivegrantfundsincertaincaseswhichmayresultinalienontheproperty.

Link to Asset Eligibility – Grant Funds

• Rate/Term Refinance transactions• RadianwillpermitthesubordinationofanexistingsubordinatemortgageliensubjecttoLTV/CLTV/HCLTVlimitations.

• Newsubordinatemortgageliens/secondaryfinancingsimultaneouswiththeclosingofthefirstmortgagerefinancetransactionarenotpermitted.

B . Financed Mortgage InsuranceThe borrower may finance any portion of a borrower paid up-front mortgage insurance premium not to exceed a Gross LTV Ratio of 100%.

• Gross LTV Ratio• Theloanamountwhichincludesanyportionofthemortgageinsurancepremiumtobefinancedbytheborrower,dividedbythepropertyvalue.

• Nottoexceed100%loan-to-value(LTV)ratio.

Loan Terms2 .8

A . Maximum Loan Term• Forty(40)yearamortization.• Loanswithanamortizationperiodand/oraNotetermgreaterthan40yearsupto50yearsareeligible,subjecttothefollowingconditions:• Propertyislimitedto1unit,primaryresidenceonly.• Manufacturedhomesareineligible.• LoanamountislimitedtoStandardAgencyConformingloanlimits.• Highbalanceloansareineligible.


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27 Mortgage Eligibility | Loan Terms

• Thefollowingprogramsarelimitedtoathirty30yearamortization:• 97%LTV• Non-agencyJumbo

B . Adjustable Rate Mortgage (ARM)(1) Initial fixed term 5 years or greater

• Qualifyatstartrate.• EligibleforPrime(97%LTV)andNon-Prime(95%LTV).

(2) Initial fixed term of less than 5 years• QualifyusingthehigheroftheNoteRateortheFullyIndexedAccrualRate(marginplusindexvalue),alsoreferredtoasFIAR.

• EligibleforPrimeonly(95%LTV).• PurchaseorRate/TermRefinanceonly.• 97%LTVandNon-agencyJumboareineligible.

(3) Maximum Interest Rate CapsARM Product Initial Cap Periodic Cap Lifetime Cap1–2 year 2% 2% 6%3 year 3% 2% 6%>= 5 year 5% 2% 6%

C . Interest Only• PlatinumProgramOnly.• Qualifywithafullyamortizingprincipalandinterestpayment.• Minimum/MaximumInterestOnlyeligibletermsasfollows:

All States other than New York New YorkMust be exact Interest Only Term based on Loan Term

Minimum Interest Only Term

Maximum Interest Only Term Loan Term Interest Only Term

15 years 5 years20 years 7 years

10 years 15 years 25 years 8 years30 years 10 years40 years 11 years

• Ineligible for Interest Only• 97%LTV• Non-agencyJumbo• Cash-OutRefinancetransactions• CooperativesandManufacturedhousing• 2Unit• Non-Prime• SecondHomes• Temporarybuydowns• DTI>41%

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Mortgage Eligibility | Loan Terms / Restrictions / Ineligible Features

D. Balloon Term• Theminimumballoontermisfiveyears.• 97%LTVandNon-agencyJumboareineligibleonloanswithaBalloonfeature.

E. Temporary Buy downs• Maximum3-2-1buydown.• PrimaryresidenceandSecondhomeareeligible.

• PurchaseandRate/TermRefinancetransactionsonly.• FixedRate:

• Qualifyatthenoterate.• EligibleforPrimeandNon-prime(95%LTV).

• ARMswithaninitialfixedterm5yearsorgreater:• QualifyattheStartRate.• EligibleforPrimeandNon-prime(95%LTV).

• ARMswithaninitialfixedtermoflessthan5years:• QualifyusingthehigheroftheNoteRateortheFullyIndexedAccrualRate(marginplusindexvalue),alsoreferredtoasFIAR.

• EligibleforPrimeonly(95%LTV).

Restrictions2.9

Loan matters which are not specifically addressed within Radian’s published guidelines default to:

• StandardFannieMaeguidelinesifthesubmissioncontainsDUUnderwritingFindings.• StandardFreddieMacguidelinesifthesubmissioncontainsLPUnderwritingFindings.• ThemorerestrictiveofFannieMae/FreddieMacguidelinesifneitherAgencyAUSisusedbythelendertoobtainFindings/FeedbackReport.

Ineligible Features2.10

Radian will not insure mortgage loans with any of the following features specific to:

A. Documentation(1) Loan applications originated as anything other than a full documentation loan

• AltA• Limitedincome,employmentorassetdocumentation• NoDoc• StatedIncomeand/orStatedAssets


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(2) Reduced Appraisal documentation• AutomatedValuationModel(AVM)• Drivebyappraisal• Exterioronlyappraisal• PropertyInspectionWaiver(PIW)

B . Occupancy StatusInvestmentProperties

C . Credit(1) Non-traditional

• 97%LTV• Non-agencyJumbo• Highbalance• InterestOnly• Cash-outRefinance• Secondhome• Non-Prime• 2Unit• Cooperatives• Manufacturedhousing• LenderssubmittingunderStandardGuidelines

(2) Non-prime (A Minus)• 97%LTV• Non-agencyJumbo• Cash-OutRefinance• Highbalance• InterestOnly• Non-traditionalcredit• 2Unitproperties• Cooperatives• Manufacturedhousing

D . Property Type• 3to4-unitproperties• PropertytypesnotmeetingFannieMaeorFreddieMaceligibility

E . Transaction Type• PropertyFlip(propertyacquiredbythecurrentsellerwithinthepastninety[90]days) Link to Transaction eligibility – Flip properties• InterimConstructionloans• InterimRenovationloans• Reversemortgages• Secondmortgageloans• Streamlinerefinances• Wraparoundmortgages

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Mortgage Eligibility | Ineligible Features

• Blanketmortgages• Governmentinsuredmortgageloans(FHA,VA,RuralHousing)• ProgramsandtransactionsforwhichRadianoffersnopublishedrates

F . Loan Features• Graduatedpaymentmortgages• Negativeamortization,potentialorscheduled

G . GeographyProperties located in:• PuertoRico• U.S.VirginIslands


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31 Borrower Eligibility | Occupancy Status

Borrower Eligibility3

A . Radian provides mortgage insurance on loans to:• Individuals.• IntervivosrevocabletruststhatmeetstandardFannieMae/FreddieMacrequirements.

B . The lender must validate the identity of the borrower .

C . All borrowers must have:• Avalidsocialsecuritynumber.• Reachedtheageatwhichamortgagenoteislegallyenforceable.

D . The borrower must be:• SubjecttoallUnitedStateslawsandregulations.

E . The borrower may be a:• U.S.Citizen.• Permanentresidentalien.• Non-permanentresidentalienwhoislegallypresentintheUnitedStates.

• Applicationswhichincludeanon-permanentresidentalienborrowerarerestrictedasfollows:- Primaryresidence,oneunit- PurchaseorRate/TermRefinancetransactionsonly- Maximumloanamountof$417,000;$625,500inAKandHI- MinimumtwoyearsofcreditandemploymenthistoryintheUnitedStates

F . Exclusions:• BorrowerswithanIndividualTaxIdentificationNumber(ITIN)inlieuofaSocialSecuritynumber.

• Borrowerswithdiplomaticimmunity.• RadianreservestherighttodenyissuingacommitmentonaloantoaborrowerwithapriorclaimpaidbyRadian.

Occupancy Status3 .1

Radianprovidesmortgageinsuranceonloanstoborrowersoccupyingthesubjectpropertyastheirprimaryresidenceorsecondhome.

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Borrower Eligibility | Occupancy Status

A . Primary ResidenceRadianidentifiestheoccupancyofapropertyasaprimaryresidencewhen:• Forpurchaseandconstructionconversiontransactions,theborrowerstatesanintentiontooccupythepropertyasaprimaryresidence,andwilloccupythepropertynotlaterthan(60)daysfromthedatetheloanisclosed.

Link to Construction Conversion

• Forexistingpropertyrefinancetransactions,theborroweroccupiesthepropertyasaprimaryresidenceatthetimeofloanapplication.

• Itisoccupiedbytheborrowerforthemajorityoftheyear.• Itislocatedwithinareasonabledistancefromtheborrower’splaceofemployment.

Note:In the event the borrower is military personnel stationed overseas, all the above occupancy requirements may be met by the borrower’s immediate family member(s) when no other real estate is owned by the borrower or occupying family member(s).

• Itistheborrower’saddressoflegalrecord.• Thepropertycharacteristicsareadequatetoaccommodatetheborrower’simmediatedependentfamily.

• InadditionRadianwillinsureloanstoborrowersastheirprimaryresidencewhenthesubjectpropertyisownedorpurchasedbytheborrowertoaccommodatetheir:• Elderlyparents,whodonothaveadequateincomeorfinancialresourcestoqualifyforamortgageontheirown.

• Physicallyhandicappedordevelopmentallydisabledchild.

Note:The elderly parent or handicapped/disabled child’s inability to qualify for a mortgage must be addressed in the loan file.

B . Second homeRadianwillinsureloanstoborrowersoccupyingthesubjectpropertyasasecondhomesubjecttothefollowingrestrictions:• PlatinumProgramonly.• Occupiedbytheborrowerforsomeportionoftheyear.• Thepropertyis:

• Locatedinanareathatisaccessibleyetremoteenoughfromtheborrower’sprimaryresidencetofunctionreasonablyasasecondhome.

• Suitableforyear-roundoccupancy.• Availablefortheborrower’sexclusiveuseandcontrolledsolelybytheborrower.

• Notunderasharedownership,revenuesharingorrentalagreement.• Shelterpurchasedorownedinlieuofdormitoryorrentalhousingforaborrower’sfamilymemberwhilehe/sheattendscollegeortraining,alsoreferredtoasa“kiddiecondo,”isnoteligibleformortgageinsuranceasasecondhome.


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33 Borrower Eligibility | Occupancy Status

C . Investment PropertyRadiandoesnotinsureloansoninvestmentproperties.

D . Non-occupant Co-BorrowersRadianwillinsureloanswithnon-occupantco-borrowerssubjecttothefollowingrestrictions:• Primecreditonly.• PlatinumProgramonly.• Primaryresidence,oneunitonly.• PurchaseorRate/TermRefinancetransactionsonly.• Non-occupantco-borrowermaynothaveaninterestinthepropertysalestransaction.

• Occupyingborrower’sDebtToIncome(DTI)ratioisnottoexceedthepublishedmaximumDTIfortheapplicableLTV/transactiontype.

• Occupyingborrowermusthaveminimumequity/cashdownpaymentoffivepercent(5%)fromtheirownfunds.

Link to Credit Considerations

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Credit Eligibility | Credit Eligibility Requirements

Credit Eligibility4

Radianevaluatesthecrediteligibilityofaborrowerinconsiderationof:• Theextentanddepthofaborrower’scredithistory.• Theborrower’sdemonstratedabilityandwillingnesstopaycreditobligationsasagreed.

• Theborrower’scurrentcreditexposureandprofile.

Therefore,inadditiontocreditscores,Radianrequiresanestablishedminimumcredithistorywithcompleteandaccurateidentificationoftheborrower’spriorandcurrentcreditobligations.

Credit Eligibility Requirements

Each borrower on the loan application must meet all three (3) of the following traditional credit

eligibility requirements:

1) Minimum representative FICO-based credit score .

2) Three trade lines which have been active and evaluated for a minimum of twelve months .

3) A satisfactory payment history of all reported and/or supplied credit references .

1) Minimum representative FICO-based credit score as required per the eligibility matrix .Theminimumrepresentativecreditscoreisbasedonthelowestrepresentativecreditscoreofallborrowers.Aminimumoftwocreditscoresfromtwocreditrepositoriesperborrowerisrequiredtoestablishtherepresentativecreditscoreandthisscoreisdeterminedasfollows:

• Iftwoscoresareprovided,thelowerscorewillbeused.• Ifthreescoresareprovidedandtwoareidentical,theidenticalscorewillbeused.• Ifthreescoresareprovided,themiddlescorewillbeused.

“Rescoring”oftheborrower’screditscoretomeeteligibilityrequirementsisnotpermittedunlesstheborrower’screditreportcontainedinaccurateand/orincompleteinformationatthetimeofapplication.Allcreditreportsobtainedfortheborrowerwithidentifiedcreditscoresmustbeprovided.

2) A minimum of three trade lines which have been active and evaluated for a minimum of twelve months .

• Atradelineisdefinedasahousing,installmentorrevolvingaccountlistedonacreditreportthatistheresponsibilityoftheborrower.• Authorizeduseraccountsarenoteligibleunlesstheborrowercanevidencetheyhavemadeallrequiredpaymentsforthepasttwelve(12)months.


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35 Credit Eligibility | Credit Eligibility Requirements / Considerations Outside of Standard Credit Eligibility

• Anactiveandevaluatedtradelinerequiresthatpaymentsweremadeonanaccounttosatisfyanamountowedbytheborrowerwiththepaymenthistoryreportedbythecreditortoacreditrepository.• Itisnotrequiredtheaccount(s)becurrentlyopen.Howeveriftheborrower’scredithistoryconsistsofonlydated,closedaccounts,sufficientdatamaynotexisttoestablishanacceptablecurrentcreditprofile.

3) A satisfactory payment history defined as follows:

Type of Account Prime Non-PrimeMortgage or Rental History Including HELOC(s) and subordinate financing

0 x 30 in the past 12 months . Must be current at the time of loan application and closing .

Maximum 2 x 30 in the past 12 months . Must be current at the time of loan application and closing .

Foreclosure Deed in Lieu of Foreclosure Short sale

Minimum 60 months since the date of foreclosure, deed–in–lieu of foreclosure or short sale occurred and re-established satisfactory credit .

Minimum 36 months since the date of foreclosure, deed–in–lieu of foreclosure or short sale occurred and re-established satisfactory credit .

Bankruptcy Minimum 48 months since the discharge/dismissal date, with satisfactory credit established .

Minimum 36 months since the discharge/dismissal date, with satisfactory credit established .

Judgments, Tax Liens Any judgment or lien which may impact title must be satisfied .

Any judgment or lien which may impact title must be satisfied .

A short saleisconsideredtobeanyprincipalforgiveness,usedtofacilitateapurchase,refinanceormodification,receivedbytheborrowereffectivelyreducingtheamountowed.

Re-established satisfactory creditrequiresallofthefollowingafterthedateofthebankruptcydischarge/dismissalorcompletiondateoftheforeclosure,deed–in–lieuofforeclosureorshortsale:

• Allaccountsarecurrent• Ahousingrelatedreferencethatcoversatwentyfourmonthperiodreflectingallpaymentspaidasagreedandcurrent.

• Threecreditreferences,inadditiontoahousingreference,whicharecurrentandhavebeenopenandactivewithinthemostrecenttwenty-four(24)monthperiodreflectingnomorethan2x30;0x60.

• Nootherderogatorycreditsuchasjudgments,collections,liensetc.

Considerations Outside of Standard Credit Eligibility4 .1

For primary residence purchase and limited cash-out refinance transactions, Radian will permit:

• Anoccupyingspouse,whoisnotcontributinganyindividualincomeorindividualassetstotheloanqualification,toco-borrowwithoutmeetingtheminimumnumberoftradelinerequirementsprovidedthepaymenthistoryofalltheindividual’sreportedcreditreferencesmeetthesatisfactorypaymenthistoryrequirements.

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Credit Eligibility | Considerations Outside of Standard Credit Eligibility / Monthly Credit Obligations

• Anoccupantborroweronanon-occupyingco-borrowertransactiontoqualifywithoutmeetingtheminimumnumberoftradelinerequirementaslongasthenon-occupyingco-borrowerisanimmediatefamilymemberoftheoccupyingborrower,theoccupyingborrowerhasarepresentativecreditscorethatmeetstheminimumrequiredfortheprogramandallcreditreferencesmeetthesatisfactorypaymenthistoryrequirements.

Monthly Credit Obligations4 .2

Recurring monthly financial obligations must be considered when qualifying the borrower .

A . Exclusions

(1) Short-term debtThe following obligations may be excluded from the debt to income calculation when the borrower demonstrates sufficient financial resources to maintain payments without impacting ability to service the new mortgage.

• Installmentdebtwithtenorfewerpaymentsremaining.• Childsupportandalimonyobligationswhichterminatewithintenmonths.

(2) Payoff of debt to qualifyRadian will permit the pay off of debt to qualify under the following conditions:

• Thefundsusedtopaythedebtareverified,seasonedand/orsourced.• Revolvingaccountsmustbepaidinfullandclosed.• Installmentdebts:

- Mustbepaidinfull,or- May bepaiddowntolessthantenmonthswhentheborrowerdemonstrates

sufficient financial resources to maintain payments without impacting ability to service the new mortgage.

(3) Contingent LiabilitiesThe following contingent liabilities may be excluded from the debt to income calculation under the corresponding circumstances:

• Outstandingdebtwhichhasbeenassignedtoanotherpartybyanexecutedandrecordedcourtorder.

• Co-signeddebtwhereitcanbeevidencedtheprimaryobligor(nottheborrower)hasbeenmakingthepaymentsasagreedforaminimumofthemostrecenttwelvemonths.

• Loansecuredbyafinancialassetthatisnotbeingusedtosupportthesubjectpropertytransaction.

• Mortgageassumption,formal,executedandrecordedwhereitcanbeevidencedconsistentandtimelypaymentshavebeenmadebytheassumingpartyforaminimumoftwelvemonths.


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37 Credit Eligibility | Monthly Credit Obligations / Non-traditional Credit

B . Considerations

(1) Deferred LoansTheminimumpaymentrequiredatthetimere-paymentbegins,istobeincludedinthedebttoincomecalculationforalldeferredliabilitiesregardlessofthedefermentperiod.

(2) Lease PaymentsRadianrequiresleasepaymentsbeincludedinthedebttoincomecalculationregardlessofthenumberofpaymentsremaining.Considerationmustbegiventopendingnewleasepaymentsifanexistingleasepaymenthasbeensatisfiedwithinsixtydaysofmortgageapplication.

(3) Reverse MortgagesBorrower(s)whoarevacatingandretainingahomeonwhichtheyhaveareversemortgagemayhaveanobligationtobeginmonthlypayments.Termsofthereversemortgagemustbeidentifiedandanyobligationforfuturemonthlypaymentsincludedinthedebttoincomecalculation.

(4) Undisclosed debtIndicationswithintheloanfilethatnewdebthasbeentakenoutorexistingdebthasnotbeendisclosedrequireanalysisandclarification.Indicationsofneworundiscloseddebtmayappearundertheinquirysectionofthecreditreport,income/assetdocumentationorcourtdocuments.

Non-traditional Credit4 .3

Borrowers who have not been extended traditional credit or have an insufficient number of traditional trade lines may meet credit eligibility by evidencing regular and consistent payment of non-traditional credit obligations. Non-traditional credit qualification is not acceptable to offset a derogatory traditional credit history. Non-traditional credit qualification is limited to the following transactions and property types:

• Maximum95%LTV• PlatinumProgramOnly• PrimeOnly• PurchaseorRate/TermRefinance• Primaryresidence• Singlefamily,attachedordetachedPUDorcondominium• Maximumloanamountof$417,000;$625,500AK,HI• USCitizensorPermanentResidents• Armslengthtransaction• Non-delegatedsubmission

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Credit Eligibility | Non-traditional Credit

Each borrower on the loan application must meet all four of the following non-traditional credit qualifications:

1) A GSE compliant credit report which:a.ProvidestheresultsofFICOscoring.b.Reportsall“infile”traditionalcreditreferencesandrecentinquiries.c.Confirmsanddisclosestheresultsofapublicrecordssearch.

2) Housing reference verified by a non-interested third party for the most recent twelve month period .

3) Two additional non-payroll deducted credit references . The borrower must be required to make periodic payments no longer than every three months, and evidence a minimum of twelve payments made on each account .

4) Satisfactory credit quality defined as follows:

Type of Account RatingMortgage or Rental History 0 x 30 in the past 12 months . Must be current at the time of loan

application and closing .Non-traditional credit reference No more than 1 x 30 in the past 12 monthsTraditional credit reference No more than 1 x 30 in the past 12 monthsPublic Records including: Judgments, Collections, Profit & Loss write-offs, Garnishments, Repossessions, Tax Liens, Housing related default

None in the past 60 months . All credit references used to meet eligibility requirements must have originated after the date the public record was filed . Medical collections may be exempt with a letter of explanation and resolution in place .


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39 Income and Employment Eligibility | Income Sources / Earned Income

Income and Employment Eligibility5

The income source(s) used to qualify the borrower must be demonstrated as both:

• Stable,and• Likelytocontinueforaminimumofthreeyears.

The measure of stability and continuance is specific to the income source and identified below .

Income Sources

Earned Income5 .1

A . Base salary/ hourly wages(1) Stability

• Aminimumofthirtydaysemploymentwithcurrentemployer. See Employment Contracts for only noted exception.• Adocumentedtwo-yearcontinuousworkhistory,or

- Theborrower(s)obtainedhis/hercurrentpositionasaresultofrecentlycompletededucationorcertificationandhassatisfiedanyassociatedprobationaryperiodoremploymentconditions.

- Theborrowerhasrecentlyreturnedtotheworkforceandcanevidenceapriortwo-yearhistoryofstableemployment.Aminimumofsixmonthswithcurrentemployerisrequired.

(2) Continuance• Theborrowerdemonstratesatwo-yearhistoryofearningconsistentandpredictableincome,orhassuccessfullycompletedschoolingspecifictotheircurrentposition.

• Noindicationsexistthattheincomesourcewillterminatewithinthenextthreeyears.

B . Overtime; Bonus; Tip Income; Seasonal Employment(1) Stability

• Incomeisderivedfromthesameincomesourceforaminimumoftwoyears.(SeasonalEmploymentincomemaybederivedfromthesameseasonallineofwork.)

• Incomeissupportedbyboththeyeartodateandmostrecenttwo-yearsearnings.(2) Continuance

• Annualearningsarelevelorincreasing.• Noindicationsexistthattheincomesourcewillterminatewithinthenextthreeyears.

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Income and Employment Eligibility | Income Sources / Earned Income

C . Commission and Second Job income(1) Stability

• Incomeisderivedfromthesameincomesourceforaminimumoftwelvemonthswithatwo-yearhistoryofreceipt.

• Incomeissupportedbyboththeyeartodateandmostrecenttwo-yearsearnings.(2) Continuance

• Annualearningsarelevelorincreasing.• Noindicationsexistthattheincomesourcewillterminatewithinthenextthreeyears.

Link to Tax Returns

D . Military Income – Base Pay(1) Stability

Currentreceiptofincomesource.(2) Continuance

Dischargedatewhichextendsthreeyearsfromtheloanapplicationdate,orabilityoftheborrowertore-enlist.

E . Military Income – Flight or hazard pay, rations, clothing allowance, quarters’ allowance(1) Stability

Currentreceiptofincomesource.(2) Continuance

Establishthattheparticularsourceofincomewillcontinuetobereceivedinthefuture.

F . Projected IncomeRadian does not consider projected or future income.

G . Employment ContractsRadian will consider base salary or hourly wages as defined in the terms of an Employment Contract subject to all of the following requirements:• Theborrowerandemployerhaveexecutedacomplete,legallybindingemploymentcontractwhichidentifiesstartdate,sourceofincomeandrateofpay.

• Allconditionsofemploymentmustbeevidencedassatisfied.• Theborrowerisemployedinaprofessionwhichtypicallyworksunderanemploymentcontract;i.e.,doctor,teacher,professor,professionalathlete.

• Borroweriscurrentlyinvolvedandcandemonstrateatwo-yearcontinuoushistoryintheprofession.(advancedschoolingpermitted,i.e.,medicalresidency)

• Borrowercanevidencethat,afterloanrequirementshavebeenmet,sufficientliquidassetsremaintosatisfyallcurrentandproposedfinancialobligationsfromthedatetheloanclosesuntiltheborrowerisscheduledtoreceivepayfromthenewemployer.Thistransitionperiodisnottoexceedsixtydays.

H . Employment GapEmployment gaps are defined as any period of 6 months or greater.• Anyemploymentgapidentifiedintheborrower’smostrecenttwo-yearworkhistorymustbeexplained.


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41 Income and Employment Eligibility | Income Sources / Self-employment / Retirement Income

• Thereasonfortheemploymentgapmustbeanalyzedtodetermineiftheborrower’sworkhistorydemonstratesstabilityandconsistencyofincome.

Self-employment5 .2

Radian considers a borrower to be self-employed if he/she has 25% or greater ownership in a business .

A . Disclosure of businesses owned• Aself-employedbusinessownedbytheborrowermustbedisclosedanddocumentedintheloanfileregardlessiftheself-employedincomeisbeingusedtoqualify.

• Lossesresultingfromaself-employedbusinessmustbeidentifiedandconsideredinqualifyingtheborrower.

B . Self-employed income(1) Stability

• Self-employment income derived from the business and received by the borrower for a minimum of two years, or

• Self-employmentincomewithlessthanatwo-yearhistorywhenaminimumof twelve months self-employment income has been reported on the most recent years tax return and:- Theborrowerdemonstratesaminimumfive-yearhistoryofcomparableorhigherincomeinthesameprofessionorindustry,or

- Thebusinessincomeisderivedfromalongtermlegallybindingcontract.(2) Continuance

• Annualearningsarelevelorincreasing.• Thereisnotameasurabledeclineindemandforbusinessproductorservicedemonstratedbydecliningsalesandrevenuetrends.

Retirement Income5 .3

A . Social Security; Employer Pension Program; Government Annuity(1) Stability

• Currentreceiptofborrowerentitledmonthlybenefits.• Borrower’sreceiptofmonthlybenefitsforaminimumoftwomonths.

(2) Continuance• Noindicationsexistthattheincomesourcewillterminatewithinthenextthreeyears.

B . Asset derived incomeFor borrowers of legal retirement age, Radian will consider asset derived income:

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Income and Employment Eligibility | Income Sources / Retirement Income / Other Income/ Unearned Income

• IRA DistributionQualifying income can be determined by either the most recent twelve month distribution average or the current established monthly distribution.(1) Stability

• Themostrecenttwelvemonthdistributionhistory,or• Theborrower’scurrentreceiptof

- Therequiredminimumdistribution,or- Regularlyscheduleddistributionsaccordingtoanestablishedagreementinitiatedpriortotheloanapplicationdate.

(2) ContinuanceThecurrentIRAbalanceissufficienttosupportdistributionsforaminimumofthreeyears.

• Annualized AssetsQualifying income can be derived from liquid assets, which are intended to provide an income source to the borrower during retirement. Qualifying income is determined by taking the available liquid assets divided by the loan term to define an income available to support the payment each year of the loan term. The annual amount is then divided by twelve and considered monthly qualifying income.

(1) Stability• Availableliquidassetsremainafterthesatisfactionofloanrequirementswhichareequaltoorgreaterthantheloanamount.

• Theassetsbeingconsideredarecurrentlyunderthecontrolandownershipoftheborrowerandhavebeenforaminimumoftwoyears.

(2) ContinuanceTheavailableliquidassetssupportthequalifyingincomefortheentiretermoftheloan.

Other Income/Unearned Income5 .4

A . Government Benefits/ Public Assistance/ Social Services(1) Stability

• Receiptofmonthlyincome,assistanceorbenefitsfromthesamesourceforaminimumoftwoyears.

• Borrower’scurrentreceiptofcomparableincomefromthesamesource,or• Eligibilityoftheborrowertoreceiveincome,assistanceorbenefitsinthecaseofunemploymentbenefits.

(2) Continuance• Determinationthatthebenefitsdonothaveadefinedexpirationdatewithinthreeyearsfromtheloanapplicationdate.


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B . Disability Income(1) Stability

• Borrowerhasbeenapprovedforandiscurrentlyreceivinglongtermmonthlydisabilitybenefits.

• Borrower’sreceiptoflongtermmonthlydisabilitybenefitsevidencedforaminimumoftwomonths.

(2) Continuance• Determinationthatthebenefitsdonothaveadefinedexpirationdatewithinthreeyearsfromtheloanapplicationdate.

C . Child Support/Alimony(1) Stability

• Legalorderrequiringthepayment.• Consistentreceiptoftheincomefromthesamesourceforaminimumoftwelvemonths,or

• Consistentreceiptoftheincomefromthesamesourceforaminimumofsixmonths,iftheincomebeingusedtoqualifydoesnotexceedthirtypercent(30%)oftheloan’stotalqualifyingincome.

(2) Continuance• Legalorderidentifyingtheobligationforthepaymentofchildsupportoralimonytotheborrowercontinuesforaminimumofthreeyears.

D . “Gross” up non-taxable incomeIncomeidentifiedasnon-taxablemaybe“grossed”upinanamountequaltothefederaltaxratepercentagefortheborrower’sincome,nottoexceedtwenty-fivepercent(25%).

E . Capital Gains; Interest and Dividend; Trust Income(1) Stability

• Incomereceivedforaminimumoftwoyears.• Incomederivedyearoveryearfromthesamesourceisconsistentorincreasing.

(2) Continuance• Theassetsproducingtheincomestreamorcomparableassetsareundertheownershipandcontroloftheborrowerandarenotcommittedelsewhere.

F . Auto Allowance; Housing Allowance(1) Stability

• Two-yearhistoryofincomereceiptwiththetwelvemonthsmostrecentfromthesamesource.

• Taxreturnsindicateincomereceivedbytheborrowerinexcessofassociatedexpense.

(2) Continuance• Noindicationsexistthattheincomesourcewillterminatewithinthenextthreeyears.

G . Trailing SpouseIncome is not eligible.

Income and Employment Eligibility | Income Sources / Other Income/ Unearned Income

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H . Rental IncomeNet rental income may be an acceptable qualifying income source.The eligibility and calculation of the net rental income is subject to the following considerations:• Thecurrentstatusoftheproperty.• Thelengthoftimethepropertyhasbeenownedbytheborrower.

Property Eligible for the use of rental income Not EligibleExisting Investment Property

Properties that are currently generating rental income for the borrower

Properties that are not currently generating rental income

Subject Property 2 Unit On non-owner occupied unit Owner occupied unitConversion of Existing Primary Residence or Second Home into an Investment property

Borrower equity in current home is 30% or greater as evidenced by an appraisal, AVM or BPO

Borrower equity in current home is less than 30%

Property Calculation of Qualifying Net Rental IncomeProperty reflected on schedule E of the most recent tax return(s)

Property acquired subsequent to filing the most recent tax return

Existing Investment Property

Gross rental income reported on the schedule E less operating and repair expenses including but not limited to monthly PITIA • Principal • Interest • Taxes • Insurance • Association Dues

75% of gross rental income identified on a fully executed lease by a tenant that is: • Not related to the borrower • A disinterested party to the transaction

Subject Property 2 Unit Gross rental income reported on the schedule E less operating and repair expenses including but not limited to monthly PITIA • Principal • Interest • Taxes • Insurance • Association Dues

The lesser of: • 75% of gross rental income as

determined by an appraiser’s opinion of market rent for the non-owner occupied unit, or

• 75% of gross rental income identified on a fully executed lease by a tenant that is: • Not related to the borrower • A disinterested party to the transaction

Conversion of Existing Primary Residence or Second Home into an Investment property

Not Applicable 75% of gross rental income as evidenced by all the following: • Fully executed lease agreement by

a tenant that is • Not related to the borrower • A disinterested party to the transaction

• Security deposit from the tenant • Bank statement showing the deposited

security funds

Income and Employment Eligibility | Income Sources / Other Income/ Unearned Income


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45 Income and Employment Eligibility | Income Sources / Tax Returns

Tax Returns5 .5

The most recent two-years complete tax returns are required to document income from the following sources:

• Borrower(s)employedbyfamilymembers.• Borrower(s)employedbyaninterestedpartytothetransaction.• Borrower(s)employedonaperjoborcontractbasis.• Self-employmentincome.• Commissionincomerepresenting25%ormoreoftheborrower’stotalannualincome.• AutoAllowanceorHousingAllowanceasasourceofqualifyingincome.• Borrower(s)claimingunreimbursedbusinessexpenses. Link to Documentation

A . Tax Extensions• Borrower(s)filingataxextensioninlieuofataxreturnarerequiredtoprovideacopyofthetaxextensioninadditiontothemostrecenttwo-yearstaxreturns.

• Thetotaltaxliabilityreportedonthetaxextensionistobeconsideredincomparisonwiththeborrower’staxliabilityfromtheprevioustwoyearsasameasureofincomesourcestabilityandcontinuance.

• Atotaltaxliabilitythatisindicatedtobelessthanthepreviousyear’staxliabilitymayrequireclarificationandexplanation.

B . Tax Transcripts• Radiandoesnotrequirethe4506-Tbeprocessedandtaxtranscriptsobtained. However if the lender processes the 4506-T and obtains the tax transcript during

the underwriting process, the tax transcripts will be required at the time of submission for mortgage insurance.Inthecaseofdelegatedtransactions,thetaxtranscriptistobereviewedandretainedintheloanfile.

• Radiandoesallowtheuseoftaxtranscriptsasanalternativetotaxreturns. However when tax transcripts do not provide sufficient detail to document

income or expenses, tax returns will be required.

• Materialdiscrepanciesbetweenthetaxtranscriptsandincomedocumentationcontainedintheloanfilemustbesatisfactorilyexplainedanddocumented.

Loan files containing irreconcilable discrepancies are not eligible for mortgage insurance.

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Assets6

Borrower’s Own Funds6 .1

A Minimum Investment from the Borrower’s Own Funds is required for all transactions .

• Purchasetransactionsrequireaminimumcashdownpayment.• Refinancetransactionsrequireminimumequityintheproperty.

Minimum Borrower’s Own Funds Investment (Equity) RequiredPurchase & Rate/Term Refinance Primary Residence Second Home

97% LTV 3% Not Eligible

Agency Eligible Conforming 5% 10%

Agency Eligible High Cost Area 5% Not Eligible

Non-Agency Jumbo 10% Not Eligible

Cash-out Refinance Primary Residence Second Home

Agency Eligible Conforming 15% Not Eligible

Agency Eligible High Cost Area Not Eligible Not Eligible

Note: The minimum investment required from the Borrower’s Own Funds, in some cases, may be less than the total down payment required.

A . Borrower’s Own Funds are defined as:

• Depositoryassetswhichhavebeenseasonedorsourcedandareundertheownershipandcontroloftheborrower.

• Borrowerentitledproceedsfromthesaleofrealestateowned.

• Non-depositoryassetswhichareownedbytheborrowerandliquidated.

• Saleofpersonalassetsmeetingthefollowingrequirements:• Borrower’sseasonedownershipoftheassetisevidenced.• Currentvalueisdeterminedbyanindependentandreputablesource.• Billofsaleisprovidedalongwithevidenceofborrower’sreceiptofthefunds.• Thepartypurchasingtheassetmaynotberelatedtotheborrowerorapartytothetransaction.

• Fundsheldbyorforthebenefitofthesellerincluding:• Earnestmoneydepositwhichisseasonedorsourced.• RentpaidonanOptiontoPurchasewhichexceedsfairmarketrentandisdefinedinthecontractasdownpayment.

Assets | Borrower’s Own Funds


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47 Assets | Borrower’s Own Funds

• Securedborrowedfunds,aslongasthepartyprovidingthesecuredloanisnotapartytothetransaction.

• Creditforvalueofsubjectpropertylotownedbytheborrower.

Title to the lot Eligible asset valueAcquired greater than twelve months from date of loan application

Current appraised value

Acquired less than twelve months from date of loan application

The lesser of the purchase price or current appraised value

Borrower acquired as a gift or inheritance

Current appraised value

(1) Seasoned fundsFundswhichareandhavebeenundertheownershipandcontroloftheborrowerforaminimumofsixtydayspriortothedateofloanapplication.

(2) Sourced funds• Alargedeposit,notoriginatingfromanestablishedincomesource,identifiedonanyassetstatementlocatedinthefilemustbesourcedanddocumented.

• Individualorcumulativedeposits,exceedingtwentypercent(20%)oftheborrower’smonthlygrossincome,aregenerallydefinedaslarge.

(3) Business AssetsBusinessassetsmaybeusedtosatisfytheminimuminvestmentrequiredfromBorrower’s own fundssubjecttothefollowingconditionsanddocumentation:

• Thebusinessis51%ormoreownedbytheborrower.• Businesstaxreturnsareprovided.• Businessassetsareseasonedorsourced,underthecontroloftheborrowerandrelatedtothebusinessdocumentedintheloanfile.

• ACPA,notrelatedtotheborrowerorapartytothetransaction,providesawrittenstatementthatremovalofbusinessassetswillnotnegativelyimpacttheabilityofthebusinesstocontinueoperatingorproducerevenue.

Note: In the case the business does not employ a CPA; the submitting lender’s

underwriter may provide a written cash flow analysis of the business and conclusion.

B . Ineligible sources of Borrower’s Own Funds:• Cashonhand• Unsecuredborrowedfunds• Tradeequity• Giftsofequity• Sweatequity• Non-liquidassetsincludingretirementaccountswhicharenoteligibleforliquidationuponrequest

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Assets | Additional Eligible Funding Sources

• Personalgiftfunds(asdefinedbelow)pooledwithandindistinguishablefromborrower’sownfunds

Additional Eligible Funding Sources6 .2

After the Borrower(s) has satisfied the minimum investment required from Borrower’s own funds, the following additional sources are eligible to fund the transaction and may be used to:

• Increasedownpayment.• Paypartoftheclosingcostsand/orprepaidexpenses.• Supplementreserves.

A . Personal Gift FundsGiftfundsfromaneligibledonorarepermittedwhenthefundsareownedbythedonorandtransferredtotheborrower,priortooratthetimeofclosing.

(1) Eligible gift donor(s)• Individualswhoarerelatedtotheborrowerbyblood,marriage,adoptionorlegalguardianship.

• Individualswhodemonstratealongstandingestablishedrelationshipwiththeborrowerspecificallyfiancé,fiancéeordomesticpartners.

(2) Ineligible gift donor(s)• Individualswhobenefitfinanciallyfromtheclosingofthetransaction.• Individualswhoare,orhaveanaffiliationwith,thebuilder,developer,realestateagent,oranyotherinterestedpartytothetransaction.

B . Gifts of EquityGiftsofequityprovidedbythesellerofthepropertywhoisrelatedtotheborrowerbyblood,marriage,adoptionorlegalguardianship.

C . Grant fundsGrantfundsfromanacceptablethirdpartyentityarepermittedunderthefollowingcircumstances:

(1) Eligibility• Primaryresidenceonly• Repaymentofthegrant,inwholeorinpart,isnotexpectedorrequiredexceptuponresaleorrefinanceoftheproperty.

• Grantispartofaformalgiftprogram.• Intheeventthegrantfundsresultinarecordedlienonthesubjectproperty,theCLTVmaynotexceedthemaximumpublishedeligibleLTVforthetransactiontype.


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49 Assets | Additional Eligible Funding Sources / Reserves

(2) Acceptable third party entities• Churches• Municipalities• Non-profitorganizations(excludingcreditunions)• Publicagencies

Reserves6 .3

Borrower liquid assets remaining after closing which could be used to pay the monthly housing expense:

• Principal• Interest• Taxes• Insurance• Associationfees

TransactionPurchase

Rate/Term Refinance

Cash-Out Refinance

Conversion of Principal Residence

OccupancyPrimary Residence

Second HomePrimary

ResidenceEquity in Current Home

Equal to or Greater than Thirty percent (30%)

Less than Thirty percent (30%)

Number of Units One Two One

Number of Units Subject Property One Two One Two

Reserves Required

Two (2) months

Six (6) months

Two (2) months

Required Reserves Subject Property

Two (2) months

Six (6) months

Six (6) months

Note: The reserve requirement may be waived in the case of a limited cash-out refinance when the transaction results in a reduction to the borrower’s monthly housing expense .

Required Reserves Current Property

Two (2) months

Two (2) months

Six (6) months

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Transaction Eligibility | Transaction Types

Transaction Eligibility7

Transaction Types7 .1

Radian insures the following transaction types subject to defined restrictions and exclusions:• Purchase• Rate/TermRefinance• Cash-OutRefinance

A . Purchase• Thesellermustbetheownerofrecordandidentifiableonthepurchasecontract.• Thebuyermustbenamedonthepurchasecontract(notanassignee).• Theappraisermustreviewacompleteandexecutedcopyofthepurchasecontract,includinganyapplicableaddendum(s).

• Non-armslengthtransactionsmustbedisclosedandanalyzedbytheappraiser.

B . Rate/Term Refinance• Repayment of a borrower’s debt in which all loan proceeds are used for one or

more of the following items:

• Payoffoftheexistingfirstmortgagewherethereexistsacontinuity of obligation.

• PayoffofasubordinatelienthatwasusedinitsentiretytopurchasethesubjectpropertyasevidencedbytheoriginalpurchasetransactionHUD-1.

• Paymentofreasonableandcustomaryclosingcostsandprepaids,includingdiscountpointsandprepaymentpenalty.

• Cashbacktotheborrowernottoexceedthelesserof2%ofthenewloanamountor$2,000.

• Existingsubordinateliensmaybere-subordinatedprovidedthemaximumCLTV/HCLTVisnotexceededfortheprogram.Newsubordinatemortgageliens/secondaryfinancingarenotallowed.

Link to Mortgage Eligibility – LTV

• Buyoutofanowner’sinterestsmaybeconsideredasalimitedcash-outrefinancesubjecttoALLofthefollowing:- Thebuyoutisrequiredasaresultofacourtordereddivorcesettlementordissolutionofadomesticpartnership.

- Thesecuredpropertywasjointlyownedforatleasttwelvemonthsprecedingthedateofthemortgageapplication(exceptinthecaseofrecentinheritanceofthesubjectproperty).


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51 Transaction Eligibility | Transaction Types

- Allpartiessignawrittenagreementthatstatesthetermsofthepropertytransferandtheproposeddispositionoftheproceedsfromtherefinancetransaction.

- Borrower’swhoacquiresoleownershipmaynotreceiveanyproceedsfromtherefinancing.

• Continuity of Obligation is satisfied when one of the following is met:

• Atleastoneborrowerisobligatedonthenewloanwhowasalsoaborrowerobligatedontheexistingloanbeingrefinanced.

• Theborrowerhasbeenontitleandresidinginthepropertyforatleast12monthsandhaseitherpaidthemortgageforthelast12monthsorcandemonstratearelationship(relative,domesticpartner,etc.)withthecurrentobligor.

• TheloanbeingrefinancedandthetitletothepropertyareinthenameofanaturalpersonoraLimitedLiabilityCompany(LLC)aslongastheborrowerwasamemberoftheLLCpriortotransfer.Transferofownershipfromacorporationtoanindividualdoesnotmeetthecontinuityofobligationrequirement.

• Theborrowerhasrecentlyinherited,orwaslegallyawarded,theproperty(divorce,separation,ordissolutionofadomesticpartnership).

C . Cash-Out RefinanceA cash-out refinance transaction provides funds in excess of what is permitted under rate/term refinance eligibility. These additional proceeds may be used to satisfy existing subordinate lien(s) and/or provide the borrower with cash. A cash-out refinance may also secure a property with no existing lien.

(1) Eligibility• PlatinumProgramOnly• PrimeCreditOnly• PrimaryResidenceOnly• RetailOriginationsOnly• Theborrowermustdemonstrateacontinuityofobligation.

(2) Restrictions• Themaximumcashaborrowermayreceiveafterthesatisfactionofthefirstmortgagelienis$75,000.

• Transactionmaynotincludesubordinationofexistingornewsecondaryfinancing.

• ARMSarelimitedtoproductswithaninitialadjustmentperiodoffiveyearsorgreater.

• Thesubjectpropertymaynothavebeenpurchasedorlistedwithintwelvemonthsoftheloanapplicationdate.

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Transaction Eligibility | Transaction Types / Installment Land Contracts / Construction Conversion

(3) Exclusions•LoanFeatures

- TemporaryBuydowns- InterestOnly

•PropertyLocationandType- PropertieslocatedinthestateofAZ,CA,FL,MI,NV- 2unitproperties- Manufacturedhomes- Attachedcondominiums- Co-ops

Installment Land Contracts, also known as, Contract for Deed7 .2

The proceeds of a mortgage loan may be used to satisfy the current remaining balance of a fully executed installment land contract .

• Contractsexecutedwithinthetwelve(12)monthsprecedingthedateoftheloanapplication:• Aretobeunderwrittenasapurchasetransaction.• RequiretheLTVratiobedeterminedbydividingtheoutstandingbalancebythelesserof:- Theappraisedvalueasdeterminedbyacurrentappraisal,or- Thetotalacquisitioncost(purchasepriceplusthecostincurredbythepurchaseforrenovation)withallincludedexpendituresfullydocumentedbytheborrower.

• Contractsexecutedmorethantwelve(12)monthsbeforethedateoftheloanapplication:• AreeligibleasaRate/TermRefinancetransaction.• AllowtheLTVratiotobedeterminedbydividingtheoutstandingbalancebytheappraisedvalueasdeterminedbyacurrentappraisal.

• Installmentlandcontractsarenoteligibleasacash-outrefinancetransaction.

Construction Conversion7 .3

Proceeds received from the permanent financing of a completed property which are used to pay off an existing construction loan .


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53 Transaction Eligibility | Construction Conversion

A . Eligibility

(1) Radian does not provide mortgage insurance coverage on construction or renovation loans during the construction or renovation phase .

(2) The transaction may be completed as a refinance if:

• Theborrowerheldlegaltitletothelotpriortotheapplicationforinterimconstructionfinancing,

• Theborrowerisnamedastheborrowerfortheconstructionloan.

• Thebuilder/developerisnotobligatedtorepaytheInterimConstructionFinancingoranyMortgageonthelandortheimprovements.

• TherespectiveRate/TermorCash-OutRefinancetermsaremet:- MaximumLTV/CLTV- Minimumborrowerequityrequirement

B . Defined Value

Construction Conversion

Lot owned 12 months or more prior to the application for interim construction financing OR The borrower acquired the lot through an inheritance or gift .

Lot owned less than 12 months prior to the application for interim construction financing .

Purchase Refinance Purchase Refinance

The Lesser of: The Lesser of:

Single Family Home 2 Unit Property

The current appraised value or The sum of the documented costs of the construction and the current appraised value of the lot .

The current appraised value .

The current appraised value or The sum of the documented costs of the construction and the sales price of the lot .

The current appraised value or The sum of the costs of the improvements and the sales price of the lot .

Manufactured Home

The purchase price of the Manufactured Home, plus the lowest purchase price at which the land was sold during the most recent 12-month period or Appraised value of the Manufactured Home and land .

The purchase price of the Mortgaged Premises (cost of the Manufactured Home and appraised value of the land) or Appraised value of the Mortgaged Premises .

The purchase price of the Manufactured Home, plus the lowest purchase price at which the land was sold during the most recent 12-month period or Appraised value of the Manufactured Home and land .

The purchase price of the Mortgaged Premises (cost of the Manufactured Home and the lowest purchase price of the land within the most recent 12-month period) or Appraised value of the Manufactured Home and land .

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Transaction Eligibility | Property Flips / Interested Party Contributions

Property Flips7 .4

Certain transaction types inherently present increased risk . As a result, the sale of a property recently acquired by the seller after a brief holding period typically for profit, with or without improvements being made to the property is restricted as follows:

• Alltransactionsmustbe“arm’slength.”• Propertymustbeowned(titledate)bythesellerforgreaterthan90dayspriortothedateborrowerenteredintoacontractforpurchaseofthesubjectproperty.

• Propertiesownedgreaterthan90daysbutnomorethan180days,priortothedateborrowerenteredintoacontractforpurchase,requiresubmissiontotheRadianServiceCenterorRadianonsiteemployeeforunderwriting.

• Anincreaseinvalueofthesubjectpropertymustbeanalyzedanddiscussedbytheappraiser.

• The following transactions are not defined as property flips:• Propertyobtainedthroughaninheritance.• Propertythatispartofasettlementinadivorceagreement.• Propertythatispartofanemployerrelocationprogram.• Propertyacquiredbythelenderorservicerasaresultofforeclosureordeedinlieuofforeclosure.

Agents or subsequent owner(s) of the property, are not considered the lender or servicer .

Interested Party Contributions7 .5

A . Financing Concessions(1) Eligibility

Financingconcessionssubjecttothefollowingrestrictionsarepermitted:

LTV Maximum90 .01% – 97% 3%90% or below 6%

(2) Disclosure• Financing concessions must be identified within the:

- Salescontract- AppraisalReport-Appraisermustanalyzetheimpactoffinancialconcessionsonthevalueofthesubjectproperty.

(3) RestrictionsRadian will not accept an increase in the sales price to accommodate seller paid financial concessions after the terms of sale have been negotiated and accepted by all parties .


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55 Transaction Eligibility | Interested Party Contributions

B . Sales Concessions• SalesConcessionsrequireadollarfordollarreductionofthepurchaseprice

in order to compute the maximum loan to value ratio for underwriting and eligibility purposes.

• Includedinsalesconcessionsareanyinterestedpartycontributionsthatexceedthemaximumpermittedfinancingconcessions.Link to Financing Concessions

C . Personal Property• Thepartiesinvolvedinapurchasetransactionmaychoosetoincludepersonalpropertyitemsinthecontractasanegotiatedtermofthesale.• Insuchcases,Radiandoesnotpermittheremovalofthesepersonalpropertyitemsfromthecontractforthesolepurposeofeligibility.

• Personalpropertyitemsincludedinthesalescontractmustbedisclosedandaddressedbytheappraiser.

• Radianwillconsidertheimpacttosubjectpropertyvalueasanalyzedbytheappraiseranddetermineifthepersonalpropertyis,foreligibilitypurposes,consideredtobeasalesconcession.

• PersonalPropertyisconsideredtobeasalesconcessionforeligibilitypurposeswhen:- Removaloftheitemfromthetransactionimpactsthevalueofthesubjectproperty.

- Itmotivatesthebuyertopurchasetheproperty.- Canberemovedfromthesubjectpropertyandhasarecognizablere-salevalue.

• Forpersonalpropertyitemsnot meeting the above definition,thefollowingarenotconsideredtobeasalesconcessionforeligibilitypurposes:- Anitemthatisnoteasilytransportableandisleftwiththepropertyfortheconvenienceoftheseller.

- Anitemthatcannotbeeasilyremovedandwhosevalueisequaltoorlessthanthecosttoremove.

- Anitemwhich,duetopoorcondition,advancedageorlackoffunctionality,providesminimalutility.

• Inthecasewheretheunderwriterisunabletoclearlyexcludedpersonalpropertyasasalesconcession;itshouldbeconsideredasalesconcessionforeligibilitypurposes.

• Thevalueofapersonalpropertyitem,definedasasalesconcessionforeligibilitypurposes,istobedeterminedbythepartiestothetransactionbasedonanestimateofcurrentre-salemarketvalue.

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Transaction Eligibility | Interested Party Contributions

D . Abatements• Transactions which include abatements are not eligible . Abatements are defined as:

• Paymentoftheloanprincipalandinterestbyapartytothetransactionotherthantheborrower.

• Paymentofmonthlypre-paidexpenses(taxes,homeownerand/ormortgageinsurance,homeownerassociationdues)byaninterestedpartytothetransactionthatexceedtheamountrequiredtoestablishtheescrowaccountassociatedwiththemortgageclosing.

• Paymentsmadedirectlytotheborrower.


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57 Property Eligibility | Eligible Property Types

Property Eligibility8

Eligible Property Types8 .1

Please refer to the Eligibility Matrices to determine maximum eligible LTV specific to transaction and property type .

Link to Eligibility Matrices

Mortgage loans secured by the following property types are eligible for coverage subject to defined Property Minimum Standards, Restrictions and Exclusions:

• SingleFamilyResidence

• PlannedUnitDevelopments(PUDs)

• CondominiumsAttached condominium eligibility is limited to the following:• PurchaseandRate/TermRefinance

Fornon-retailorigination:- PlatinumProgramOnly- PrimeCreditOnly- PrimaryResidenceOnly- Minimum720creditscore

• 2UnitEligibility is limited to the following:• PlatinumProgram• PrimeCredit• PrimaryResidence• PurchaseandRate/TermRefinancetransactions• Standardagencyconformingloanlimits

• Co-operativesEligibility is limited to the following:• PlatinumProgram• PrimeCredit• PrimaryResidence• PurchaseandRate/TermRefinancetransactions• Retailorigination• Standardagencyconformingloanlimits

• ManufacturedHomesEligibility is limited to the following:• PlatinumProgram• PrimeCredit• Primaryresidency

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Property Eligibility | Eligible Property Types

• PurchaseandRate/TermRefinance• Retailorigination• Standardagencyconformingloanlimits

A . Minimum StandardsAneligiblepropertytypemustmeetminimumstandardstobeacceptablecollateralformortgageinsurancecoverage.Ataminimumthepropertymust:

• Be habitable and certified for occupancy by the local housing authority . Radian does not provide mortgage insurance coverage on construction or

renovation loans during the construction or renovation phase. A loan on a completed property which has been certified for occupancy is eligible.

• Have a clear and marketable title .

• Provide residential use, which has been determined by the appraiser to be the highest and best use .

• Provide conditions which do not compromise the health, safety or security of the occupants .

• Demonstrate structural integrity .

• Have a permanent water source .

• Have operational utilities and mechanical systems that meet community standards .

• Have legal, unrestricted, year round access .

B . RestrictionsEligiblepropertytypesarerestrictedbythefollowing:

(1) Acreage• Maximumoften(10)acres.• Propertymustbeusedexclusivelyforresidentialpurposesandcannotbeincomeproducing.

(2) Land-to-value ratioLandvalueexceeding35%ofappraisedvaluemustbetypicalfortheareaandsupportedbycomparablesales.

(3) Out-buildings• Maynotaccommodateagricultureorbusinessuse.• Mustbetypicalfortheareawithvalueandmarketabilitysupportedbycomparablessales.

• Contributoryvalueincidental.


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59 Property Eligibility | Eligible Property Types / Ineligible Property Types / Property Type Definition

(4) Zoning• Thesubjectpropertymustconstitutealegallypermissibleuseoftheland.• Maynotincludelanduseregulationswhichrestrictreconstructionormaintenance.

(5) Project WarrantyAttachedPUDs,attached/detachedCondominiumsandCooperativesmustbeFannieMae/FreddieMacwarrantable.

C . ExclusionsThefollowingfeaturesofeligiblepropertytypesarenoteligibleforRadianmortgageinsurancecoverage:

• SecondhomesinFloridaorGuam.

• Condotels.

• Single-widemanufacturedhomes.

• Manufacturedhousingsitecondominiums.

• Modelhomeleasebacks.


Ineligible Property Types8 .2

The following property types are not eligible for Radian mortgage insurance coverage:

• 3to4-unitproperties

• Mobilehomes

• Time-shareproperties

• Lotloans

Property Type Definition8 .3


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Property Eligibility | Property Type Definition

Single Family Residence

• A one unit detached or attached home• Held in fee simple or leasehold estate• Not subject to a mandatory homeowners association• Not a manufactured home

•Asinglefamilyresidencemayincludeanaccessoryunitthatisincidentaltotheoverallvalue and appearance of the subject property subject to all of the following:• Appraiser must describe the accessory unit.• The accessory unit must be identifiable in the appraisal subject property photographs.• Appraisal must demonstrate the accessory unit improvement is typical for the market area through

comparable sales with similar use .• Appraiser must analyze any effect on the value and marketability of the subject property.• Use of rental income from an accessory unit is not permitted.

•Asinglefamilyresidencewhichrepresentsamixeduse(businessuseinadditiontoresidential use) is eligible subject to all of the following:• Primary residence only.• The property must be primarily residential in nature, located in a residential area and typical for

properties in the market area .• Appraiser must describe the mixed use characteristics.• The business use of the subject property must be identifiable in the appraisal subject property

photographs .• The mixed use of the property must represent a legal permissible use under current zoning regulations.• An opinion of value is based on the property’s residential nature.• Appraiser must analyze any effect on the value and marketability of the subject property.• If the property has a commercial use, the Borrower must be the owner and operator of the business.

2 Unit Property

• Provides two separate, self contained living units, attached to or detached from each other that are legally permissible and located on the same parcel

• Held in fee simple or leasehold estate• Not subject to a mandatory homeowners association• Not a manufactured home

Rental income may be considered on the non-owner occupied unit .

Planned Unit Development (PUD)

• A one unit detached or attached home• Held in fee simple or leasehold estate• Located in a project or subdivision which includes common

property owned and maintained by a homeowners’ association• Subject to mandatory membership in the homeowners association

and payment of assessments• Not a manufactured home

• An attached unit within a PUD in the state of Florida requires a non-delegated submission .• Warrantable:

• An attached unit within a PUD must meet Fannie Mae or Freddie Mac warranty requirements.• A detached unit within a PUD is not required to meet Fannie Mae or Freddie Mac warranty requirements.


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61 Property Eligibility | Property Type Definition

Fannie Mae/ Freddie Mac Project Warranty

The submitting lender is responsible to determine that the Planned Unit Development or Condominium project meets all applicable Fannie Mae/ Freddie Mac eligibility requirements and is therefore warrantable. This includes the integrity of all data submitted to obtain a Fannie Mae/ Freddie Mac project approval and applies to both delegated and non-delegated submissions.

Condominium

• A one unit detached or attached home• Held in fee simple or leasehold estate• Located in a project or subdivision which includes common

property owned and maintained by a homeowners’ association• Subject to mandatory membership in the homeowners association

and payment of assessments• Not a manufactured home

•AnattachedcondominiumunitinthestateofFloridarequiresanon-delegatedsubmission.•Investor-Ownedunitswithintheprojectarelimitedto30%.•Nosingleentitymayownmorethanthegreaterofoneunitor10%ofthetotalunits

within the project .•Non-residentialunitsinaproject,limitedtolobby-levelservicebusinesses,maynot

exceed 20% of the square footage of the overall project .•Nomorethan15%ofunitscanbegreaterthanone-monthdelinquentonHOAfees.•Constructionofallunits,commonareasandfacilitieslocatedwithinthelegalphasehave

been completed .•Lenderstargetingandmarketingloanserviceswithinaprojectarelimitedtothehigher

of one unit or 40% of the project .•Warrantable:

• An attached condominium unit must meet Fannie Mae or Freddie Mac warranty requirements.• A detached condominium must meet Fannie Mae or Freddie Mac Limited Review warranty requirements.

Cooperatives

• A one unit attached home• Held in fee simple estate• Designed for residential use• Consists of five or more units• Not a manufactured home• Form of ownership in which the buyer obtains shares in a

corporation which owns the building where the unit is located

•AcooperativeunitinthestateofFLrequiresanon-delegatedsubmission.•Co-op housing projects must be located in areas that have demonstrated market acceptance .•Awrittenstatementfromtheco-opcorporationverifyingtheco-opprojectqualifiesunder

the Internal Revenue Service Code and is in compliance with section 216 of the Code .

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Property Eligibility | Property Type Definition / Assessment of Property Value and Condition


• Multi-width, one unit detached home• Held in fee simple estate• Legally classified and taxed as real estate• Permanently affixed to the lot• Assumes the characteristics of site built housing

•Mustassumethecharacteristicsandfunctionalutilityofsite-builthousing.•ManufacturedincompliancewiththeapplicableFederalManufacturedHomeConstruction

and Safety Standards as amended and in force at the time the home is manufactured as evidenced by both a HUD Data Plate and HUD Certification Label .

Assessment of Property Value and Condition8 .4

Radian utilizes industry standard appraisal reports to determine the acceptability of the collateral with the following requirements:

• Theappraisalincludesaninterior/exteriorinspection.

• Theappraisalisreportedontheappropriateformforthepropertytypeandtransactionandaccommodatesidentificationofinterior/exteriorfeaturesandcondition.

• Theappraisalwasinitiated,completedandpreparedin:• ConformancetoFHFA’sHome Valuation Code of Conduct.• CompliancewiththeUniformStandardsofProfessionalAppraisalPractice(USPAP).

• Theappraisalmaynotbemorethan120daysoldatthetimethenoteissigned.

• Radianwillacceptarecertificationofvalueinthefollowinginstances:• Theloanisforthepurchaseofanewlyconstructed,neveroccupied,property.• TheloanisaRate/TermRefinanceofapropertypurchasedwithinthepastyear.

• Arecertificationofvaluemustmeetthefollowingrequirements:• Theappraiserperformsare-inspectionoftheexterioroftheproperty.• Theappraiserperformsareviewofcurrentmarketdatatodeterminewhetherthepropertyhasdeclinedinvaluesincethedateoftheoriginalappraisal.

• RadiandoesnotacceptAVMs,PVMMs,PropertyInspectionWaivers(PIWs),orPropertyInspectionAlternatives(PIAs)inlieuofappraisals.

• FieldreviewsobtainedbythelendertosatisfyFannieMae,FreddieMacorinvestorprogramunderwritingguidelinesaretobeincludedintheloanfile.

• UseofafieldreviewvaluetodetermineLTVrequiresthefollowing:• CompliancewithFannieMaeguidanceasdeliveredinannouncementSEL-2010-09andsubjecttoanysubsequentupdates.

• Receiptoftheoriginalappraisal.


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63 Property Eligibility | Assessment of Property Value and Condition

• Documentationand/orexplanationastowhytheoriginalappraisalreportwasnotacceptedbythelender

Postponed Improvements

Radiandoesnotrestrictthelenderfromestablishinganescrowaccountforpostponedimprovementswhen:

• Theappraisaliscompletedasiswithnorequiredrepairs.

• Theappraisedvalueisbasedoncurrentconditionofthepropertyandnotcontingentuponrequiredrepairsorimprovements.

• Thepostponedimprovementsdonotaffectthelivability,soundnessorstructuralintegrityoftheproperty.

EscrowsforPostponedImprovementswhicharearesultofappraisalconditionsareacceptableaslongas:

• Therepairsorimprovementsdonotaffectthelivability,soundnessorstructuralintegrityoftheproperty.

• Thepropertyishabitableandcertifiedforoccupancyatthetimeofmortgageinsurancecertification.

• Thecostofthepostponedimprovementsdonotexceedtenpercent(10%)ofthecompletedasisvalue.

10/10

Radian Guaranty Inc .

1601 Market StreetPhiladelphia, Pennsylvania19103-2337

800 .523 .1988215 .231 .1000