Genworth U/W Guides by Mark McCarthy

UNDERWRITING GUIDELINES Genworth Mortgage Insurance underwriters include: Genworth Mortgage Insurance Corporation Genworth Residential Mortgage Insurance Corporation of North Carolina Genworth Residential Mortgage Assurance Corporation November 15, 2010

Genworth Underwriting Guidelines Updates effective November 15, 2010 Topic

97% LTV

Sections

2, 4.1, 4.3, 4.6, 4.9, 7.2, 7.3

Current Guideline Limited to:  Affordable Housing borrowers  First time homebuyers  Purchase only  Underwritten by Genworth

Ineligible

DTIs 41.01 – 45%

Minimum Credit Score

2, 4.2, 4.4.2, 5.3, 5.7, 5.13.9, 6.4

2, 4.1, 4.2, 6.4, 6.5, 6.7, 6.8, 7.2

1 unit Loan Amounts > $417,000

2, 4.1, 4.2

Minimum Borrower Contribution

1.6.1,4,4, 2, 5.12.1, 5.12.3, 6.4

Michigan

Genworth Insured Refinance HARPEligible (Same Servicer)

2, 4.1, 4.2,4.3, 4.9, 5.6, 5.7, 6.4, 7.2, 9 3, 5.12.9, 5.13.10, 6.17, 7.1, 8.6.5

Minimum 680 credit score for retail originations for  Primary < =95% LTV (including condos, coops)  Primary 2 units  Primary manufactured housing Minimum 740 credit score for retail originations for:  1 unit > $417,000  Limited to FHFA designated markets only  Guidelines for loan amounts > $417,000 were applied to AK and HI

New Guideline 95.01 – 97% is eligible for retail originations:  Primary residence  Purchase & rate/term refinance  Minimum 720 credit score  Not limited to first time homebuyers, AMI or underserved areas  Ineligible: AZ, CA, FL and NV Requirements:  Primary residence  Max 95% LTV  Minimum 740 credit score  Loan amounts < = $417,000  Retail originations  Ineligible: FL, cash-out refinance, C to P, non-traditional credit, nonoccupant co-borrower, pledged assets Minimum 660 credit score for retail originations for all states except FL:  Primary < =95% LTV (including condos, coops)  Primary 2 units  Primary manufactured housing

Minimum 5% contribution from borrower’s own funds  Borrower’s minimum own funds not required for Fannie Mae Flex and Freddie Mac Alt program Michigan fell into the same guideline set as AZ, CA, FL and NV

Minimum 720 credit score for retail originations for:  1 unit > $417,000  Loan amount to $625,500 allowed in all markets, except FL  Loan amounts > $625,500 continue to be limited to FHFA designated markets only  Loan amounts up to $625,500 in AK and HI are not subject to the guidelines for loan amounts > $417,000  Minimum 3% borrower own funds requirement for one unit primary purchase transactions  Minimum 5% for FL, primary 2 units and C to P, >$417,000 Michigan has been removed from the AZ, CA, FL and NV guideline set

 

Commitment term and documentation age increased to 180 days



Commitment term 120 days Documentation age 120 days

Genworth Mortgage Insurance Underwriting Guidelines

Genworth Underwriting Guidelines Updates effective November 15, 2010 Topic

Sections

PUDs

6.2, 6.6

Condominiums

6.2, 6.5

Current Guideline Properties in PUDS were subject to Genworthâ&#x20AC;&#x2122;s Project Eligibility guidelines Guidelines for site (detached) condominiums imbedded in condominium project guidelines

Genworth Mortgage Insurance Underwriting Guidelines

New Guideline Added new sections to address Attached PUD Units and Detached PUD Units No guideline changes for condominiums. Reorganized condominium guidelines by creating new sections for Site (Detached) Condominiums and Attached Condominiums

Table of Contents 1

INTRODUCTION (02/16/10) ............................................................................................................... 4 1.1 Geographic Guidelines (11/01/05) .................................................................................................. 4 1.2 Portfolio Dispersion (11/17/08) ........................................................................................................ 4 1.3 Affordable Housing (05/05/08)......................................................................................................... 4 1.4 Homeowners Protection Act (11/01/05) .......................................................................................... 5 1.5 Fair Lending (11/01/05) ................................................................................................................... 5 1.6 Approved Automated Underwriting Systems................................................................................... 5 1.6.1 1.6.2

Fannie Mae’s Desktop Underwriter® and Freddie Mac’s Loan Prospector® (11/15/10) ........................ 5 Other Approved Automated Underwriting Systems (04/27/09) ............................................................ 6

1.7 Retail and Non-Retail Originations (04/12/10)................................................................................. 7 2

INELIGIBLE LOAN FEATURES (11/15/10) ....................................................................................... 8 2.1 Ineligible for All Genworth Loans ..................................................................................................... 8 2.2 Ineligible for Retail Originations ....................................................................................................... 8 2.3 Ineligible for Non-Retail Originations ............................................................................................. 10

DOCUMENTATION REQUIREMENTS (11/15/10) ........................................................................... 11

STANDARD GUIDELINES FOR LOAN ELIGIBILITY ..................................................................... 13 4.1 LTV/Loan Limits (11/15/10) ........................................................................................................... 13 4.1.1 4.1.2

Retail Originations ............................................................................................................................. 13 Non-Retail Originations ...................................................................................................................... 13

4.2 1 Unit with Loan Amounts > GSE Conforming Limit (11/15/10) .................................................... 14 4.3 LTV/CLTV/GLTV/TLTV (11/15/10) ................................................................................................ 15 4.3.1 4.3.2

LTV/CLTV/GLTV/TLTV for Retail Originations................................................................................... 15 LTV/CLTV/GLTV/TLTV for Non-Retail Originations ........................................................................... 15

4.4 Refinance Transactions ................................................................................................................. 16 4.4.1 Rate/Term Refinance Definition (08/10/09)........................................................................................ 16 4.4.2 Cash-out Refinances (11/15/10) ........................................................................................................ 16 4.4.3 Fannie Mae DU Refi Plus™ and Refi Plus™ and Freddie Mac Relief Refinancesm Programs (03/23/09)........................................................................................................................................................... 17 4.4.4 Subordinate Liens, Home Equity Lines of Credit & Junior Liens (09/21/09)....................................... 17 4.4.5 Continuity of Obligation for Refinance Transactions (11/17/08) ......................................................... 17

4.5 Adjustable Rate Mortgages (02/04/08) .......................................................................................... 17 4.5.1 4.5.2 4.5.3 4.5.4 4.5.5 4.5.6 4.5.7 4.5.8 4.5.9 4.5.10

4.6 4.7 4.8 4.9

ARM Index ......................................................................................................................................... 17 Five Year Fixed Period ARM ............................................................................................................. 17 Lifetime Caps on ARM Loans (02/16/10) ........................................................................................... 17 Minimum Initial Fixed Period .............................................................................................................. 17 Per Adjustment Caps on ARM Loans ................................................................................................ 17 Qualifying Rate on ARMs (04/27/09) ................................................................................................. 17 Interest Rate Shortfall (09/21/09) ....................................................................................................... 17 Potential Negative Amortization ......................................................................................................... 17 Scheduled Negative Amortization ...................................................................................................... 17 Graduated Payment Mortgage (09/21/09) ......................................................................................... 17

Temporary Buydowns (11/15/10) .................................................................................................. 18 Balloons/Call Options (11/05/05) ................................................................................................... 18 Relocation Loans (01/07/08) ......................................................................................................... 18 Financed Mortgage Insurance (11/15/10) ..................................................................................... 19

4.9.1 4.9.2

GLTV for Retail Originations .............................................................................................................. 19 GLTV for Non-Retail Originations ...................................................................................................... 19

4.10 Retail and Non-Retail Originations (04/12/10)............................................................................... 19 5

STANDARD GUIDELINES FOR BORROWER ELIGIBILITY .......................................................... 20 5.1 Eligible Borrowers (11/01/05) ........................................................................................................ 20 5.1.1 5.1.2 5.1.3

Non-Permanent Resident Alien ......................................................................................................... 20 Permanent Resident Aliens ............................................................................................................... 20 Foreign Nationals ............................................................................................................................... 20

5.2 Occupancy Status (04/27/09) ........................................................................................................ 20 5.2.1 5.2.2 5.2.3

Primary Residence ............................................................................................................................ 20 Second Homes (09/21/09) ................................................................................................................. 20 Investment Properties ........................................................................................................................ 20

5.3 Qualifying Ratios (11/15/10) .......................................................................................................... 20 5.3.1 5.3.2

Debt-to-Income Ratio (DTI)................................................................................................................ 20 DTI 41.01 -45%.................................................................................................................................. 21

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Table of Contents 5.3.3 5.3.4

Non-occupying Co-borrower .............................................................................................................. 21 Housing Expense to Income Ratio (HDI) ........................................................................................... 21

5.4 Credit Underwriting (08/11/08) ...................................................................................................... 21 5.5 Credit History: Using Credit Scores (04/12/10) ............................................................................ 22 5.6 Credit History: Using Traditional Credit (11/15/10)....................................................................... 23 5.7 Credit History: Using Nontraditional Credit (11/15/10) ................................................................. 25 5.8 Collections, Judgments, Garnishments or Liens (06/28/10) ......................................................... 25 5.9 Consumer Credit Counseling (01/02/07) ....................................................................................... 25 5.10 Pending Lawsuits (11/01/05) ......................................................................................................... 26 5.11 Previously Paid Claim (01/02/07) .................................................................................................. 26 5.12 Assets and Liabilities (09/01/09) ................................................................................................... 26 5.12.1 5.12.2 5.12.3 5.12.4 5.12.5 5.12.6 5.12.7 5.12.8 5.12.9

Source of Funds per Agency Standard Guidelines (11/15/10) ........................................................... 26 Repayment of Debts per Agency Standard Guidelines (02/16/10) .................................................... 26 Borrower’s Required Funds and Reserves (11/15/10) ....................................................................... 27 Builder/Seller Contributions (09/21/09) .............................................................................................. 27 Primary Residence Conversion (02/16/10) ........................................................................................ 28 IRS Refunds ...................................................................................................................................... 28 Ineligible Assets ................................................................................................................................. 28 Pooled Savings as Debt .................................................................................................................... 28 Credit and Asset Documentation (11/15/10) ...................................................................................... 29

5.13 Employment and Income (11/01/05) ............................................................................................. 29 5.13.1 5.13.2 5.13.3 5.13.4 5.13.5 5.13.6 5.13.7 5.13.8 5.13.9 5.13.10

Self-employed Income ....................................................................................................................... 29 Salaried or Other Income (04/12/10) ................................................................................................. 29 New Employment Income (09/01/09) ................................................................................................. 29 Employment Gap ............................................................................................................................... 30 Foreign Income .................................................................................................................................. 30 Deferred Income ................................................................................................................................ 30 Education Benefits ............................................................................................................................. 30 Trailing Co-Borrower Income (09/01/09) ............................................................................................ 30 Non-Occupant Co-Borrowers (11/15/10) ........................................................................................... 30 Income and Employment Documentation (11/15/10) .................................................................... 30

STANDARD GUIDELINES FOR PROPERTY AND APPRAISALS ................................................ 31 6.1 Ownership (11/01/05) .................................................................................................................... 31 6.2 Eligible Property Types (11/15/10) ................................................................................................ 31 6.3 Ineligible Properties (04/12/10)...................................................................................................... 31 6.4 Geographic Guidelines (11/15/10) ................................................................................................ 31 6.5 Condominiums (11/15/10) ............................................................................................................. 32 6.5.1 6.5.2

Site (Detached) Condominiums ......................................................................................................... 32 Attached Condominiums .................................................................................................................... 32

6.6 PUDs (11/15/10) ............................................................................................................................ 34 6.6.1 6.6.2

Detached PUD Unit ........................................................................................................................... 34 Attached PUD Unit ............................................................................................................................. 34

6.7 Cooperative Units Eligibility (11/15/10) ......................................................................................... 34 6.8 Manufactured Housing (11/15/10) ................................................................................................. 35 6.9 Two Individual Residential Dwellings on One Lot (11/01/05) ........................................................ 36 6.10 Acreage and Land Value (02/16/10) ............................................................................................. 36 6.11 Rural and Unique Homes (02/16/10) ............................................................................................. 36 6.12 Declining Property Values (04/12/10) ............................................................................................ 36 6.13 Non-Arm’s Length Transactions (01/02/07) .................................................................................. 36 6.14 Maximum Genworth Insured Properties (09/21/09) ...................................................................... 37 6.15 Renovation Mortgages (04/27/09) ................................................................................................. 37 6.16 Property Flipping (02/16/10) .......................................................................................................... 37 6.17 Appraisal Documentation and Age (11/15/10) .............................................................................. 37 7

PRODUCTS GUIDELINES ............................................................................................................... 39 7.1 Genworth-Insured Refinance Program (11/15/10) ........................................................................ 39 7.1.1 HARP-Eligible Refinance (Same Servicer) ........................................................................................ 39 7.1.2 Genworth-Insured Refinance (Same Servicer) .................................................................................. 40 7.1.3 Genworth-Insured Refinance (New Servicer), Including HARP-Eligible (New Servicer) Loans through DU Refi Plus and Relief Refinance – Open Access (New Servicer) .................................................................. 42

7.2 Genworth Affordable Housing Guidelines (11/15/10) .................................................................... 44 7.3 EasySubmit® (11/15/10) ............................................................................................................... 46

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Table of Contents 7.4 Counseling Saver (02/16/10) ......................................................................................................... 47 7.5 Pledged Assets (04/12/10) ............................................................................................................ 48 7.6 Construction to Permanent Loan (06/28/10) ................................................................................. 50 8

COMMITMENT/CERTIFICATE ......................................................................................................... 53 8.1 Changes Prior to Certification: Not Requiring Prior Approval (11/01/05) ..................................... 53 8.2 Changes Prior to Certification: Requiring Prior Approval (01/07/08)............................................ 53 8.3 Modifications (03/23/09) ................................................................................................................ 53 8.4 Closed Loans (11/17/08) ............................................................................................................... 53 8.5 Pre-Qualifications (05/05/08) ......................................................................................................... 53 8.6 Changes after Certification (01/07/08) .......................................................................................... 54 8.6.1 8.6.2 8.6.3 8.6.4 8.6.5 8.6.6

Loan Sales ......................................................................................................................................... 54 Waivers .............................................................................................................................................. 54 Reinstatement of a Canceled Certificate ........................................................................................... 54 Assumptions ...................................................................................................................................... 54 Terms/Extensions/Reinstatement of Expired Commitments (11/15/10) ............................................. 54 Partial Releases (10/06/08) ............................................................................................................... 54

APPENDIX A: DECLINING/DISTRESSED MARKETS (11/15/10) ................................................. 56

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1 Introduction (02/16/10) In our continuing commitment to quality and in an effort to simplify the underwriting process for our customers, borrowers and investors in the secondary market, we at Genworth Mortgage Insurance have streamlined our underwriting guidelines. Genworth promotes clarity and understanding in our guidelines. We will insure loans that are manually underwritten or are underwritten by an approved automated underwriting system. Manually Underwritten Loans We generally align with Fannie Mae and Freddie Mac guidelines (Agency standard) to ensure simplicity in the underwriting process. Agency standards are defined as either Fannie Mae’s or Freddie Mac’s most currently published Selling or Seller’s Guide guidelines. Underwrite your loans to Agency standards with the exceptions and additional requirements/clarifications in this manual and your loan will be eligible for our insurance. Underwritten by an Approved Automated Underwriting System Genworth will also insure loans that are underwritten by an approved automated underwriting system (AUS). Section 1.6 Approved Automated Underwriting Systems describes our acceptance of these system’s guidelines and documentation. Guideline variances granted by Fannie and Freddie are outside of published Selling/Seller’s Guide guidelines. Delegated MI (EXCEL®) lenders must submit the variance to Genworth for written approval to obtain a program approval or submit each loan to Genworth for underwriting. Non-delegated lenders must submit each loan for underwriting. When Genworth’s underwriting manual is “silent” and does not address a guideline, the lender must follow Agency standard guidelines. If you typically adhere to Fannie guidelines for underwriting, follow Fannie’s Selling Guide guidelines when we are silent. Likewise, follow Freddie’s Sellers Guide guidelines if you typically adhere to Freddie guidelines. For all other situations, follow the more conservative of the agencies guidelines. We recognize that not every loan falls within these guidelines and may deserve special consideration. Loans outside of our guidelines may benefit from the flexibility in underwriting provided by our underwriters and must be submitted to Genworth for a full package underwrite.

1.1

Geographic Guidelines (11/01/05)

Genworth continues to monitor market conditions for economic factors that may be unfavorable for the housing market and may pose considerable risk to long-term collateral values. Our Geographic Guidelines, set forth in Section 6.4, are applied to all loans. These guidelines are subject to change as warranted by local economic conditions.

1.2

Portfolio Dispersion (11/17/08)

Our Risk Management team monitors the dispersion of our customers’ portfolios. Genworth periodically reviews a customer’s performance, geographic distribution, mix of loan characteristics, loan origination sources, and concentration of high risk products and compares the results to Genworth’s portfolio actual and targeted mix and performance. On occasion, Genworth may also review a customer’s operational policies and processes. As necessary, observations and suggestions will be shared with our customers.

1.3

Affordable Housing (05/05/08)

Genworth has a special commitment to serve low-to-moderate income buyers through our Community Home Buyer, Affordable Housing, and Emerging Markets efforts. We work closely with our customers by providing mortgage insurance on affordable housing programs and products that help them to meet the needs of diverse markets. These programs may result from partnerships with local and state housing finance agencies and nonprofit community organizations throughout the country. We also work very closely with local governments and community groups to better understand the markets through working with local appraisers, and partnering in neighborhood developments and re-developments.

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While Genworth has made a strong commitment to affordable housing, we have not reduced our commitment to sound risk management practices. We wish to partner with our customers who share Genworth’s dedication to high quality affordable housing lending. Our affordable housing guidelines are found in Section 7.2.

1.4

Homeowners Protection Act (11/01/05)

The Homeowners Protection Act (HPA), which applies to loans closed on or after July 29, 1999, addresses private mortgage insurance disclosure and cancellation. It provides for cancellation of mortgage insurance when certain conditions are met and requires disclosure at origination and during loan servicing. Genworth has taken all steps to be fully compliant with the law.

1.5

Fair Lending (11/01/05)

It is Genworth’s policy to provide all creditworthy applicants equal access to the capital, products, services and expertise of the corporation and its employees without regard to race, color, sex, religion, national origin, handicap, familial status, age, marital status, sexual orientation, geographic location or any other prohibited basis as defined by federal and state law. We require appraisers to report neighborhood and property conditions in factual and specific terms; to be impartial and specific in describing favorable or unfavorable factors; and to avoid the use of subjective, racial or stereotypical terms, phrases, or comments in the appraisal report. We do not designate certain areas as “acceptable” or “unacceptable”. Genworth does not “red line”.

1.6

Approved Automated Underwriting Systems

1.6.1 Fannie Mae’s Desktop Underwriter® and Freddie Mac’s Loan Prospector® (11/15/10) Genworth will insure most loans that are processed through Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Prospector (LP) automated underwriting systems (Agency AUS). Our approval is conditioned on:    

The recommendation or risk classification is based on accurate and verified data; The loan is underwritten according to the guidelines detailed in the Agency AUS findings or feedback report; The loan is documented according to the standards specified in the Agency AUS findings or feedback report; and All terms have been met and the loan is eligible for investor delivery.

While the Agency AUS standards may be different from standard underwriting guidelines, they supersede Genworth’s guidelines provided the loan meets the terms above and these Genworth guidelines: Genworth Guideline Overlays for DU and LP Section Topic 2 Ineligible Loan Features 3 Documentation Requirements Note: Appraisal form, including 1004MC/Form 71, with a minimum interior/exterior review by a licensed or certified appraiser 4.1 LTV/Loan Limits 4.2 1 Unit with Loan Amounts > GSE Conforming Limit 4.3 LTV/CLTV/GLTV/TLTV 5.3 Qualifying Ratios 5.5 Credit History: Using Credit Scores 5.12.3 Borrower’s Required Funds and Reserves 5.12.5 Primary Residence Conversion 6.4 Geographic Guidelines 6.5 Condominium Project Approval Process by Fannie and Freddie 6.8 Manufactured Housing 6.11 Rural and Unique Homes 6.12 Declining Property Values

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Genworth Guideline Overlays for DU and LP 6.14 Maximum Genworth Insured Properties 6.16 Property Flipping 7.1 Genworth-Insured Refinance Program 7.6 Construction to Permanent Loan  Product or program restrictions, applicable to Agency AUS loans  Restrictions applicable to Retail and Non-Retail Originations Guideline variances granted by Fannie and Freddie are outside of published Selling/Seller’s Guide guidelines. Delegated MI (EXCEL®) lenders must submit the variance to Genworth for written approval to obtain a program approval or submit each loan to Genworth for underwriting. Non-delegated lenders must submit each loan for underwriting. Here are the insurable recommendations and risk classifications that Genworth will accept: Recommendation or Agency AUS Risk Classification Desktop Underwriter Approve/Eligible Loan Prospector Accept, Eligible for Purchase Agency AUS loans are not automatically approved. Prudent underwriting and reasonableness tests should be applied to all loans processed through an AUS. Agency AUS loans submitted for underwriting are carefully evaluated and all loan factors are weighed and analyzed prior to decisioning. Evidence of the final AUS evaluation is a required document for the loan file. Loans that are deemed “Ineligible” for purchase by an Agency AUS will be considered for mortgage insurance if the loan meets Genworth’s standard underwriting guidelines. The processing efficiencies and guideline stretches provided by DU and LP do not apply. Approve/Eligible or Accept/Eligible loans with income or asset documentation relief (stated income or stated asset) provided by standard DU or LP are not considered Alt A as a product or for pricing, provided the loan is documented according to the requirements of standard DU Findings or LP Feedback Report, and the loan application was taken and intended to be a fully documented loan. An Agency AUS loan is considered Alt A if it is documented with less than the income or asset requirements of the reports or the application was taken and intended for Alt A documentation. Alt A loans are ineligible for insurance. The credit report used by the Agency AUS to determine its recommendation or risk classification is the credit information that the lender must use when determining the representative score for pricing or eligibility. Loans that do not meet the Agency AUS underwriting requirements must be manually underwritten to our standard underwriting guidelines. Many Agency AUS loans have features that make the loan eligible for a Genworth product or program with special underwriting guidelines. When this is the case, the product guidelines address any product specific requirements that apply to Agency AUS loans. Unless a difference is noted in the product guidelines, follow the guidelines outlined in this section for all products. 1.6.2 Other Approved Automated Underwriting Systems (04/27/09) Genworth will insure Approve and Accept loans decisioned by a Genworth-approved non-Agency automated underwriting system. All standard Genworth guidelines and pricing policies apply, unless indicated otherwise in writing by Genworth’s Risk Management. Guideline stretches provided by the AUS are not permitted. Please contact your Genworth Sales Representative for information on approved nonAgency AUS. ®

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

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1.7

Retail and Non-Retail Originations (04/12/10)

For a loan to qualify as a Retail Origination, the entity that orders the mortgage insurance coverage (the Insured) must have performed all of the following loan tasks:  Taking the loan application  Processing the loan application  Underwriting the loan application for MI eligibility by the Insured, an MSP, or Genworth (Investor underwriting for compliance to its guidelines is not considered an MI eligibility underwrite)  Funding and closing of the loan. A Mortgage Service Provider (MSP) may be used so long as: (1) the MSP does not take the loan application, (2) the MSP is paid on a fee basis for services performed, and (3) the payment of fees is not contingent on mortgage approval or loan closing. Loans must be funded from a warehouse line in the lender’s name or from the lender’s own funds. Tablefunded loans are considered Non-Retail. Differences in guidelines for Retail and Non-Retail Originations are incorporated throughout these underwriting guidelines.

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2 Ineligible Loan Features (11/15/10) 2.1

Ineligible for All Genworth Loans

Loans with any of the following features are ineligible for Genworth insurance. Additional restrictions are found in Section 6.4 Geographic Guidelines

     

2.2

All Genworth LTVs > 97%  1 Unit with Loan Amounts > GSE Conforming Limits not meeting Section 4.2 guidelines Investment Property  Loan Types: Interest only, GPMs, negative DTI > 45% amortization of any type, POA Alt A documentation (stated and no income/no  A Minus assets), no doc, reduced doc, lite doc, limited  Property Types: 3-4 unit properties, condotels, doc and Section 6.3 Ineligible Property Types AVMs, PIWs, PIAs, desk reviews, exterior only appraisals CLTV/GLTV/TLTV > LTV or not meeting Section 4.3 guidelines

Ineligible for Retail Originations

In addition to the loan features applicable for all Genworth loans, the following are ineligible for retail originations. Topic Ineligible Feature LTV > 95%  Loan amounts > $417,000  DTI > 41%  ARMs with initial adjustments < 5 years, balloons, temporary buydowns (unless affordable housing)  AZ, CA, FL, NV Credit Scores  < 660  FL < 680 Cash-out Refinance  LTV > 85%  Credit score < 700  > $417,000  DTI > 41%  Attached housing, manufactured housing, 2-4 units  ARMs with initial adjustments < 5 years  Second Homes  Construction to Permanent Second Homes  LTV > 90%  Credit score < 720  > $417,000  DTI > 41%  Attached housing, manufactured housing, 2-4 units  Cash-out Refinance  Construction to Permanent Reserves  Primary Purchase: < 2 months, including DU and LP  Primary DU or LP Primary Refinances: reserves < months required by Agency AUS  Second Homes: < 2 months  Primary 2 unit and rental income used to qualify: < 6 months  Primary 2 unit and no rental income used: Purchase : < 2 months, including LP and DU. Refinance: reserves < months required by Agency AUS  < 6 months for 1 unit with loan amounts > $417,000  Primary residence conversion: < number of months required in

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Topic

Nontraditional Credit

Traditional Credit DTI 41.01 – 45%

ARMs with initial adjustments < 5 years

Manufactured Housing

Condominiums and Attached Housing

Cooperative Units

Construction to Permanent

Ineligible Feature Section 5.12.5  Construction to Permanent: < 2 months, including DU and LP  All, unless underwritten by Genworth  LTV > 95%  Loan amount > $417,000  DTI > 41%  Construction to Permanent All, unless underwritten by Genworth  LTV > 95%  Credit score < 740  Loan amount > $417,000  Cash-out refinance  Second Homes  Non-occupant co-borrowers  Nontraditional credit  Construction to Permanent  FL  Pledged assets  Cash-out refinance  1 unit loan amounts > $417,000  LTV > 95%  Affordable housing  Manufactured housing: ineligible if < 7 years  Construction to Permanent  LTV > 85%  > $417,000  Cash-out refinance  ARMs with initial adjustments < 7 years  Construction to Permanent  Second Homes  LTV/CLTV> 95%  Cash-out Refinance  Second Homes  Florida, unless underwritten by Genworth  Construction to Permanent  LTV/CLTV > 95%  Cash-out Refinance  Second Homes  Not located in an Acceptable Location per Section 6.7  Construction to Permanent  LTV > 95%  Credit score < 680  > $417,000  DTI > 41%  Second Homes  Cash-out refinance  ARMs with initial adjustments < 5 years  Attached housing, condominiums, cooperatives, manufactured housing

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2.3

Ineligible for Non-Retail Originations

In addition to the loan features applicable for all Genworth loans, the following are ineligible for non-retail originations. All States Topic except AZ, CA, FL, NV AZ, CA, FL, NV LTV > 95% LTV > 90% LTV < 720 Credit Scores Ineligible Cash-out Refinance  LTV > 85%  > $417,000  Attached housing  ARMs with initial adjustments < 5 years  Second Homes Ineligible Second Homes  LTV > 90%  > $417,000  Attached housing  Cash-out Refinance Reserves  Primary Purchase: < 2 months, including DU and LP  DU or LP Primary Refinances: reserves < months required by Agency AUS  Second Homes: < 2 months  < 6 months for 1 unit with loan amounts > $417,000  Primary residence conversion: < number of months required in Section 5.12.5 All, unless underwritten by Genworth Nontraditional Credit All, unless underwritten by Genworth Traditional Credit All DTI > 41% ARMs with initial adjustments <  Cash-out refinance 5 years  1 unit with loan amounts > $417,000  Affordable housing Ineligible Primary 2 Units Ineligible Manufactured Housing Condominium and  LTV/CLTV> 90% Attached Housing  Cash-out Refinance  Second Homes  Florida, unless underwritten by Genworth Cooperative Units  LTV/CLTV > 90%  Cash-out Refinance  Second Homes  Not located in an Acceptable Location per Section 6.7 NA All properties in Florida must be Florida underwritten by Genworth Ineligible Construction to Permanent

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3 Documentation Requirements (11/15/10) Documentation requirements for Agency AUS and manually underwritten loans are described in the following chart. We generally accept the documentation set from DU and LP with a few overlays. Our policy for manually underwritten loans is to:  Follow Fannie’s guidelines when Fannie is the investor or the Fannie Selling Guide is your standard guideline set  Follow Freddie’ s guidelines when Freddie is the investor or the Freddie Sellers Guide is your standard guideline set  Follow the more conservative of the agencies guidelines for all other situations The chart below abbreviates this policy as “Fannie if Fannie, Freddie if Freddie, otherwise more conservative.” In some places, we select either Fannie or Freddie as the “all other” default.

Documentation Credit Report

Desktop Underwriter & Loan Prospector Follow the Agency AUS requirements

Housing & Rental

Follow the Agency AUS requirement

Income & Employment



IRS Form 4506-T, 8821, or 4506 Verbal VOE

Assets

Follow the Agency AUS requirements  Loan amounts > $417,000: written verification of income is required. Use of a verbal VOE as sole means of documenting employment and income is not permitted Follow the Agency AUS requirements 

Follow the Agency AUS requirements  Use of a verbal VOE, when determined by an Agency AUS, as the sole method of documenting employment and income is not permitted Follow the Agency AUS requirements

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

 Follow Freddie if Freddie  Follow Fannie Mae for all others Verbal VOE is required as follows:  Salaried borrowers: dated within 10 days of note date  Self-employed borrowers: dated within 30 days of note date

Fannie if Fannie, Freddie if Freddie, otherwise more conservative

Documentation Appraisal

    

Appraisal for Construction to Permanent Loans

     

Age of Credit Report, Income, Employment, and Asset Documentation

 

Desktop Underwriter & Loan Prospector Manually Underwritten Loans All property evaluations must have a minimum interior/exterior review completed by a licensed or certified appraiser The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500 Use of automated valuation models (AVMs), PIWs, PIAs, desk reviews, or exterior only appraisals to obtain property values are ineligible Appraisals may be 180 days, for newly constructed homes, however, a recertification of value must be provided if the appraisal is more than 120 days. If the value has declined, a new, full appraisal is required HARP-Eligible Refinance (Same Servicer): appraisal may be 180 days URAR, “subject to completion” completed by a licensed or certified appraiser at time of Genworth underwrite The appraisal form and applicable addenda must meet Agency requirements Appraisal Update and/or Completion Report (Form 1004D/442) completed by appraiser at completion of construction A new appraisal may be required at completion of construction if (1) the appraiser indicates on the 1004D/442 that the value has declined, or (2) the original appraisal is > 180 days Refer to Section 7.6 for detailed construction to permanent appraisal and recertification of value requirements  Follow Freddie if Freddie Follow the Agency AUS requirements  Follow Fannie Mae for all others HARP-Eligible Refinance (Same  HARP-Eligible Refinance (Same Servicer): document age is 180 Servicer): document age is 180 days days

Electronically generated verifications are acceptable provided the lender represents and warrants the integrity and accuracy of the information. In addition we require:  Verification of significant debts, such as mortgage or installment loans, which are not verified on the credit report or the in-file reports  Applicable Genworth Application to request the mortgage insurance coverage Ineligible Documentation Types  Stated Income (SIVA, SISA)  Stated Assets (VISA)  No Income (NINA, NIVA)  “No Doc”  All other income, employment, or asset documentation that does not meet published Agency standard guidelines (e.g. limited doc, lite doc, reduced doc, etc.)

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4 Standard Guidelines for Loan Eligibility 4.1

LTV/Loan Limits (11/15/10)

LTV/Loan Limits for Retail Originations and Non-Retail Originations are found below. Refer to Section 1.7 Retail and Non-Retail Originations for definitions. NOTE: Some products may have different LTV/loan amount limits. Please refer to the product descriptions for possible exceptions. 4.1.1

Retail Originations

Occupancy

Primary Residence

Purpose Purchase & Rate/Term Refinance Purchase & Rate/Term Refinance

Cash-out Refinance Second Homes

Purchase & Rate/Term Refinance

Loan Amount

LTV1

Units

97%2

$417,000

720

< = 95%

$417,0003

6606

< = 90%

$625,5004

7206

< = 90%

FHFA Limit5

7206

< = 90%

$533,850

6606

Credit Score

< = 85% 1 $417,000 700 Maximum cash-out amount: $200,000 < = 90%

$417,000

720

See Section 4.3 LTV/CLTV/GLTV/TLTV for complete details 97% LTV ineligible for AZ, CA, FL and NV 3 AK and HI: $625,500 4 FL: Loan amounts > $417,000 are allowed in FHFA designated markets only 5 Loan amounts > $625,500 are allowed for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming as described in Section 4.2 6 FL: Add 20 points to credit score for minimum credit score requirement 2

4.1.1.1 LTV 95.01 – 97%  Primary, purchase and rate/term refinances  Minimum 720 credit score  Retail originations only  Maximum DTI 41%  Ineligible in AZ, CA, FL and NV  Eligible loan types: fixed rate/fixed payment, ARMs with initial adjustments > = 5 years. Ineligible loan types: ARMs with initial adjustments < 5 years, temporary buydowns, balloons For affordable housing guidelines for 95.01 – 97% LTVs, refer to Section 7.2. 4.1.2

Non-Retail Originations All States except AZ, CA, FL and NV

Occupancy Primary Residence

Purpose Purchase & Rate/Term Refinance Cash-out Refinance

LTV1 < = 95%

Units 1

Loan Amount $417,000

Credit Score 720

< = 90%

FHFA Limit2

720

< = 85%

$417,000

720

Maximum cash-out amount: $200,000

See Section 4.3 LTV/CLTV/GLTV/TLTV for complete details Loan amounts > $417,000 are allowed for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming as described in Section 4.2 2

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AZ, CA, FL and NV Occupancy

Purpose

Primary Residence

Purchase & Rate/Term Refinance

LTV1 < = 90%

Units 1

Loan Amount $417,000

Credit Score 720

< = 90%

FHFA Limit2

740

4.2

1 Unit with Loan Amounts > GSE Conforming Limit (11/15/10) 1 Unit with Loan Amounts > GSE Conforming Limit Retail Originations

1 2

Occupancy

Purpose

LTV/CLTV

Units

Primary

Purchase & Rate/Term Refinance

90%

Loan Amount $625,5001 FHFA Limit

Credit Score 720 7202

FL: Loan amounts > $417,000 are allowed in FHFA designated markets only FL: Add 20 points to credit score for minimum credit score requirement

Non-Retail Originations Occupancy Primary

Purpose Purchase & Rate/Term Refinance

Loan Amounts $417,000 - $625,500

Loan Amounts > $625,500

Loan Type Borrower Contribution DTI Reserves Builder/Seller Contributions Credit GSE AUS Result Documentation

LTV/CLTV

Units

Loan Amount

Credit Score

90%

FHFA limit

740



Retail: Available in all markets except FL. In FL, loan amounts > $417,000 are allowed in FHFA designated markets only  Non-Retail: Allowed in FHFA designated markets only Genworth will insure loan amounts in excess of conforming loan limits, up to a maximum $793,750, for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming in eligible markets as determined by the FHFA in accordance with the High Cost Area Provisions of the Housing and Economic Recovery Act of 2008 and/or the American Recovery and Reinvestment Act of 2009  Fixed rate/fixed payment  Fully amortizing 5/1, 7/1, or 10/1 ARMs Minimum 5% from borrower’s own funds Maximum 41% Minimum 6 months verified 3%  Traditional credit must be underwritten by Genworth  Ineligible: Nontraditional credit DU Approve/Eligible or LP Accept Eligible only if submitted to DU or LP  DU and LP: As determined by the AUS, except written verification of income is required. Verbal VOE as sole method for documenting employment and income is not permitted  All other loans: Full documentation

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1 Unit with Loan Amounts > GSE Conforming Limit Appraisal Documentation  All property evaluations must have a minimum interior/exterior review completed by a licensed or certified appraiser  The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements  A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500 Underwriting by Genworth is required for: Genworth Underwriting Requirement  Retail Originations: Attached housing in Florida  Non-Retail Originations: Loan amounts > $417,000, all properties in Florida Ineligible Construction to Permanent

4.3

LTV/CLTV/GLTV/TLTV (11/15/10)

Genworth calculates several ratios to express the relationship between the loan amount, subordinate financing amounts and financed MI with the property value (lesser of purchase price or appraised value). The numerator for each includes:  LTV: Loan amount  Combined LTV (CLTV): Loan amount + subordinate financing amounts (second liens or HELOCS)  Gross LTV (GLTV): Loan amount + financed MI premium  Total LTV (TLTV): Loan amount + subordinate financing amounts + financed MI premium Loan amount: Loan amount, including financed amounts for closing costs, prepaids/escrows, etc. but not MI 4.3.1

LTV/CLTV/GLTV/TLTV for Retail Originations Purpose

Primary 1 Unit Primary 2 Units Manufactured Housing Second Home 1

Cash-out Refinance Purchase & Rate/Term Refinance

LTV 97%1 95% 85% 90%

CLTV 97%1 95% NA 90%

GLTV 97% 97% NA 95%

TLTV 97% 97% 85% 95%

Purchase & Rate/Term Refinance

85%

90%

Purchase & Rate/Term Refinance

90%

95%

CLTV 95% NA 90%

GLTV 97% NA 95%

TLTV 97% 85% 95%

CLTV 90%

GLTV 95%

TLTV 95%

Purchase & Rate/Term Refinance

97% LTV/CLTV ineligible for AZ, CA, FL and NV

4.3.2

LTV/CLTV/GLTV/TLTV for Non-Retail Originations All States except AZ, CA, FL and NV Purpose LTV Purchase & Rate/Term Refinance 95% Primary Cash-out Refinance 85% Purchase & Rate/Term Refinance 90% Second Home AZ, CA, FL and NV Purpose LTV Purchase & Rate/Term Refinance 90% Primary

Note: A loan is ineligible for mortgage insurance in NY if the loan amount /appraised value is < 80%. Follow Agency standard guidelines for eligible types of subordinate financing. The maximum combined loan-to-value (CLTV) for all products/programs is equal to the maximum LTV of the applicable product and program. The LTV/CLTV/GLTV/TLTV table for affordable housing loans is found in Section 7.2.

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4.4

Refinance Transactions

4.4.1 Rate/Term Refinance Definition (08/10/09) The mortgage amount for a rate/term refinance may include:  Payoff of unpaid principal balance of the existing first mortgage,  Payoff of the outstanding principal balance of subordinate liens securing the property that were used in whole to acquire the subject property,  Paying of closing costs, financing costs, points, prepaids, and  Other funds for the borrower’s use not to exceed 2% of the principal amount of the new loan amount or $2,000, whichever is less Note: “Buyouts” and “special purpose cash-out refinance mortgages” are treated as rate/term refinance transactions provided the Agency conditions are met. 4.4.2 Cash-out Refinances (11/15/10) The mortgage amount for a cash-out refinance may include:  Payoff of unpaid principal balance of the existing first mortgage,  Payoff of the outstanding principal balance of subordinate liens securing the property that were not used in whole to acquire the subject property,  Paying of closing costs, financing costs, points, prepaids, and  Other funds for the borrower’s use

Seasoning and Listing History

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

LTV Determination If subject property is owned… 6 – 11 months

>= 12 months Subordinate Financing

Loan Type

Borrower Contribution Credit History DTI Property Types

Construction to Permanent Market Restrictions

Then the LTV is based on … Lesser of the:  Original purchase price plus documented costs of improvements, or  Current appraised value Current appraised value

Borrower may pay off subordinate financing in a cash-out refinance transaction. Borrowers may not re-subordinate liens in a cash-out transaction.  Fixed rate/fixed payment  Fully amortizing ARMs with initial adjustments > = 5 years  Balloon with an initial term > = 5 years  Ineligible: Temporary buydowns Minimum 5% from borrower’s own funds  Traditional credit: must be underwritten by Genworth  Nontraditional credit is ineligible 41%  Single family, detached  Ineligible: Attached housing, manufactured housing, 2 units Ineligible Not eligible for Non-Retail Originations in AZ, CA, FL and NV

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Fannie Mae DU Refi Plus™ and Refi Plus™ and Freddie Mac Relief Refinancesm Programs (03/23/09) We will insure Fannie Mae and Freddie Mac’s Home Affordable Refinance programs according to the guidelines in Section 7.1 Genworth-Insured Refinance Program.

4.4.3

4.4.4 Subordinate Liens, Home Equity Lines of Credit & Junior Liens (09/21/09) Borrowers may payoff subordinate financing in a rate/term or cash-out refinance transaction, according to the Agency standard guidelines. Subordinate financing may be re-subordinated in a rate/term refinance, according to Agency standard guidelines. Borrowers may not re-subordinate liens in a cash-out refinance transaction. 4.4.5 Continuity of Obligation for Refinance Transactions (11/17/08) Genworth follows Fannie Mae’s published standard guidelines for continuity of obligation.

4.5

Adjustable Rate Mortgages (02/04/08)

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

Per Adjustment Caps on ARM Loans Initial Cap (Max 1st Fixed Period Adjustment) 1% 6 months 2% 1 year 3% 2 years 6% > = 3 years

Periodic Cap (Max Subsequent Annual Cap) 1% 2% 2% 2%

Lifetime Cap 6% 6% 6% 6%

4.5.6 Qualifying Rate on ARMs (04/27/09) Follow Agency standard requirements. 4.5.7 Interest Rate Shortfall (09/21/09) The maximum initial interest rate discount from the fully indexed accrual rate (FIAR) is:  Primary residence: 300 basis points  Second Home: 200 basis points 4.5.8 Potential Negative Amortization Loans with a potential negative amortization feature are not eligible for insurance. 4.5.9 Scheduled Negative Amortization Loans with scheduled negative amortization are not eligible for insurance. 4.5.10 Graduated Payment Mortgage (09/21/09) GPMs are not eligible for insurance.

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4.6

Temporary Buydowns (11/15/10)

Temporary buydowns are eligible as follows:

Occupancy Primary Residence

Second Homes

Loan Type  Fixed rate  >= 5 year ARMs 3 year ARMs  Fixed rate  >= 5 year ARMs 3 year ARMs

Max LTV 97%1 < = 95% < =95% < = 90%

Maximum Buydown Period 2-1-0 3-2-1 2-1-0 3-2-1

Qualifying Rate Note rate Bought down rate Bought down rate Bought down rate

< =90%

2-1-0

Bought down rate

97% LTV buydown allowed for affordable housing only

Temporary buydowns are ineligible for cash-out refinances, 1 unit loan amounts > $417,000, LTV > 95% (unless affordable housing), manufactured housing, and construction to permanent loans.

4.7

Balloons/Call Options (11/05/05)

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

4.8

Relocation Loans (01/07/08)

A relocation loan must have all of the following attributes:  Made to a transferred employee or to a newly hired employee to finance a primary residence at a new location  Made pursuant to a relocation program administered by the corporate employer or its agent  Involves a significant employer contribution to mortgage financing (at least 3% of the original mortgage principal amount)  Made by the lender pursuant to a contract or agreement with the employer or its agent Employer contributions to mortgage financing must consist of one or more of the following:  A buydown or subsidy of the mortgage interest rate  Payment of the borrower’s closing costs (including loan discount points and origination fees) on the new and/or the previous residence  Funding of a below market rate or no interest bridge loan  Payment of the difference between property tax and/or mortgage interest rate obligation on the employee’s previous residence and new primary residence

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4.9

Financed Mortgage Insurance (11/15/10)

For loans where the MI premium is financed into the loan amount:  Genworth’s underwriting guidelines are based on the LTV excluding the financed MI premium  The LTV category for rates is determined using the loan amount excluding the financed MI premium  The premium amount is calculated using the base loan amount, excluding the financed MI premium, times the premium rate  Split Premium payment option loans follow the same guidelines above. The annualized monthly premium rate is applied to the base loan amount, excluding the financed upfront premium  Financed MI premium is not allowed for cash-out refinance transactions 4.9.1 GLTV for Retail Originations The maximum Gross LTV (GLTV), the loan amount + financed MI premium, is as follows: Purpose LTV GLTV Purchase & Rate/Term Refinance 97% 97% Primary 1 Unit Cash-out Refinance 85% NA 90% 95% Primary 2 Units Purchase & Rate/Term Refinance Manufactured Purchase & Rate/Term Refinance 85% 90% Housing Purchase & Rate/Term Refinance 90% 95% Second Home 4.9.2 GLTV for Non-Retail Originations The maximum Gross LTV (GLTV), the loan amount + financed MI premium, is as follows: All States except AZ, CA, FL and NV Purpose LTV GLTV Purchase & Rate/Term Refinance 95% 97% Primary Cash-out Refinance 85% NA Purchase & Rate/Term Refinance 90% 95% Second Home AZ, CA, FL and NV Purpose LTV GLTV Purchase & Rate/Term Refinance 90% 95% Primary The LTV/GLTV table for affordable housing loans is found in Section 7.2.

4.10 Retail and Non-Retail Originations (04/12/10) For a loan to qualify as a Retail Origination, the entity that orders the mortgage insurance coverage (the Insured) must have performed all of the following loan tasks:  Taking the loan application  Processing the loan application  Underwriting the loan application for MI eligibility by the Insured, an MSP, or Genworth (Investor underwriting for compliance to its guidelines is not considered an MI eligibility underwrite)  Funding and closing of the loan. A Mortgage Service Provider (MSP) may be used so long as: (1) the MSP does not take the loan application, (2) the MSP is paid on a fee basis for services performed, and (3) the payment of fees is not contingent on mortgage approval or loan closing. Loans must be funded from a warehouse line in the lender’s name or from the lender’s own funds. Tablefunded loans are considered Non-Retail.

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5 Standard Guidelines for Borrower Eligibility 5.1

Eligible Borrowers (11/01/05)

5.1.1 Non-Permanent Resident Alien Genworth will insure loans to non-permanent resident aliens who apply with a resident alien or a U.S. citizen under the same terms that are available to U.S. citizens. For loans where all the borrowers are non-permanent resident aliens, the borrower must have a two (2) year history of U.S. residency and must meet all standard guidelines for employment and credit history. The lender must have acceptable documentation in the loan file to verify the non-permanent resident alien status. Genworth does not insure borrowers with diplomatic immunity. 5.1.2 Permanent Resident Aliens Genworth will insure loans made to aliens who are lawful permanent residents of the United States under the same terms available to citizens. 5.1.3 Foreign Nationals We do not insure foreign nationals.

5.2

Occupancy Status (04/27/09)

5.2.1 Primary Residence A property is considered a primary residence if it meets the following criteria:  Occupied by the borrower for at least six months out of the year and the address of record for taxes, voter registration, etc.  Located within a reasonable commuting distance to the borrower’s place of employment  Borrower declares an intention to occupy the property as a primary residence  The property must be occupied by the borrower within sixty (60) days of closing or completion 5.2.2 Second Homes (09/21/09) A property is considered a second home if it meets the following criteria:  Is a 1 unit property located a reasonable distance away from the borrower’s primary residence  Suitable for year-round occupancy  Occupied by the borrower for some portion of the year  Available for the borrower’s exclusive use with usage controlled solely by the borrower  Must not be rental property, subject to rental pools, timeshare or shared ownership agreements. No agreements may exist that give a management firm control over the occupancy of the property 5.2.3 Investment Properties Genworth does not insure investment properties.

5.3

Qualifying Ratios (11/15/10)

It is the lender’s responsibility to document and support the borrower’s capacity to repay monthly debt obligations. 5.3.1 Debt-to-Income Ratio (DTI) Genworth uses a single, total debt-to-income ratio for qualification. We will insure:  41% for all loans, or  41.01 – 45% for loans meeting the criteria described in Section 5.3.2

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5.3.2

DTI 41.01 -45% Retail Originations Only

Occupancy Primary

Purpose Purchase & Rate/Term Refinance

LTV/CLTV

Units

Loan Amount

Credit Score

95%

$417,000

740

Ineligible: FL, nontraditional credit, non-occupant co-borrowers, construction to permanent loans, pledged asset loans

DTIs above 41% may not be prudent for every borrower. We recommend a careful assessment of the borrower’s current and past financial profile and overall terms of the loan transaction to determine the reasonableness of a DTI > 41%. The presence of one or more of the following conditions may help compensate for the increased risk:  Borrower has demonstrated the ability to carry a higher housing expense or higher debt level while maintaining a good credit history  Borrower has additional sources of income that were not considered stable for use in qualification  Borrower has substantial liquid reserves equal to six months reserves above required reserves  Borrower has demonstrated the ability to accumulate savings and to maintain a good credit history or a non-housing debt-free position  Borrower’s new housing payment is no more than 115 - 120% of the prior rental or housing payment  Borrower’s gap between the monthly housing debt (HDI) and DTI is less than 15 points There may be factors other than those above that you use to support and document the borrower’s capacity to repay monthly obligations. 5.3.3 Non-occupying Co-borrower For loans where a non-occupying co-borrower’s income is used for qualification, the occupying borrower’s DTI must not exceed 41%. 5.3.4 Housing Expense to Income Ratio (HDI) Genworth does not impose a maximum total housing expense-to-income ratio (HDI) but recognizes that a review of the gap between the borrower’s HDI and DTI is a useful tool to help assess the borrower’s capacity to satisfy monthly obligations. When the gap is wide (more than 15 points) prudent underwriting and reasonableness tests should be applied to see if the borrower has managed the level of nonmortgage related debt in the past and maintained a strong credit history. In addition, a borrower, especially a first time homebuyer, with both an HDI and TDI in the 41%-45% range may not be prudent. NOTE: Some products may have different qualifying ratios. Refer to the program descriptions for possible exceptions to these ratios.

5.4

Credit Underwriting (08/11/08)

Genworth will accept any of the following ways to establish a borrower’s credit history for manually underwritten loans:  Using credit scores, or  Using a traditional credit history, or  Using a nontraditional credit history We accept the agencies’ documentation guidelines for:  Verification of the borrower’s credit history  Payment history documentation

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5.5

Credit History: Using Credit Scores (04/12/10)

Follow our guidelines for underwriting using credit scores as noted below:  Agency AUS loans: the credit history for loans underwritten with an Agency AUS will be considered acceptable provided the loan meets guidelines in Section 1.6.1 and the Credit History guidelines below  Loans manually underwritten to Fannie Mae or Freddie Mac guidelines for underwriting with credit scores as specified in their Selling or Seller Guides: apply the guidelines below in addition to the Agency guidelines

Number of Credit Scores

Credit History

Selecting the Representative Credit Score

Using Credit Scores Credit data should be requested for each borrower from a minimum of two (2) repositories; three (3) repositories are preferred  Minimum of three (3) tradelines open and evaluated at least 12 months  Credit scores not supported by the minimum number of tradelines or do not meet the history requirement must be submitted to Genworth for underwriting. The traditional credit guidelines in Section 5.6 will apply.  All borrowers on the loan must have a valid credit score. If not, submit the loan to Genworth for underwriting. The traditional credit guidelines in Section 5.6 will apply. If… Three (3) scores are obtained for one borrower Three (3) scores are obtained for one borrower and two are identical Two (2) scores are obtained for one borrower Multiple borrowers have three (3) credit scores each

Representative Score is… Use the middle score Use the identical score

Use the lower score  

Multiple borrowers have two (2) credit scores each

 

Choose the middle score for each borrower, then Choose the lowest of all the middle scores Choose the middle score for each borrower, then Choose the lower of all the scores

Example

Inaccurate Credit File Mortgage/Housing Payment History Revolving & Installment Credit Bankruptcy

Credit Scores Borrower 690 700 710 690 Co-Borrower 675 680 In this example, the representative score is 680, as it is the lower of the two middle scores. Follow agency guidelines for treatment of inaccurate credit file information  No more than 0x30 in the last twelve (12) months  No more than 1 x 30 or 0 x 60 in last 24 months  A current status Not currently delinquent Follow Agency standard guidelines and the following:

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Using Credit Scores Chapter 13: Two (2) years from discharge date or four (4) years from dismissal date  All other bankruptcy actions: Four (4) years from either dismissal or discharge  Extenuating Circumstances: Two (2) years from discharge or dismissal date  Multiple bankruptcy filings within last 7 years: Five (5) years from most recent discharge or dismissal; three (3) if extenuating circumstances. Most recent must be extenuating circumstances Follow Agency standard guidelines and the following:  Five (5) years from date of completion  Years 5 – 7 from completion: Primary only, max 90% LTV. Minimum 680 credit score. Rate/term refinances allowed. No second homes or cash-out refinances allowed  Extenuating Circumstances: Three (3) years from completion date Follow Agency standard guidelines and the following:  Four (4) years from date of completion  Years 4 – 7 from completion: Greater of minimum 10% downpayment or minimum required by transaction for all occupancies  Extenuating Circumstances: Two (2) years from completion date Follow Agency standard guidelines and the following:  Two (2) years from date of completion Follow Agency standard guidelines Follow Agency standard guidelines File data should be consistent with information in the credit report and the credit score factor codes should not indicate recent high risk activity, such as:  Multiple newly opened accounts,  Unrelated credit inquiries, or  Any recently delinquent accounts, especially 60-day or 90day late payments 

Foreclosure

Deed-In-Lieu of Foreclosure

Short Sale Public Derogatories Re-established Credit Underwriting Notes

A borrower’s payment history should be underwritten using the traditional credit history guidelines below if the borrower did not satisfy all the other credit criteria above.

5.6

Credit History: Using Traditional Credit (11/15/10)

A traditional credit history should be used when a credit score for a borrower is obtained but the credit lines do not meet the minimum required number (3) of open tradelines evaluated at least 12 months or the credit report contains significant inaccuracies. The maximum LTV for traditional credit is:  Retail Originations: 97%  Non-Retail Originations, all states except AZ, CA, FL and NV: 95%  Non-Retail Originations in AZ, CA, FL and NV: 90% Loans with a traditional credit history require a Genworth underwrite. Genworth will evaluate the borrower’s entire credit history to ascertain the borrower’s willingness to repay obligations. Additional credit references may be requested in some circumstances.

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Credit History

Payment History

Bankruptcy

Foreclosure

Traditional Credit Minimum of three (3) credit references. References may be a combination of tradelines, traditional, nontraditional or a combination of both. All three (3) credit references must have been open and active over the past twelve (12) months. We will place a great deal of emphasis on the last twelve (12) months of credit and look very closely at the last 24 months, as well as the borrower’s entire credit history to determine willingness to repay obligations. Genworth underwriters will generally view the following as an acceptable level of late payments: Max Nbr of Late Max Nbr of Late Payments in the Payments in the Type last 12 Months last 24 Months Mortgage or  0 x 30 days  1 x 30 days Housing  Mortgage  0 x 60 or Payments must be greater days current Installment  1 x 30 days  2 x 30 days  0 x 60 or  1 x 60 days greater days  0 x 90 days Revolving  2 x 30 days  2 x 30 days  0 x 60 or  1 x 60 days greater days  0 x 90 days When a borrower has occasional and isolated adverse ratings, we will use our best judgment to determine if such late payments affect the borrower’s ability and willingness to repay his/her mortgage in a timely fashion. Genworth evaluates the age of any account that reflects late payments, the frequency and severity of the late payments, the size of the account balance, how long ago the late payments occurred, and the status of the borrower’s other credit accounts. Borrowers who have some adverse ratings should have a sufficient number of other accounts that demonstrate their willingness and ability to meet debt obligations in a timely manner. We will weigh some moderate late consumer credit payments against the loan’s LTV, the borrower’s verified assets and the strength of the subject collateral as well as other risk factors involved in the loan. Follow Agency standard guidelines and the following:  Chapter 13: Two (2) years from discharge date or four (4) years from dismissal date  All other bankruptcy actions: Four (4) years from either dismissal or discharge  Extenuating Circumstances: Two (2) years from discharge or dismissal date  Multiple bankruptcy filings within last 7 years: Five (5) year from most recent discharge or dismissal; three (3) if extenuating circumstances. Most recent must be extenuating circumstances Follow Agency standard guidelines and the following:  Five (5) years from date of completion  Years 5 – 7 from completion: Primary only, max 90% LTV. Minimum 680 credit score. Rate/term refinances allowed. No second homes or cash-out refinances

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Deed-In-Lieu of Foreclosure

Short Sale Public Derogatories Credit Inquiries Number and Age of Accounts Balances to Limits and Utilization of Revolving Credit Explanation and Documentation of Late Payments

5.7

Traditional Credit allowed  Extenuating Circumstances: Three (3) years from completion date Follow Agency standard guidelines and the following:  Four (4) years from date of completion  Years 4 – 7 from completion: Greater of minimum 10% downpayment or minimum required by transaction for all occupancies  Extenuating Circumstances: Two (2) years from completion date Follow Agency standard guidelines and the following:  Two (2) years from date of completion Follow Agency standard guidelines for significant derogatory credit Follow Agency standard guidelines Follow Agency standard guidelines Follow Agency standard guidelines

Follow Agency standard guidelines

Credit History: Using Nontraditional Credit (11/15/10)

Follow Agency standard guidelines for documenting the credit history if no score was obtained from any credit reporting agency due to the absence of credit information. The maximum LTV for nontraditional credit is:  Retail Originations: 95%  Non-Retail Originations, all states except AZ, CA, FL, and NV: 95%  Non-Retail Originations in AZ, CA, FL and NV: 90% Loans with a nontraditional credit history require a Genworth underwrite. The maximum DTI is 41%. A nontraditional credit history is not allowed for second homes, cash-out refinances, primary 2 units, manufactured housing or construction to permanent loans.

5.8

Collections, Judgments, Garnishments or Liens (06/28/10)

Collections, charge offs, judgments, garnishments, liens and payment plans for federal and state tax liens must be paid in full prior to closing, especially any debt affecting title. However, we will allow collections and charge offs to remains open to the following maximums:  Up to $250 per account, and  Up to $1,000 in the aggregate Collections in connection to an unforeseen expense should not be viewed as adverse provided that it has been paid in full or a repayment plan has been established and has been paid as agreed for the last twelve (12) months. For construction to permanent loans, all mechanics’ liens, materialmen’s liens or any other liens affecting title must be satisfied prior to activation of MI coverage.

5.9

Consumer Credit Counseling (01/02/07)

Some borrowers seek assistance of consumer credit counseling agencies to restructure debts and establish an affordable repayment plan. At the conclusion of credit counseling, the borrower should have:  Re-established credit of a minimum of three (3) accounts, one housing related, with twelve (12) months history, and  No late payments

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5.10 Pending Lawsuits (11/01/05) Borrowers who have pending lawsuits may be eligible if they can provide evidence of sufficient malpractice insurance, other means to cover the estimated amount of the potential liability, or a letter from an attorney stating the borrower has no financial liability.

5.11 Previously Paid Claim (01/02/07) Genworth will generally not insure a loan for borrowers on whom we have previously paid a claim.

5.12 Assets and Liabilities (09/01/09) Genworth will accept the following Agency standard underwriting guidelines for eligible sources and verification of borrower funds for downpayment and closing costs and repayment of debt. Our policy is to:  Follow Fannie’s guidelines when Fannie is the investor or the Fannie Selling Guide is your standard guideline set  Follow Freddie’ guidelines when Freddie is the investor or the Freddie Sellers Guide is your standard guideline set  Follow the more conservative of the agencies guidelines for all other situations, unless a specific agency’s guideline is noted to follow for all others 5.12.1 Source of Funds per Agency Standard Guidelines (11/15/10) Borrower’s Own Funds  Sales proceeds from a currently owned home  Borrowed Funds, secured by an asset  Stocks, Bonds, Mutual Funds (follow Fannie for owned by the borrower all others)  Bridge loans  Individual Development Accounts  Cash on hand Other acceptable sources after borrower’s  Checking and Savings Accounts contributions from borrower’s own funds  Deposits on Sales Contract  Credit Card Financing (follow Freddie for all  Mortgage Credit Certificates as Income others) (follow Fannie for all others)  Gifts and Grants  Rent with Option to Purchase  Gifts of Equity  Retirement Accounts (follow Fannie for all others)  Sale of Personal Assets Refer to Section 7.6 Construction to Permanent for lot equity guidelines. 5.12.2         

Repayment of Debts per Agency Standard Guidelines (02/16/10)  Satisfaction of Debt to Qualify Alimony and Child Support  Subject Property Payment Bridge Loans  Subordinate Financing Contingent Liabilities  Undisclosed Debt Installment Debt  Trade Equity, per Fannie Mae guidelines Mortgage Credit Certificates as Debt (follow Fannie for all others)  Trust Accounts Real Estate Debt  401-K as Debt Revolving Debt  1031 Exchange Lines of Credit Student loans and other deferred payments

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5.12.3 Borrower’s Required Funds and Reserves (11/15/10) Borrower’s1 Gifts Funds Occupancy Own Funds Allowed2 Reserves 3% Primary Residence:  Two (2) months (including FL Purchase  1 unit with loan amounts > affordable $417,000: Six (6) months housing) Yes  Current primary residence 5% in FL pending sale: follow Primary and>$417,000 Residence Conversion guidelines Primary Residence: Rate/Term Refinance

Primary Residence: Cash-out Refinance



Yes

5% or lot equity3

Yes

Primary Residence 2 Units

Second Homes Construction to Permanent

DU and LP: verify reserves as determined by AUS  If not DU or LP: 0 months  1 unit with loan amounts > $417,000: Six (6) months, including DU and LP  DU and LP: verify reserves as determined by AUS  If not DU or LP: 0 months Rental income is used to qualify Six months, including DU and LP Rental income is not used to qualify  Purchase: two (2) months  Refinance: If DU and LP, verify reserves as determined by AUS. If not DU or LP: 0 months Two (2) months for all loans, including DU and LP  Two (2) months, including DU and LP  Current primary residence pending sale: follow Primary Residence Conversion guidelines

Borrower’s own funds as defined in Section 5.12.1 Gift funds are allowed per Agency standard guidelines 3 Refer to Section 7.6 Construction to Permanent for lot equity guidelines. 2

5.12.4 Builder/Seller Contributions (09/21/09) Follow Agency standard guidelines for treatment of builder/seller contributions, subject to these maximum contributions amounts: Occupancy LTV Max Contribution 90.01 – 97% 3% Primary Residence < = 90% 6% < = 90% 6% Second Homes Loans with payment abatements are ineligible. Payment abatements are funds provided by an interested party used to offset or fully fund a borrower’s monthly payments.

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5.12.5 Primary Residence Conversion (02/16/10) Guidelines For all intended uses of  Borrower must qualify with both the current and proposed current Primary Residence mortgage payments  Six (6) months verified reserves are required for both properties  No mortgage delinquencies in prior twelve (12) months Current Primary Residence  Copy of executed Contract for Sale pending sale  Reserves may be reduced to two (2) months for both properties if there is a minimum of 30% documented equity in the existing property (determined by a valid appraisal, AVM, or BPO, minus outstanding liens. AVM and BPO may not be used in Declining/Distressed Markets.) Conversion to a Second  DU and LP loans: Reserves as determined by the AUS Home but no less than two (2) months for each property  For all other loans: Six 6) months reserves for each property  Reserves may be reduced to two (2) months for both properties if there is a minimum of 30% documented equity in the existing property (determined by a valid appraisal, AVM, or BPO, minus outstanding liens. AVM and BPO may not be used in Declining/Distressed Markets.) Conversion to an  Copy of the fully executed rental/lease agreement Investment Property  Proof of security deposit from the tenant and deposit into the borrower’s account  Borrower may qualify with up to 75% of the rental income if there is documented equity of at least 30% in the existing property (determined by a valid appraisal, AVM, or BPO, minus outstanding liens. AVM and BPO may not be used in Declining/Distressed Markets.). If the 30% equity in the property cannot be documented, rental income may not be used to offset the mortgage payment A Genworth insured current primary residence may be Genworth Insured Current converted to a second home or investment property provided: Primary Residence  Our guidelines are met, and  Genworth's risk exposure does not exceed $300,000 per borrower and no more than one primary residence, one second home and two investment properties are insured for the borrower 5.12.6 IRS Refunds Refund checks from either the IRS or a State Revenue Department are acceptable sources of funds. Satisfactory documentation includes:  Copies of the refund check  Proof of increase in deposit accounts  Copies of borrower’s federal/state income tax returns 5.12.7 Ineligible Assets  Repayment of debt from family or friends  Shared equity 5.12.8 Pooled Savings as Debt Payments on loans against a pooled savings debt will not be considered as a debt when determining qualifying ratios.

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5.12.9 Credit and Asset Documentation (11/15/10) This excerpt from Section 3 Documentation Requirements highlights our documentation requirements for credit and assets. Refer to Section 3 for a complete discussion of loan file documentation. Desktop Underwriter & Loan Documentation Prospector Manually Underwritten Follow the Agency AUS requirements Fannie if Fannie, Freddie if Freddie, Credit Report otherwise more conservative Follow the Agency AUS requirements Fannie if Fannie, Freddie if Freddie, Assets otherwise more conservative Age of Credit and  Follow Freddie if Freddie  Follow the Agency AUS Asset requirements  Follow Fannie Mae for all others Documentation  HARP-Eligible Refinance (Same  HARP-Eligible Refinance (Same Servicer): document age is 180 Servicer): document age is 180 days days

5.13 Employment and Income (11/01/05) The borrower’s ability to repay the mortgage debt in a timely fashion is a major underwriting criterion. Like collateral value and credit, the borrower’s income and employment history play an important role in determining if the loan is an insurable risk for Genworth. Although Genworth values stability of income more than stability of employment, to consider income or employment to be stable, two (2) years of receipt should be documented. If less than two (2) years are documented, we require that the borrower’s income be:  Adequately verified  Stable  Likely to continue  Sufficient to repay the mortgage debt 5.13.1 Self-employed Income We underwrite all self-employed income and cash flow to Agency standard guidelines and documentation. 5.13.2 Salaried or Other Income (04/12/10) For borrowers that are salaried or otherwise not self-employed, Genworth accepts income calculations as defined by Agency standard underwriting guidelines for the following sources of income as long as there is a documented history of receipt and such income is likely to continue for at least three (3) years:  Overtime  Automobile Allowances  Part Time or Second Job Income  Alimony and Child Support  Rental Income from Investment Property  Boarder Income  Rental Income for Primary 2 Unit Property,  Bonus Income (follow Fannie Mae for all others)  Commission Income  Retirement Income  Foster Care Income  Social Security Benefits  Interest and Dividends  Tip Income  Military Income  Trust Income  Mortgage Interest Differential Payments  Unemployment Benefits  Non-taxable Income  VA Benefits  Section 8 Income  Welfare Benefits  Notes Receivable Other types of income such as disability, pension income and other incomes not listed may be eligible as long as they can be properly verified and receipt is likely to continue. 5.13.3 New Employment Income (09/01/09) Follow Agency standard guidelines when the borrower has been employed for less than two years and was previously attending school or a training program. Employment should be sufficiently documented (e.g., employment contract). The underwriter should relate the borrower’s education/training to future income potential, employment opportunities, and employment stability.

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5.13.4 Employment Gap Agency standard documentation is acceptable. 5.13.5 Foreign Income Income may be earned in the U.S. or a foreign country and may be paid in U.S. or foreign currency. Qualification ratios using foreign income will be determined by utilizing 75% of the current exchange rate to compensate for potential currency fluctuation. 5.13.6 Deferred Income Deferred income not presently available may not be used to qualify borrowers. 5.13.7 Education Benefits Education or scholarship benefits are not acceptable as effective income because educational expenses offset the benefits. 5.13.8 Trailing Co-Borrower Income (09/01/09) Trailing co-borrower income may not be used as qualifying income. 5.13.9 Non-Occupant Co-Borrowers (11/15/10) We allow income from non-occupant co-borrowers to qualify the borrower for 95% and less LTV subject to the following parameters:  Occupying borrower’s DTI must not exceed 41%  Non-occupying co-borrower must not be an interested party to the transaction and sign the note and deed of trust  Occupying borrower must have 5% own funds as downpayment  Occupying borrower must demonstrate reasonable capacity and willingness to make mortgage payments  Reserves must be documented from occupying borrower’s own funds  Primary residence only 5.13.10 Income and Employment Documentation (11/15/10) This excerpt from Section 3 Documentation Requirements highlights our documentation requirements for income and employment. Refer to Section 3 for a complete discussion of loan file documentation. Desktop Underwriter & Loan Documentation Prospector Manually Underwritten Loans Fannie if Fannie, Freddie if Freddie, Income &  Follow the Agency AUS otherwise more conservative Employment requirements  Loan amounts > $417,000: written verification of income is required. Use of a verbal VOE as sole means of documenting employment and income is not permitted Follow the Agency AUS requirements  Follow Freddie if Freddie IRS Form 4506-T, 8821, or 4506  Follow Fannie Mae for all others Verbal VOE is required as follows: Verbal VOE  Follow the Agency AUS requirements  Salaried borrowers: dated within 10 days of note date  Use of a verbal VOE, when determined by an Agency AUS,  Self-employed borrowers: dated as the sole method of within 30 days of note date documenting employment and income is not permitted Age of Income and  Follow Freddie if Freddie  Follow the Agency AUS Employment requirements  Follow Fannie Mae for all other Documentation situations  HARP-Eligible Refinance (Same Servicer): document age is 180  HARP-Eligible Refinance (Same days Servicer): document age is 180 days

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6 Standard Guidelines for Property and Appraisals 6.1

Ownership (11/01/05)

Genworth will accept loans with the following forms of ownership under Agency standard guidelines:  Fee Simple estate  InterVivos Trusts  Leasehold Estates  Loans to natural persons only. Corporation, partnership, or associations may be eligible for special programs approved by Genworth.

6.2

Eligible Property Types (11/15/10)

Genworth will provide mortgage insurance coverage for the following property types:  Cooperatives  Single family, detached  Modular and Panelized Factory Built Housing  Condominiums, detached and attached  Manufactured Housing  PUDs, detached and attached (townhomes, row homes, patio homes)  2 units units We will accept loans with the following features under Agency standard guidelines:  Energy- Efficient properties: Higher ratios as described by Freddie Mac guidelines are acceptable, subject to Genworth’s ratio guidelines. Variances for adjustments to income for anticipated energy savings are not allowed.  Mixed Use properties

6.3

6.4

    

Ineligible Properties (04/12/10)

    

Commercially used properties Unimproved land Time share units 3 – 4 units Mobile Homes

Earth, dome, and geothermal properties Working farms, orchards and ranches Kiddie condos Houseboats Condotels

Geographic Guidelines (11/15/10) State or MSA

Arizona California Florida

Nevada New York MSAs or States identified by Genworth as Declining/Distressed (Refer to Appendix A for listing) Puerto Rico, Guam and the Virgin Islands Genworth Mortgage Insurance Underwriting Guidelines November 15, 2010

Restrictions > 95% LTV ineligible > 95% LTV ineligible  > 95% LTV ineligible  Minimum 680 credit score; for loan amounts > $417,000 minimum 740 credit score  Maximum DTI 41%  Borrower contribution: 5% minimum from borrower’s own funds, 3% affordable housing  Retail Originations: attached housing requires a Genworth underwrite  Non-Retail Originations: all properties require a Genworth underwrite > 95% LTV ineligible Ineligible if the loan amount/appraised value is < 80% Declining/Distressed Markets guidelines are applicable to Non-Retail Originations only and are incorporated throughout these guidelines. Refer to 6.12 for restrictions Ineligible for mortgage insurance Page 31 of 56

6.5

Condominiums (11/15/10)

Condominium features include:  Attached or detached properties  Units that are individually owned and the common areas, such as hallways and recreational facilities, are jointly owned (usually as "tenants in common") by all the unit owners in the building  A homeowners association that manages the project 6.5.1 Site (Detached) Condominiums A site condominium that has the following characteristics may follow “single family detached property” LTV guidelines (Section 4.1):  Single family detached residences where sites are divided and recorded by condominium documents rather than a plat  Buyers receive a warranty deed for their property  Owners within the community own, with the other owners, the common areas  Owners are responsible for the maintenance of their own properties and landscape  A homeowners association which manages the project The appraisal report should include an addendum describing the project and the specific ownership characteristics/rights of the subject property and state that comparable sales have been used from similar projects. It should be clear in the report that the subject property’s owner owns the entire dwelling and the entire lot as well as the airspace/ground space above and below the subject property. 6.5.2

Attached Condominiums Attached Condominium Loan Eligibility Requirements Retail Originations

Occupancy Primary

LTV Units Loan Amount 95% 1 $417,0001 Purchase & 90% 1 $625,5002 Rate/Term 90% 1 FHFA4 All attached housing in Florida must be underwritten by Genworth Non-Retail Originations

Occupancy Primary

Purpose

Max LTV Units Loan Amount 90% 1 $417,000 Purchase & Rate/Term 90% 1 FHFA4 All properties in Florida must be underwritten by Genworth

Credit Score 6603 7203 7203

Credit Score 720 740

NOTE: Attached PUD units follow the Attached Condominium Loan Eligibility Requirements above. 1

AK and HI: $625,500 FL: Loan amounts > $417,000 are allowed in FHFA designated markets only 3 FL: add 20 points to credit score for minimum credit score requirement 4 Loan amounts > $625,500 are allowed for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming as described in Section 4.2 2

Attached Condominium Project Requirements A condominium project must meet Genworth’s project Condominium Project guidelines, regardless of the type of GSE project approval Approval Process by process (e.g. Limited Review, Streamlined Review, etc.) Fannie and Freddie conducted for Agency eligibility Attached Condominium Project Requirements Acceptable characteristics of a condominium project include: Acceptable Projects Genworth Mortgage Insurance Underwriting Guidelines November 15, 2010

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 

Unacceptable Projects

Project Concentration

Leasehold Condominiums

2-4 Unit Condo Projects

Investment property concentration 30% or less Specific location in a neighborhood complementary to the intended market  Project design and unit size appropriate for the location and market  Good quality of construction and workmanship  Professional management  Adequate budget and reserves  Competing, but not excessive amenity package  70% presale requirement; 100% for 2-4 unit projects Unacceptable characteristics of a condominium project include:  Ineligible properties per agency guidelines (aka nonwarrantable)  Mixed use projects with more than 20% non-residential use  Tenant/investor ratio above 30%  Pending lawsuits  Physical and functional deficiencies that negatively impact marketability  Delinquencies/foreclosures as reflected in lender, Genworth, or homeowner association portfolio  Unacceptable environmental conditions – proximity to hazardous/noxious waste sites Genworth will insure a maximum of 33% of the units within a condominium project or phase. Additional units will be considered on a case-by-case basis A leasehold condominium is acceptable, if the following conditions apply:  The leasehold should be typical to the area and marketaccepted. The appraiser should state this in the appraisal report  Comparable sales should have the same type of ownership, properly reflecting market value, marketability and market acceptance  The comparable sales should be leasehold and have similar lease terms  The term of the leasehold should extend out past the term of the loan. This may vary depending upon investor requirements  Project must meet agency guidelines Apply Genworth’s 2-4 condo project guidelines:  Presale requirement is 100%  Investor concentration: 30% (no investment units allowed in 2-3 units; 1 investment unit allowed in 4 unit)  Genworth will insure a maximum of 1 unit in a 2 or 3 unit project and a maximum of 2 units in a 4 unit project. In addition to our guidelines, follow Fannie Mae or Freddie Mac guidelines. Highlights of these guidelines are:  All units and common areas are complete  No entity may own more than one unit

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6.6

PUDs (11/15/10)

6.6.1 Detached PUD Unit A detached PUD unit follows “single family detached property” LTV guidelines (Section 4.1). 6.6.2 Attached PUD Unit An attached PUD unit (townhomes, row homes, patio homes) in a PUD must be warrantable according to Fannie Mae or Freddie Mac project eligibility guidelines. Ineligible projects are considered nonwarrantable and are ineligible for insurance. Follow Freddie Mac’s project warranty requirements if you typically adhere to Freddie Mac guidelines. Follow Fannie Mae’s warranty requirements of project eligibility if you typically adhere to Fannie Mae guidelines and for all other loans. An attached PUD follows the Attached Condominium Loan Eligibility Requirements above.

6.7

Cooperative Units Eligibility (11/15/10)

Genworth accepts cooperative units for underwriting which meet Agency guidelines for:  Maximum number of units  Maximum number of loans per project  Presale restrictions  Investor concentration  Delinquency  Pro-rata share of project mortgage These additional requirements also apply: Cooperative Units Eligibility Requirements Retail Originations Occupancy Primary

Purpose

LTV Units 95% 1 Purchase & 90% 1 Rate/Term 90% 1 Non-Retail Originations

Occupancy Primary

Purpose Purchase & Rate/Term

Max LTV 90% 90%

Units 1 1

Loan Amount $417,000 $625,500 FHFA1

Credit Score 660 720 720

Loan Amount $417,000 FHFA1

Credit Score 720 740

Loan amounts > $625,500 are allowed for loans originated as Fannie Mae High Balance and Freddie Mac Super Conforming as described in Section 4.2

Acceptable Locations

Subordinate Financing Minimum Square Footage

The cooperative unit must be located in an area where this form of ownership has demonstrated market acceptance. Acceptable locations include:  New York: the five boroughs of New York City, Long Island, Nassau, and Suffolk Counties, and Westchester, Rockland, and some Dutchess Counties  Northern New Jersey  Connecticut  Washington, D.C., including portions for Maryland and Virginia outside the D.C. area  Boston, MA  Philadelphia, PA  Chicago, IL Ineligible Genworth does not have a minimum square footage

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Cooperative Units Eligibility Requirements requirement. All properties, regardless of size, must be supported with comparables of similar size and sales price Special Requirements for  New conversions/new construction projects (within the last Conversions 12 months): Underlying mortgage must have minimum remaining loan term of five (5) years  Existing Projects: Underlying mortgage must have minimum remaining loan term of two (2) years Comparables  Existing projects greater than two (2) years old: Two (2) comparables from within the project are required where possible as well as one (1) from outside the project  New conversions and new construction: Two (2) comparables from outside the project are required as well as one (1) from inside the project If the flip tax is over 3% of the appraised value, it is deducted Flip Tax from the appraised value and the LTV is based on the adjusted amount

6.8

Manufactured Housing (11/15/10)

Manufactured housing must meet Agency guidelines with the following additional requirements: Retail Originations: Manufactured Housing Requirements Loan Credit Occupancy Purpose Max LTV Units Amount Score Purchase & Rate/Term 85% 1 $417,000 6601 Primary 1

FL: Add 20 points to credit score for minimum credit score requirement

Loan Types

Minimum Property Requirements

Appraisal Considerations

 

Fixed rate, fixed payment Positively amortizing ARMs with initial adjustments > = 7 years  Ineligible: Temporary buydowns, balloons Loans must meet Agency guidelines for manufactured housing and the following additional requirements:  Legally classified and assessed/taxed as real property and owned in fee simple. No leaseholds are permitted  Zoned residential  Doublewide design or greater  Property and land must be financed under one mortgage  Ten acres (10) or less; land value should not exceed 35% of the property’s appraised value. Outbuildings or additional structures cannot contribute more than 5% to total value  Property must meet state and local building codes  Must be permanently attached to a foundation that meets the manufacturer’s requirements and state and local codes. Wheels, axles, and towing hitch must be removed.  For subdivisions, refer to Condominium Project Eligibility section for acceptable and unacceptable guidelines  The unit must have the general appearance and functional utility of a conventional site built home  The appraisal must address local demand, marketability, and supply of manufactured housing in the area, as well as the quality of construction

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6.9

Two Individual Residential Dwellings on One Lot (11/01/05)

We will review loans for underwriting that contain two (2) individual residential dwellings such as a unit above a detached garage, guest house or basement apartment if the following guidelines apply:  Appraiser must address the impact to the value and marketability and the value must be supported  The property and its improvements must constitute a legally permissible use of land  The legal description must describe the property as one (1) parcel  The property must be taxed as one (1) parcel  No income from a second unit can be considered in the borrower qualifications  The appraiser should provide at least one (1) comparable containing two (2) residential dwellings on one (1) lot  Appraisers must comment and document that properties similar to the subject are typical and marketable for the area.

6.10 Acreage and Land Value (02/16/10) Genworth will not insure residences situated on more than ten (10) acres of land. Properties with acreage exceeding 10 acres must be submitted to Genworth for underwriting consideration. Land should not exceed 35% of the appraised value of the property. Although exceptions can be made, we will ensure that the land-to-value ratio is not excessive for residential properties in the local market and that the property is completely residential in nature. The appraiser must comment and document that properties similar to the subject are typical and marketable for the area.

6.11 Rural and Unique Homes (02/16/10) Properties in urban/suburban areas are typically easier to evaluate since there are multiple, recent and proximate comparables available. Rural, resort and mountain properties can pose valuation problems since, by their very nature, comparables are difficult to find. Unique homes or one-of-a kind luxury residences present the same problems and require a Genworth underwrite. Such homes are difficult to evaluate, and an accurate value depends on a rather small market, which can be considerably more volatile than the traditional home market. We will underwrite all such loans carefully to ensure both value and marketability. We will closely review both the comparables used and the condition of the subject property.

6.12 Declining Property Values (04/12/10) Properties located in neighborhoods experiencing declining values, an oversupply of homes for sale, and marketing times in excess of six (6) months represent a higher risk of loss of equity for the borrower. These properties require additional scrutiny of the appraisal, e.g. use of recent sales, sales and financing concessions. In addition, Genworth has used internal and external housing market data to identify certain markets as Declining or Distressed Markets. Properties in these markets are not eligible for the highest LTVs or certain loan products due to the increased risk posed by property value depreciation in these localized markets. Refer to Appendix A, Declining/Distressed Markets for details. Declining/Distressed Market conditions apply when the property is located in a market (State, Metropolitan Statistical Area, or Metropolitan Division) identified as Declining/Distressed on Genworth’s Declining/Distressed Market List (Appendix A). Declining/Distressed Markets guidelines are applicable to Non-Retail Originations only and are incorporated throughout these guidelines.

6.13 Non-Arm’s Length Transactions (01/02/07) A non-arm’s length transaction exists where there is a direct relationship, such as family members, close friends, employers, or employees, between the borrower and another party to the transaction. These other parties include, but are not limited to, the property seller, builder, broker, appraiser, closing agent, etc. Such transactions may not yield a fair or accurate market value.

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If the subject property sale is between related parties or is otherwise not an arm’s length transaction, such relationship should be disclosed and addressed on the appraisal. The underwriter should be careful to ensure that true and accurate value has been established.

6.14 Maximum Genworth Insured Properties (09/21/09) Genworth will insure a maximum of $300,000 aggregate risk exposure* for a borrower and only one primary residence and one second home per borrower. Refer to Section 5.12.5 Primary Residence Conversion for guidelines for the maximum number of insured properties when a Genworth insured current primary residence is converting to a second home or investment property. * Risk exposure = loan amount x coverage %

6.15 Renovation Mortgages (04/27/09) Genworth will insure renovation loans that provide the borrower with funds to cover the costs to renovate, remodel or repair a property. The loan purpose may be either a purchase or a rate/term refinance transaction. In addition to meeting Genworth’s guidelines, we will accept Fannie Mae’s Selling Guide and Freddie Mac Seller Guide guidelines and documentation for renovation mortgages with these overlays:  The borrower must be an individual; no corporations, not-for-profits, or agencies allowed  The borrower may not be the contractor or provide repairs as a “do-it-yourself” option  A recertification of the property value by an appraiser is required in addition to the certificate of completion. The recertification of value must be added to the loan file documentation  The loan must be identified as a “renovation” at time of mortgage insurance application and be submitted to Genworth for underwriting. The commitment term for renovation loans is 120 days.

6.16 Property Flipping (02/16/10) A property flip occurs when a recently purchased property is quickly resold for a profit by the seller. The short time frame between the acquisition and resale coupled with an increase in the property value are signs that a flip may have occurred.  Properties resold within 6 months must be underwritten by Genworth. The HUD-1 statement and original appraisal, if available, is required in the new loan file.  Property seller must be “owner of record” according to publicly available information and is supported by loan file documentation  No back-to-back, simultaneous closings, or double closings, or assignment of contract for sale  Increases in the property value must be explained, documented and supported by a new appraisal. Improvements and renovations must be substantiated with receipts, contractor invoices, building permits or other documentation and reflected by the appraiser The transactions below would not be considered flips. Sales of:  A recently inherited property  A property acquired through a divorce settlement  A property acquired through an employer relocation program  A property resold by a lender, servicer, or MI company that was acquired through foreclosure or deed-in-lieu

6.17 Appraisal Documentation and Age (11/15/10) This excerpt from Section 3 Documentation Requirements highlights our documentation requirements for appraisals. Refer to Section 3 for a complete discussion of loan file documentation. Desktop Underwriter & Documentation Loan Prospector Manually Underwritten Loans Appraisal  All property evaluations must have a minimum interior/exterior review completed by a licensed or certified appraiser  The appraisal form and applicable addenda, such as 1004MC/Form 71, must meet Agency requirements  A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500

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Documentation  

Appraisal for Construction to Permanent Loans

     

Desktop Underwriter & Loan Prospector Manually Underwritten Loans Use of automated valuation models (AVMs), PIWs, PIAs, desk reviews, or exterior only appraisals to obtain property values are ineligible Appraisals may be 180 days, for newly constructed homes, however, a recertification of value must be provided if the appraisal is more than 120 days. If the value has declined, a new, full appraisal is required HARP-Eligible Refinance (Same Servicer): appraisal may be 180 days URAR, “subject to completion” completed by a licensed or certified appraiser at time of Genworth underwrite The appraisal form and applicable addenda must meet Agency requirements Appraisal Update and/or Completion Report (Form 1004D/442) completed by appraiser at completion of construction A new appraisal may be required at completion of construction if (1) the appraiser indicates on the 1004D/442 that the value has declined, or (2) the original appraisal is > 180 days Refer to Section 7.6 for detailed construction to permanent appraisal and recertification of value requirements

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7 Products Guidelines 7.1

Genworth-Insured Refinance Program (11/15/10)

The Genworth-Insured Refinance Program provides expanded underwriting guidelines for rate/term refinances of Genworth-insured mortgage loans. Our new guidelines cover the Home Affordable Refinance programs announced by Fannie Mae and Freddie Mac under the Make Home Affordable initiative. The term “HARP” is used in our guidelines to encompass these Genworth-insured Fannie Mae and Freddie Mac Home Affordable Refinance programs:  Fannie Mae Refi Plus™  Fannie Mae DU Refi Plus™  Freddie Mac Relief Refinancesm – Same Servicer  Freddie Mac Relief Refinancesm – Open Access A loan is considered “HARP-Eligible” if it is determined by the lender to be eligible for delivery through the agency’s program. The term “Genworth-Insured Refinance” is used for all other Genworth-insured rate/term refinance loans that are not HARP-Eligible, such as portfolio loans, or those that that do not meet the Agency’s program guidelines. Unlike our previous streamlined refinance program, there is no requirement for the submitting lender to be the current servicer of the existing mortgage loan. Our program has four options, depending on HARP-eligibility and same servicer status:  HARP-eligible (Same Servicer) – see Section 7.1.1  Genworth-Insured Refinance (Same Servicer) – see Section 7.1.2  HARP-eligible (New Servicer) – see Section 7.1.3  Genworth-Insured Refinance (New Servicer) – see Section 7.1.3 There are underwriting guidelines, documentation requirements, and mortgage insurance parameters for each option. Loans are not subject to our Ineligible Loan Features or Declining/Distressed Markets Policy. 7.1.1

HARP-Eligible Refinance (Same Servicer)

Guidelines

MI Guidelines and Ordering

HARP-Eligible Refinance (Same Servicer) Genworth will insure HARP-eligible refinance loans originated under these programs when:  The loan meets all of the agency’s eligibility, guideline and delivery requirements for the applicable program  Genworth’s HARP (Same Servicer) overlays are met, and  The submitting lender is the servicer of the existing loan  Genworth will modify the existing certificate by issuing a replacement Commitment/Certificate with a new certificate number  The premium rate (in basis points) of the existing certificate will be applied to the replacement Commitment/Certificate  The coverage percentage applied of the existing certificate will be applied to the replacement Commitment/Certificate  The representations and warranties on the original Commitment/Certificate of Insurance transfer to the replacement commitment/certificate without changes. Additionally, the insured represents and warrants all new documentation relied upon for the refinance  Submit only Home Affordable Refinance (Same Servicer) Form, 1003/65, and 1008/1077 to the National Processing Center  The commitment term is 180 days. Document age may be 180 days

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New Loan Amount

Seasoning Requirement Mortgage Payment History

Occupancy

GSE AUS Result

Property Valuation

HARP-Eligible Refinance (Same Servicer) Overlays The new loan amount may include the following:  Payoff of existing first mortgage  The lesser of 5% or $5,000 in related closing costs and prepaids/escrows  Borrower may receive no more than $250 cash back at closing  All other sums in excess of this amount must be applied as a principal curtailment to the new refinance Lender must follow investor’s seasoning requirements, if any Existing mortgage must be current, and:  Fannie’s Refi Plus options: borrowers have not been delinquent by more than 30 days in the last 12 months (during the life of the loan, if it is less than 12 months old)  Freddie’s Relief Refinance: borrowers have no 30 day or more delinquencies in the last 12 months. If less than 12 months old, no 30 day delinquencies since the Note Date Same as original Occupancy Type, except:  If the occupancy was originally insured as a second home or investment property, the Occupancy Type can be changed to Primary if the property is the borrower’s primary residence Acceptable DU and LP decisions are:  DU Approve/Eligible  DU EAI, EAII and EAIII/Eligible  LP Accept/Eligible DU Ineligibles attributed to excessive ratios are acceptable if converted and underwritten as a Refi Plus (manual) transaction. Genworth will not require the lender to represent and warrant the value, marketability and condition of the property of the new refinance transaction when utilizing HVE or PFW under the following conditions: Fannie DU Refi Plus (Same Servicer)  The new LTV is < = 95%  DU returns the property fieldwork waiver eligibility messages  The lender meets all of Fannie Mae’s requirements for exercising the property fieldwork waiver Fannie Refi Plus (Same Servicer)  Not applicable. Property fieldwork waiver is not an option for manual underwriting Freddie Relief Refinance - Same Servicer  The new LTV is < = 95%  The lender meets all Freddie Mac’s requirements for using the HVE  The lender meets all other property valuation requirements for the mortgage

7.1.2

Genworth-Insured Refinance (Same Servicer)

MI Processing

Genworth-Insured Refinance (Same Servicer)  Genworth will modify the existing certificate by issuing a replacement Commitment/Certificate with a new certificate number  The premium rate (in basis points) of the existing certificate will be applied to the replacement Commitment/Certificate  The coverage percentage applied of the existing certificate will be applied to the replacement Commitment/Certificate

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Genworth-Insured Refinance (Same Servicer) The representations and warranties on the original Commitment/Certificate of Insurance transfer to the replacement commitment/certificate without changes. Additionally, the insured represents and warrants all new documentation relied upon for the refinance  Submit only Home Affordable Refinance (Same Servicer) Form, 1003/65, and 1008/1077 to the National Processing Center The new refinance must improve the borrower’s overall position in at least one of the following ways:  Reduce the interest rate  Replace an ARM with a fixed rate  Reduce the amortization term The submitting lender must be the current servicer of the existing mortgage and have the original underwriting file. Rate/term refinance only No maximum loan amount. The new loan amount may include the following:  Payoff of existing first mortgage  The lesser of 5% or $5,000 in related closing costs and prepaids/escrows  Borrower may receive no more than $250 cash back at closing  All other sums in excess of this amount must be applied as a principal curtailment to the new refinance  Maximum 125% LTV  No maximum CLTV  All existing subordinate financing must be resubordinated and may not be paid off in the new transaction  No new subordinate financing may be obtained Same as original Occupancy Type, except:  If the occupancy was originally insured as a second home or investment property, the Occupancy Type can be changed to Primary if the property is the borrower’s primary residence Same as original Property Type  Fixed rate fixed payment  Fully amortizing ARM: 5yr, 7yr, 10yr 

Borrower Benefit

Lender Eligibility Loan Purpose Maximum Loan Amount

Maximum LTV/CLTV Subordinate Financing Occupancy

Property Type Loan Type

An existing fixed rate loan may not be refinanced into an ARM. An ARM is allowed only if existing loan is an ARM. The number of months to first adjustment of the new ARM must equal or exceed the number of months to first adjustment of the existing ARM.

Loan Term New P&I Mortgage Payment History Seasoning Requirement GSE AUS Result Borrower Eligibility

If the refinance will replace an Option ARM, or other loan with a neg am feature, a 30yr fixed rate loan with a 10yr IO period is permitted. Maximum 40-year loan term. Loan term may only decrease from original loan term. An increase in the loan term is not allowed. No cap on new P & I  The existing mortgage must be current  No mortgage delinquencies in the last 90 days  No more than 1x30 in the last twelve (12) months No seasoning requirement Loans are not required to have a GSE AUS decision. If provided, the result must be Approve/Eligible or Accept Eligible  All borrowers on the new refinance must be the same as the borrowers on the original loan unless a divorce or death occurred  The loan file should contain the documentation to explain the drop and show the remaining borrower has made the mortgage payments for 12 months  A borrower may be added provided the original borrower(s) remain on the

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DTI

Credit Score Documentation

Property Valuation Requirements

7.1.3

Genworth-Insured Refinance (Same Servicer) loan  No maximum ratio  Borrowers are not required to re-qualify, however, lender must determine the borrower has a reasonable ability to repay his/her total debt obligations No minimum credit score  New 1003 & 1008  New Credit Report  Verbal VOE  Use income and asset amounts as stated on the 1003 Property value for the new loan must be supported by either:  New appraisal report, or  Original appraisal report If the original appraisal report is used, the lender must represent and warrant that the original property value is still valid and that the property’s value has not declined since the original appraisal. A new appraisal is required if the lender is unable to make this warranty.

Genworth-Insured Refinance (New Servicer), Including HARP-Eligible (New Servicer) Loans through DU Refi Plus and Relief Refinance – Open Access (New Servicer)

Genworth-Insured Refinance (New Servicer) Including HARP-Eligible (New Servicer) loans through DU Refi Plus and Relief Refinance – Open Access (New Servicer) The new refinance must improve the borrower’s overall position in at least one Borrower Benefit of the following ways:  Reduce the interest rate  Replace an ARM with a fixed rate  Reduce the amortization term The submitting lender does not have to be the current servicer of the existing Lender Eligibility mortgage Rate/term refinance only Loan Purpose No maximum loan amount Maximum Loan Amount The new loan amount may include the following:  Payoff of existing first mortgage  The lesser of 5% or $5,000 in related closing costs and prepaids/escrows  Any cash back to the borrower at closing must be applied as a principal curtailment to the new refinance Maximum LTV/CLTV  Maximum 105% LTV  No maximum CLTV NOTE: Check State Restrictions for LTVs > = 100.01% for limitations State Restrictions for LTVs > = Restriction State 100.01% LTV > 100%: Loan Type must be fixed rate fixed All states payment (no ARMs, including 5yr, 7yr, 10yr ARMs) LTV > 100%: Max base LTV of 100% without financed closing costs, prepaids, and/or MI. Borrower can finance amounts (not to exceed $5,000) over 100% up to the state’s max LTV (103% or 105%) to cover closing costs, prepaid items and/or MI LTV = 103%: Max base LTV of 100% without financed closing costs, prepaids, and/or MI. Borrower can finance amounts (not to exceed $5,000) over 100% up to a max LTV of 103% to cover closing costs, prepaid items and/or MI

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All states

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

Genworth-Insured Refinance (New Servicer) Including HARP-Eligible (New Servicer) loans through DU Refi Plus and Relief Refinance – Open Access (New Servicer) NY Coops Max 100% LTV

Subordinate Financing Occupancy Property Type Loan Type



All existing subordinate financing must be resubordinated and may not be paid off in the new transaction  No new subordinate financing may be obtained Same as original Occupancy Type Same as original Property Type  Fixed rate fixed payment  Fully amortizing ARM: 5yr, 7yr, 10yr An existing fixed rate loan may not be refinanced into an ARM. An ARM is allowed only if existing loan is an ARM. The number of months to first adjustment of the new ARM must equal or exceed the number of months to first adjustment of the existing ARM.

Loan Term New P&I Mortgage Payment History Seasoning Requirement MI Coverage %

MI Rates GSE AUS Result

DTI Minimum Credit Score Documentation Property Valuation Requirements

Underwriting Notes MI Ordering

Coverage % on the new loan may not increase from the original coverage %  Coverage may decrease if the new LTV is lower than the original LTV Subject to premium rates in effect at the time of new MI application Loans are not required to have a GSE AUS decision. If provided, the result must be Approve/Eligible or Accept Eligible Genworth-Insured Refinance (New Servicer) Overlays 45% 620 Full documentation New appraisal report:  FNMA 1004 / FHLMC 70 for 1 unit properties  FNMA 1073 / FHLMC 465 for condo units  A Field Review (Form 2000/Form 1032) is required for loan amounts > $625,500  Loan must meet all other standard Genworth Guidelines  Loan must be fully underwritten and documented Submit the Genworth-Insured Refinance Application, 1003/65, and 1008/1077 to the National Processing Center

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7.2

Genworth Affordable Housing Guidelines (11/15/10) Affordable Housing Requirements Primary Residence Only LTV CLTV Retail Originations

GLTV

TLTV

1 unit, Purchase & Rate/Term 97% 100% 97% 100% Refinance 1 unit, Purchase & Rate/Term 95% 100% 97% 100% Refinance 2 unit, Purchase & Rate/Term 90% 90% 95% 95% Refinance Non-Retail Originations: All States except AZ, CA, FL and NV Purchase & Rate/Term Refinance 95% 100% 97% 100% Non-Retail Originations: AZ, CA, FL and NV Purchase & Rate/Term Refinance 90% 90% 95% 95%

Score 680 6601 6601 720 720

NOTE: 97% LTV ineligible in AZ, CA, FL and NV 1 FL: Add 20 points to credit score for minimum credit score requirement

Condominiums and Attached Housing: Retail Originations: Maximum 95%/95% LTV/CLTV. Non-Retail Originations in all states except AZ, CA, FL and NV: 90%/95%. Non-Retail Originations in AZ, CA, FL and NV: 90%/90%. Cooperative Units: Retail Originations: Maximum 95%/NA LTV/CLTV. Non-Retail Originations: Maximum 90%/NA Manufactured Housing: Retail Originations: Maximim 85%/85%

General Requirements

Subordinate Financing Loan Types

Borrower Contribution Traditional & Nontraditional Credit History



Maximum 100% of Area Median Income (AMI) as defined by HUD, unless the property is located in a high cost area where a higher AMI is permitted. The income limit may be exceeded if the property is located in an “underserved area” as determined by HUD  Homebuyer education is required for first time homebuyers  Agency affordable housing programs are subject to the above referenced guidelines Subordinate financing must meet Fannie’s Community Second or Freddie’s Affordable Second guidelines  Fixed rate/fixed payment  Fully amortizing ARMs with initial adjustments > = 5 years  Temporary buydowns Minimum 3% from borrower’s own funds Traditional and nontraditional credit must be underwritten by Genworth Traditional Credit  Retail Originations: Maximum 97% LTV  Non-Retail Originations, all states except AZ, CA, FL and NV: Maximum 95% LTV.  Non-Retail Originations, AZ, CA, FL and NV: Maximum 90% Nontraditional Credit  Retail Originations: Maximum 95% LTV  Non-Retail Originations, all states except AZ, CA, FL and NV: Maximum 95% LTV.

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Affordable Housing Requirements Primary Residence Only  Non-Retail Originations, AZ, CA, FL and NV: Maximum 90% Property Types  Single family, detached  Condominiums and Attached Housing  Cooperatives  Manufactured Housing  Primary 2 units Underwriting by Genworth is required for: Genworth Underwriting Requirement  Retail Originations: Attached housing in FL  Non-Retail Originations: All properties in Florida Refer to Section 7.6 for guidelines Construction to Permanent Loan must meet all other standard Genworth guidelines Underwriting Notes

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7.3

EasySubmit® (11/15/10)

EasySubmit is a quick and easy way to order mortgage insurance on a non-delegated basis for loans that meet the program guidelines. Either order online or send a reduced level of documentation and receive a commitment.

Eligible Loans

MI Ordering Options

Maximum LTV Construction to Permanent Underwriting Criteria

Risk and Audit

EasySubmit EasySubmit is available for Agency AUS loans only with these decisions:  Desktop Underwriter Approve/Eligible  Loan Prospector Accept, Eligible for Purchase  Online, at mortgageinsurance.genworth.com  Paper: submit an Application for Genworth Mortgage Insurance, 1003 and a 1008/1077  EasySubmit is not a submission option for delegated MI (EXCEL) customers Lesser of 97% LTV or the LTV eligible for the loan Ineligible for EasySubmit  Loan must meet the guidelines in Section 1.6.1  All loan data must be verified and the loan completely underwritten, documented and determined to meet program guidelines prior to submitting for insurance  Lender represents and warrants that the loan is underwritten, documented, and meets program guidelines  Genworth reserves the right to request additional documentation  Terms and conditions of the standard Master Policy (MP201, Rev. 1) and its endorsements apply  Genworth reserves the right to rescind coverage if a submitted loan does not meet program guidelines  All loans submitted via EasySubmit are subject to audit

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7.4

Counseling Saver (02/16/10)

Loans that meet the requirements of Genworth’s Counseling Saver program are eligible for the Counseling Saver rate discount. The discount is available for monthly MI and split premium MI only.

Eligible Loans

Counseling Saver Counseling Saver program is open to all loans that meet Genworth’s guidelines and the following:  Classroom or face-to-face pre-purchase homebuyer education requirement consisting of a minimum of eight (8) hours  Education provider must be a nonprofit organization approved by Genworth Loan must meet all standard Genworth’s guidelines with the following limitations:  Primary residence  Purchase and rate/term refinance  Fixed rate and ARMs

Documentation

A certificate of completion or other documentation of classroom or face-to-face counseling by an approved nonprofit organization must be present in the loan file and available upon request.

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7.5

Pledged Assets (04/12/10)

Occupancy Primary

Purpose Purchase & Rate/Term

Pledged Assets Max LTV Max LTV before net of pledge pledge

Units

100%

95%*

Loan Amount $417,000

Credit Score 680*

NOTE: Loans with LTVs > 95% must be underwritten by Genworth. The maximum LTV for EXCEL and EasySubmit is 95%. * Declining/Distressed Markets: Maximum 90% net of pledge. Minimum credit score = 720 in AZ, CA, FL, MI and NV

Subordinate Financing Loan Types

Maximum DTI Downpayment Borrower’s Own Funds

Sources of Funds

Reserves

Property Types

Underwriting Notes Pledge Funds Source Pledge Agreement

Not permitted Eligible loan types:  Fixed rate fixed payment  ARMs with initial adjustments >= 5 years Ineligible loan types  Temporary buydowns  Balloons 41% None required, if pledge funds are from the borrower (first party)  Pledge from borrower’s own funds: if the 5% pledge is from the borrower, no additional contribution is required, except reserves  Pledge from third party (immediate family member): if the pledge funds are provided by a third party, the borrower is required to make a 3% contribution from own funds, in addition to reserves In addition to the borrower’s own funds, these sources are acceptable for closing costs and prepaids:  Gifts from relative, domestic partner, fiancé, fiancée, church, municipality, public agency, or nonprofit (other than a credit union)  Grants from an employer, public agency or nonprofit organization  Unsecured borrowed funds from a nonprofit, employer, government municipality or relative  Borrower funds secured by an asset per Agency guidelines Purchase: 2 months reserves PITI from borrower’s own funds, including DU and LP Rate/Term: For DU and LP, verify reserves as determined by the AUS. For non-DU and LP, 0 months Eligible property types:  Single family, condo, PUDs Ineligible property types:  Coops, Manufactured housing, 2-4 units Loan must meet all other standard Genworth guidelines Pledge funds may be pledged by the borrower (first party) or third party (immediate family member) The pledged asset agreement in use by the lender for

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Pledge Release

Pledged Assets execution by the pledgor (borrower) must contain the following basic terms: Pledge may be first party pledge or third party pledge The lender must perfect a senior security interest in the collateral, with the right vesting in the investor or servicer to foreclose on or otherwise liquidate the collateral in the event of borrower default  Neither the pledgor nor any other party is allowed to access or impair the security interest in the pledged assets The pledge will not be released until either loan payoff or cancellation of MI. However, Genworth may consider the release of the pledge under the following terms:  May be considered after 7 years for a 30 year mortgage and after 5 years for a 25 year mortgage  The mortgagor must be current on loan payments with no delinquencies in the last 12 months  Based on a current appraisal acceptable to Genworth, the current LTV of the related loan must be less than the original net LTV (i.e., the LTV of the loan less the amount of the pledge)  Documentation: the following documents must be submitted to the National Processing Center (NPC): letter of request, current appraisal (within the last 120 days), and a loan payment history showing current principal balance and activity for the last 12 months  Genworth’s agreement to allow the release of the pledge will not waive its rights to deduct the total amount of the pledge in the event of a claim settlement

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7.6

Construction to Permanent Loan (06/28/10) Construction to Permanent Loan

Occupancy Primary

Purpose Purchase & Rate/Term

Single Close Description

Two-Close Transactions

Loan Purpose

Construction to Permanent Purchase Transaction

Construction to Permanent Rate/Term Refinance Transaction

LTV/CLTV

Units

Loan Amount

Credit Score

95%/95%

$417,000

680



Combines the interim construction financing and the permanent financing into a single closing  Borrower is underwritten and qualified one time according to the terms of the permanent financing  At conclusion of the construction, the loan automatically converts to a permanent long-term mortgage Genworth will insure the “end loan” or “permanent loan” that is obtained at time of completion of the construction to replace the interim construction financing. These loans are not considered construction to permanent and follow standard Genworth guidelines.  Purchase  Rate/Term Refinance  Ineligible: Cash-out Refinance Borrower is not the owner of record of the land prior to the closing of the construction financing LTV Calculation Lesser of:  Acquisition cost (purchase price of the lot plus total documented construction costs), or  Appraised value, as completed Borrower is the owner of record of the land prior to the closing of the construction financing. Land owned >=12 months

Appraised value, as completed

Loan Types

Land owned < 12 months Lesser of:  Acquisition cost (purchase price of the lot plus total documented construction costs) or  Appraised value, as completed

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

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DTI Borrower Contribution Lot Equity

Construction to Permanent Loan 41% Minimum 5% borrower own funds or lot equity Lot equity is the value or cost of the land minus the amount owed on the land. Lot purchased < 12 Months Value or cost of the land is the lower of current appraised value or the original purchase price. Lender must document the purchase of the land (HUD-1) and the transfer of ownership of the land to the borrower.

Reserves

Borrower/Builder Property Types

Appraisal Documentation

Underwriting Notes MI Underwriting Commitment Term

Commitment Condition

Coverage During Construction Prior to MI Activation

Lot purchased > = 12 Months Value or cost of the land is the current appraised value  Purchase & Rate/Term Refinance: 2 months, regardless of DU and LP  Current residence pending sale: follow Primary Residence Conversion guidelines Borrower cannot be the builder/contractor Eligible property types:  Single family, detached Ineligible property types:  2-4 units, attached housing, condominiums, cooperatives, manufactured housing  URAR, “subject to completion” completed by a licensed or certified appraiser at time of Genworth underwrite  The appraisal form and applicable addenda must meet Agency requirements  Appraisal Update and/or Completion Report (Form 1004D/442) completed by appraiser at completion of construction  A new appraisal may be required at completion of construction if (1) the appraiser indicates on the 1004D/442 that the value has declined, or (2) the original appraisal >180 days  Loan must meet all other standard Genworth guidelines  Retail originations only  Full loan package must be underwritten by Genworth  No EXCEL or EasySubmit delivery options  12 months  Extensions and reinstatements not permitted. Loan must be resubmitted and will receive current rates and guidelines. Commitment and Certificate of Insurance will be issued subject to satisfactory review by Genworth of completion and property value documentation. The condition must be cleared prior to coverage activation. Mortgage insurance coverage is not provided during the construction phase. No MI premiums are collected during the construction period. 1. At completion of construction and prior to coverage activation, the lender is required to submit documentation to Genworth to clear the commitment condition. If the original appraisal is:  <= 120 days: submit Form 1004D/442 with the Certification of Completion section completed by the

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Terms for Activation of Coverage

Loan Close Date

Construction to Permanent Loan appraiser  120 – 180 days: submit Form 1004D/442 completed in its entirety by the appraiser. If the appraiser notes that the market value has declined, then a new appraisal is required  180 days: new appraisal required 2. Lender must update and provide to Genworth the final loan amount and appraised value if these are different than the amounts on the commitment. Final LTV may not exceed 95%. 1. Construction must be completed at the time of activation as evidenced by acceptance of the property by the borrower (such as a final walk through inspection report) and issuance of a Certificate of Occupancy by the applicable municipality. These documents must be added to the loan file. 2. Loan is ineligible if borrower has any 30-day delinquencies during construction phase. The pay history from the construction phase must be added to the loan file. 3. All mechanics’ liens, materialmen’s liens or any other liens affecting title must be satisfied prior to activation of coverage. 4. Receipt of the loan close date and premium serves as the lender’s representation and warranty that:  The borrower had no delinquencies during the construction phase  There are no outstanding liens or any debt affecting title, and  The loan file documentation is complete. The loan close date provided to Genworth to activate coverage is the date the loan converts to the permanent financing

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8 Commitment/Certificate Genworth issues a Commitment/Certificate of Insurance for each approved loan.

8.1

Changes Prior to Certification: Not Requiring Prior Approval (11/01/05)

Lenders may make some changes and corrections to the Commitment/Certificate without submitting a new application or receiving prior approval from Genworth:  Changes in renewal premium option  Decrease in loan amount not exceeding 1%  Typographical corrections to borrower’s name or property address  Increase in either the note rate or borrower’s payment rate of 100 basis points or less Changes not requiring prior approval may be made by indicating the correction on the Commitment copy remitted to Genworth. An amended Commitment/Certificate will be issued.

8.2

Changes Prior to Certification: Requiring Prior Approval (01/07/08)

Some changes and corrections to the Commitment/Certificate require prior approval from Genworth, such as:  Assignment of commitment  Premium plan changes  Borrower addition or deletion  Mortgage instrument changes  Decrease in loan amount exceeding 1%  Loan term changes  Decrease in the initial interest rate  Loan amount increases  Increase in either the note rate or borrower’s  Property changes, including changes in payment rate over 100 basis points property value

Changes requiring prior approval should be submitted to your local Genworth Mortgage Insurance underwriting office for review. An amended Commitment/Certificate will be issued upon approval.

8.3

Modifications (03/23/09)

Modification requests should be forwarded to our National Processing Center for prior approval. Modifications of delinquent or potential delinquent loans should be referred to the National Loan Workout Center in Raleigh for review. Refer to specific instructions on our servicing website for U.S. Department of the Treasury Modification Programs.

8.4

Closed Loans (11/17/08)

Genworth may insure loans that were closed more than 120 days ago and were previously uninsured (or insured by another mortgage insurer) provided the loan meets our current underwriting guidelines. At a minimum, the following documentation must be submitted to our offices for underwriting:  A copy of the current mortgage payment history. For loans seasoned twelve or more months, the payment history must evidence the last twelve months  Final, verified 1003 and 1008  Current credit report  If the appraisal is more than 120 days old, an appraisal update with three new comps is required. A new appraisal may be used to confirm value  Genworth may request additional documentation as deemed necessary for the underwriting decision Mortgage insurance premiums are based on current rates and collected from original loan closing date.

8.5

Pre-Qualifications (05/05/08)

Delegated and EasySubmit loans must be fully documented (including the appraisal), underwritten, and determined to meet current guidelines prior to submission. A pre-qualification or credit-only request where the subject property has not been determined must be submitted to our offices for underwriting.

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8.6

Changes after Certification (01/07/08)

8.6.1 Loan Sales Our Policy Servicing Department should be advised when you sell a loan and/or transfer its servicing so that our records can be changed. If we are not notified, renewal billings could be sent to the wrong servicer. Appropriate forms can be obtained by calling the Action Center at 800 444.5664. 8.6.2 Waivers In the event a borrower requires a waiver for easements, the lender must be given prior approval by our Policy Servicing Department for insurance to remain in force. The following documentation is required:  Appraiser statement that changes do not adversely affect the property value  Survey showing the changes Genworth’s approval of a waiver is contingent upon such waiver not affecting the title or the marketability of the property. 8.6.3 Reinstatement of a Canceled Certificate Genworth’s Policy Servicing Department will consider reinstating canceled certificates upon a request from the insured. The most recent twelve (12) month payment history or if a loan has not established a twelve (12) month history, the payment history for the life of the loan will be reviewed. The borrower should not be more than 1 x 30 days late in the past twelve (12) months and should not have been delinquent at all within the last three (3) months. Genworth may request additional documentation as deemed necessary. 8.6.4 Assumptions Assumptions on loans that do not release the original borrower from liability require no written approval by Genworth as long as the new borrower qualifies under the insured’s current underwriting guidelines. Lenders should provide Genworth’s Policy Servicing Department with an Assumption Notice. In the event of an assumption with release of liability of the original borrower, a Genworth Assumption Notice form and a complete credit package for the new borrower should be submitted to your local Genworth Mortgage Insurance underwriting office. A new appraisal is not required. The assumption will be underwritten to current guidelines and an amended Certificate of Insurance will be issued. Complete packages for assumptions of delinquent or potentially delinquent loans will be referred to the National Loan Workout Center in Raleigh for review to determine acceptance of the new borrower. In some cases, the Insured is obligated to consent to an assumption (e.g., when there is no “due-on-sale” clause in the note and deed or trust, or where the lender is required by applicable law to permit an assumption). Under these circumstances, our coverage on the loan will automatically continue. We will, however, still require the Assumption Notice. 8.6.5 Terms/Extensions/Reinstatement of Expired Commitments (11/15/10) Genworth’s Commitment of Insurance is valid for four (4) months from date of issuance. The term for HARP-Eligible Refinance (Same Servicer) is six (6) months. Our standard commitment term is twelve (12) months for construction-to-permanent loans. Insurance on such loans is subject to the property being completed and sold to the borrower pursuant to the original specifications and plans submitted with the credit package. Existing commitments set to expire will no longer be extended upon request. The loan may be insured as a new transaction with current documentation in accordance with the guidelines and rates in effect as of the new request. 8.6.6 Partial Releases (10/06/08) A release of any portion of the property also requires Genworth’s prior approval. The following documentation should be submitted to our Policy Servicing Department:  Letter outlining the specifics of the release, including why the release is requested, amount of money exchanged, if any  Twelve (12) month payment history  Copy of the deed

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   

Copy of the mortgage Copy of the original appraisal Survey outlining the property to be released relative to the location of the house New appraisal stating the value of the land released and the impact on the value of the insured property

If the new appraisal of the remaining property indicates no reduction or increase in property value arising from the partial release, Genworth will not require that funds received from the sale of property be applied to the borrower’s principal balance. If the property value is reduced, we reserve the right to deny the request or require the funds to be applied to reduce the outstanding loan balance. In the case of “eminent domain”, a new appraisal is not necessary.

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9 Appendix A: Declining/Distressed Markets (11/15/10) Genworth considers the following states in their entirety as Declining/Distressed Markets:  Arizona  California  Florida  Nevada

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