SM Underwriting Guidelines - National MI...2013/09/15 · national Mi TrueGuidesM: Underwriting...

National MI TrueGuideSM

Underwriting Guidelines

National Mortgage Insurance Corporation | 2100 Powell Street | 12TH Floor | Emeryville, CA 94608 | www.nationalmi.com

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v e r s i o n 1 . 4

Effective: 9.15.2013Dated: 9.15.2013

National MI TrueGuideSM: Underwriting Guidelines

2 A S 0.13.02E f f E c t i v E : 9 .15.2013

Table of Contents 1.0 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.1 NationalMITrueGuideSMUnderwritingPhilosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.2 Fair Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.3 Insured Originator Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.4 DelegationofUnderwritingAuthority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.5 NationalMIAXISOnlineSystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.6 GSEAUSSystems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.7 Delegated Assurance Review Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.8 Premium Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.9 GuidelineQuestions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2.0 Mortgage insurance eligibility —AUs Plus overlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1 AUS Requirements and Comprehensive Credit Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.1 DU/LP Outcomes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.2 Data Integrity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.3 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1.4 Comprehensive Credit Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.2 GeneralEligibilityRequirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2.1 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2.3 ConstructiontoPermanent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2.4 RenovationLoans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2.5 Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.2.6 Residency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.2.7 Credit History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.2.8 Non-arm’sLengthTransactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.2.9 Assets and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.2.10 Wholesale Lending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.3 Credit Overlay Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.3.1 ProductEligibilityMatrix—ConformingLoans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.3.2 ProductEligibilityMatrix–ConfirmingHighBalanceLoans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.3.3 ProductEligibilityMatrix—AffordableLending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3.0 Mortgage insurance eligibility —non AUs Dependent – standard Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1 Mortgage Products (Loan Type) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1.1 FixedRateMortgages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1.2 GraduatedPaymentMortgages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1.3 BalloonMortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1.4 AdjustableRateMortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1.5 SubordinateFinancing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.1.6 Buydowns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.2 BorrowerEligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.2.1 CitizenshipandResidencyRequirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.2.2 Non-occupantCo-borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.2.3 Co-signers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.2.4 Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21


3 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.2.5 Non-Arm’sLengthTransactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.2.6 MaximumNumberofInsuredLoans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.2.7 BorrowerswithPreviouslyPaidClaims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.3 Occupancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.3.1 Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.3.2 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.3.3 Occupancy Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.4.1 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.4.2 RateandTermRefinance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.4.3 CashOutRefinance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.4.4 CorporateRelocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.4.5 ConstructiontoPermanent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.4.6 HomeRenovation(Improvement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.5 UnderwritingtheBorrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.5.1 IncomeDocumentationandCalculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.5.1.1 GeneralandForm4506Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.5.1.2 Alimony or Child Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.5.1.3 Auto Allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.5.1.4 BonusorOvertime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.5.1.5 CapitalGains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.5.1.6 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.5.1.7 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.5.1.8 EmploymentOffers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5.1.9 Foreign Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5.1.10 Foster Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5.1.11 Hourly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5.1.12 Interest and Dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5.1.13 Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.5.1.14 NoteReceivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.5.1.15 Overtime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.5.1.16 Part-Time or Secondary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.5.1.17 PublicAssistance(IncludingHousingChoiceVoucher–Section8) . . . . . . . . . 28 3.5.1.18 Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.5.1.19 RetirementAssetLiquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.5.1.20 Retirement,GovernmentAnnuity,andPension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.5.1.21 Reverse Mortgage Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.5.1.22 Royalty Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.5.1.23 Salaried/Hourly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.5.1.24 Seasonal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.5.1.25 SecondaryEmployment(SecondJob) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.5.1.26 Self-Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.5.1.27 Social Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.5.1.28 Temporary Leave. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.5.1.29 Tips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.5.1.30 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.5.1.31 UnemploymentBenefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.5.1.32 VABenefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3.5.1.33 IneligibleSourcesofIncome. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34


4 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.2 VerbalVerificationofEmployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.5.3 AssetDocumentationandCalculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.5.3.1 SourceofMinimumBorrowerContributions(Borrower’sOwnFunds) . . 35 3.5.3.2 AdditionalEligibleAssets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 3.5.3.3 IneligibleAssets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 3.5.3.4 InterestedPartyContributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 3.5.3.5 Reserve Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 3.5.4 Credit Reports and Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.5.4.1 TraditionalCreditRequirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.5.4.2 Non-TraditionalCredit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.5.4.3 Foreign Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.5.4.4 RepresentativeFICOScoreforUnderwriting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.5.4.5 Minimum FICO Score . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3.5.4.6 Payment of Derogatory Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3.5.4.7 Fraud Alert Messages on Credit Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3.5.5 LiabilitiesandRatios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3.5.5.1 GeneralRequirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3.5.5.2 QualifyingPaymentAmounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 3.5.5.3 Debt-To-Income(DTI)Ratios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.6 UnderwritingtheProperty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.6.1 EligiblePropertyTypes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.6.1.1 Single Family/PUD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.6.1.2 Condominiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.6.1.3 Co-ops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.6.1.4 Two-Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 3.6.1.5 MixedUse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 3.6.1.6 Acreage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 3.6.1.7 Factory-BuiltHousingOtherThanManufacturedHousing . . . . . . . . . . . . . . . . . . . . . 44 3.6.1.8 Zoning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 3.6.1.9 Accessory Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 3.6.1.10 PropertyCondition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 3.6.1.11 PostponedImprovements–CompletionEscrows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 3.6.1.12 PropertiesListedorPreviouslyListedforSale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.6.2 IneligiblePropertyTypes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.6.3 EligibleOwnershipTypes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3.6.3.1 Fee Simple Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3.6.3.2 Leasehold Estates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3.6.4 Property Flips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3.6.5 GeographicandMarketConsiderations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3.6.5.1 RestrictedMarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 3.6.5.2 AppraisalIndicatesDecliningMarket. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 3.6.6 Appraisal Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 3.7 Loan-to-Value(LTV)andHomeEquity CombinedLoan-to-Value(HCLTV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.7.1 FinancedPremiumsandLTV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.7.2 HomeEquityCombinedLoan-to-Value(HCLTV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50


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3.8 Loan Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.9 Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.9.1 Flood Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.9.2 HazardInsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.9.3 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.10 Legal and Regulatory Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.11 AgeofDocumentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.11.1 CreditBureauandFICOScore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.11.2 IncomeandAssetDocumentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.11.3 VerbalVerificationofEmployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.11.4 Appraisal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.12 AdditionalRequirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.12.1 OriginationChannel(RetailandNon-Retail) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.12.2 Fraud Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3.12.3 Changes to MI Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3.12.4 Incomplete/DeniedApplicationsandBorrowerCommunication . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3.12.5 Pre-Funding Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 3.13 ProductEligibility—NonAUSConformingandJumboLoanAmounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

4.0 CommitmentsandCertificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.1 ConditionalCommitmentsand/orPre-qualifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.2 SubmissionRequirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.2.1 DelegatedSubmissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.2.2 Non-delegatedSubmissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4.3 SubmissionMethods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.3.1 Upload(partial)withDataEntry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.3.2 Data Entry Only. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.3.3 Electronic Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.3.4 Fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.3.5 Email. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.3.6 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.4 NationalMICommitmentofInsuranceandInsuranceActivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

5.0 ChangesAfterInsuranceIssued(Certification) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 5.1 InsuringLoansafterClosing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 5.2Assumptions,PartialReleasesandTransferofTitle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 5.3 ModificationstoExistingNationalMIInsuredLoans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 5.4 ReinstatementofCancelledCertificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

6.0 UnderwritingGuidelineManualRevisionHistory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

7.0 NationalMITrueSolutionssM summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61


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1.0 Introduction

1.1 NationalMITrueGuidesMUnderwritingPhilosophyNationalMortgageInsuranceCorporation(NationalMI)offersmortgageinsurance(MI)inthe48statesandtheDistrictofColumbia.1MIplaysanimportantroleinthehousingfinancesystemexpandinghomeownershipopportunitiesbyhelpingpeople,especiallyfirsttimehomebuyers,purchase homes with less than 20% down.

NationalMIbringsnewcapitaltothemarketunburdenedbylegacyexposures–thisstrongcapitalpositionprovidesNationalMI’scustomerswithalowcounterpartyriskMIsolution.

NationalMIseekstopartnerwithitscustomerstoprudentlymanageinsuredrisk.Theprocess starts with the approval of insured originators and monitoring of credit performance. Creditguidelinesandpricingarecontinuouslymonitoredandupdatedwhennecessaryasenvironmentalconditionschange.

NationalMI’sunderwritingphilosophyistodeterminewhetheraborrowerqualifiesforamortgageloanandiftheborrowercansuccessfullymaintainhomeownership.NationalMIperformsanindependentunderwritingreviewofthecreditworthinessoftheborrower.Ourunderwritingisbasedonacarefulassessmentofmortgagecreditriskasfollows:

�� CreditandIncomeHistory,AssetsandLiabilities:Theborrower’swillingnessandabilitytorepay the loan

�� EquityandDownPayment:Theborrower’scommitment

�� Appraisal:Themarketabilityofthepropertyandjustificationofitsvalueasdocumentedinthe appraisal

InsuranceisunderwrittenandapprovedbyNationalMIorbypartnerswithdelegatedapprovalauthority.Eachinsuredoriginator’sdelegatedunderwritingapprovalisassessedviaNationalMI’sindependentup-frontre-underwriting(DelegatedAssuranceReview)processthatwillcoverallofneworiginations.ThisprocessprovidesvaluablefeedbacktoboththeoriginatorsandNationalMI.Thisprocessalsoprovidescustomerswithahighlevelofconfidencethatavalidclaimwillbepaidbyreducingtheriskofrescissionsduetomissing/insufficientdocumentationand/orfraud/misrepresentation.

Guidelinesareorganizedaroundthefollowingsegments:

�� ConformingLoanswithGSEAutomatedUnderwritingSystem(AUS)Approval�� ConformingHighBalanceLoanswithGSEAUSApproval�� NonGSEAUS–StandardGuidelines

1 AsofMay3,2013NationalMortgageInsuranceCorporationwaslicensedin48statesandtheDistrictofColumbiatowriteinsurance.


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LoanswhichreceiveaFannieDU/ApproveRecommendationoraFreddieLPAccept/EligibleResponseandsatisfyafewcreditunderwritingoverlaysgenerallymeetNationalMI’seligibilitycriteria.ApprovalformortgageinsurancewilldependuponapprovalbyaNationalMIunderwriterfornon-delegatedloansorapprovalbyalenderunderwriterfordelegatedloans.Lenderunderwritersareexpectedtopracticeprudentandcomprehensiveunderwritingandriskassessment.AlldelegatedloanswillreceiveaDelegatedAssuranceReviewbyaNationalMIunderwriter,describedinSection1.7ofthisUnderwritingManual.

IntheeventNationalMI’sguidelinesaresilentonatopic,thestandardagencyguidelines(excludinganycustomvariancesthatmayhavebeennegotiated)ofanagency(FNMAorFHLMC)thattheinsuredoriginatorisdeliveringloanstoapplies,eveninsituationswheretheloanamountisnoteligiblefordeliverytoeitheragency.IftheoriginatorisretainingloansratherthansellingloanstoFNMAorFHLMC,thenthedefaultguidelineswillbeoneortheotheragencyasagreed to in the insured originator’s approval.

InsuredoriginatorswhoseektomakeexceptionstoNationalMI’sguidelinesmustsubmittherequesttoNationalMIforapproval.

1.2 Fair LendingItisillegaltodiscriminateagainstcreditapplicantsonthebasisofrace,color,religion,sex,maritalstatus,nationaloriginorancestry,andconditions,characteristics,ortrendsintheneighborhoodorgeographicareasurroundingahousingaccommodation.NationalMIiscommittedtotreatingallmortgageinsuranceapplicantsinafairandresponsiblemannerinaccordancewithallapplicablefederal,stateandlocalfairlendinglawsandregulations.Weexpectourapprovedoriginatorstobeequallydiligentinconductingtheirlendinginaccordancewithallapplicablefairlendinglawsandregulations.

1.3 insured originator ApprovalInsuredoriginatorsmustbeapprovedbyNationalMIbeforeaninsurancecertificatecanbeissued.OriginatorsshouldcontacttheirSalesAdvisortoinitiatethisprocess,orcallNationalMItollfreeat855.317.4NMI.Insuredoriginatorsmayalsoapplytobeanapprovedservicer.

Approvedoriginatorsareeligibleforinsurancecoveringmostloans.Certainprograms(listedbelow)requireaspecialapproval.InsuredoriginatorsseekingspecialapprovalshouldasktheirAccountManagerabouttheapplicationprocessandrequirements.

Programs Requiring Special Approval:

�� ConstructiontoPermanent

�� RenovationLoans

�� VariancestostandardagencyAUSrequirementsnegotiatedbytheInsuredOriginator

�� VariancestoNationalMIGuidelinesfornon-agencyloansandamounts


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1.4 DelegationofUnderwritingAuthorityInsuredoriginatorsmustbeseparatelyapprovedfordelegatedauthority.DelegatedauthoritymayberequestedinconjunctionwiththeinitialapprovalorbycurrentNationalMIcustomerswithout delegated authority. Originators should contact their Account Manager to learn more abouttheapplicationprocessandrequirements.

Approved originators with delegated authority may approve most loans for insurance. Certain loansarenoteligiblefordelegatedapprovalandmustbesubmittedtoNationalMIforapproval.These include:

�� NonArm’sLengthTransactions

�� PolicyExceptions

�� PropertyFlips(refertosection3.6.4withinthismanual)

1.5 NationalMIAXISOnlineSystemNationalMortgageInsuranceCorporation’sunderwritingplatform,justonecomponentofNationalMI’senterpriseinsurancemanagementsystem,isinnowayanautomatedunderwritingengine.Itdoes,however,containasystematizedkeysubsetofNationalMI’seligibilityrules,enablinginternalandexternaluserstosubmitloandataforaswiftresponseindicatingwhetheranyofthosekeyeligibilityrulesareinviolation.Thisinitialresponseprovidescustomerswithanefficientearlyindicatorofaloan’spotentialmortgageinsurancequalification.Ifthisinitialeligibilitycheckindicatesthatthesystematizedeligibilityruleshavebeenmet,theloanpackagemaybesubmittedtoNationalMIforapproval.Fulltime,experiencedunderwriterswillmanuallyunderwritetheentirecreditpackageandcollateral(appraisal)ofthefile.Forlenderswithdelegatedapprovalauthority,adelegatedcommitmentisissuedafterthelendersubmitstherequireddatatotheNationalMIsystem,whichautomaticallyinvokestheeligibilityrulecheck,and the pricing algorithms.

Beyondthesystematizedeligibilityrules,theNationalMIsystemsupports,andprovidesstructurefor,theunderwritingprocessfollowedbytheunderwriterswhenmanuallyunderwritingloans.Itprovidesworkflowfunctionality,asecurefacilityforstoringandretrievingloandocumentimages,mechanismsforcapturingandmonitoringunderwritingfindingsandconditions,afacilityforgeneratingcustomerfacingcommunicationsanddocuments,andawebbasedapplicationthatsecurelyenablescustomerstosubmitandtrackMIapplications,andretrieveNationalMIgeneratedcorrespondenceandinsurancecommitments.


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1.6 Gse AUs systemsFannieMae’sDesktopUnderwriter®(DU)andFreddieMac’sLoanProspector®(LP)areAutomatedUnderwritingSystems(AUS)withembeddedcrediteligibilityrequirementsthatlineupfairlycloselywithNationalMI’screditeligibilityrequirements.WhereNationalMIconsidersthe AUS outcome in its review process (AUS Plus Overlays guidelines), the AUS outcome is notsufficienttodetermineinsuranceeligibility.Theloanmustalso1)meetNationalMIcreditrequirementsdescribedwithintheseguidelines(refertosection2ofthismanualfordetails);and2)beunderwrittenbyaNationalMIunderwriter(Non-delegatedloans)orunderwrittenbyalenderunderwriterandsubjecttotheNationalMIDelegatedAssuranceReviewProcessdescribedinthefollowingsection.

1.7 Delegated Assurance review ProcessEachinsuredoriginator’sunderwritingwillbeassessedviaNationalMI’sindependentup-frontre-underwriting(DelegatedAssuranceReview)processthatwillcoverallneworiginations.

Thequalityassurancereviewwillassessin-filedocumentationandoccursoonafterfunding.Itisintendedtoachieveseveralobjectives:

InsuredoriginatorswillhavegreaterconfidenceofMIcoveragebecausethereviewreducestheriskofsubsequentrescissionsduetomissing/insufficientdocumentationand/orfraud/misrepresentation.

Theinsuredoriginatorwillreceivevaluablefeedbackaboutthequalityofneworiginations.Thisinformationmaybeusefultosupplementandconfirmthelender’sownQCfindings.

ThecontinuousfeedbackimprovesNationalMI’sabilitytomonitoreachoriginatoronareal-timebasisandworkwithitscustomerstoensuredelegatedunderwritingdecisionsremainalignedwithNationalMI’sguidelines.

1.8 Premium PlansNationalMIutilizesarisk-basedpricingapproachdrivenbyLTV,FICO®score,producttype(fixedornon-fixed);withadditionaladjustmentsforotherriskvariables.FixedpricingappliestofixedrateloansandARMswithinitialfixedperiodsof5yearsormore.

Borrowerpaidmonthlyrefundable,monthlynon-refundable,singlerefundable,andsinglenon-refundableplansareavailable.Optionsforamortizingrenewal,annualpremium,deferredmonthlyareofferedonmonthlyplans.Non-refundablelenderpaidmonthlyandsingleplansarealsoavailable.

Forthemostcurrentpremiumplansandpricing,refertotheNationalMIwebsite.


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1.9 GuidelineQuestionsNationalMIisavailabletoanswerguidelinequestions.PleasecontactyourAccountManager,callNationalMItollfreeat855.317.4NMI(4664),[email protected].


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2.0 Mortgage insurance eligibility - AUs Plus overlays

2.1 AUs requirements and Comprehensive Credit Assessment

2.1.1 DU/LP outcomesFannieMaeorFreddieMacAUSapprovals(DUApprove/EligibleorLPAccept/Eligible)maybeutilizedasaguidepostforMIapprovalprovidedtherequirementsinthissectionofthemanualaresatisfied.AUSapprovalsarenotreliedupontodetermineNationalMIeligibility.

NationalMIunderwritingofnon-delegatedloansandreviewofdelegatedloanswillentailacomprehensiveassessmentofeligibility(credit,capacityandcollateral)andNationalMI’sownunderwritingrequirements.

LoansthatarenotrunthroughaGSEAUSmustbemanuallyunderwrittenandmeettheeligibilitycriteriadescribedinsection3.0ofthismanual.

2.1.2 Data integrityThe“Eligible”decisionfromtheAUSisonlyinsurableifthedecisionisbasedonvalidandverifiedinputstothedecisionengine.Theinsuredoriginatormustverifyandconfirm1)theaccuracyofthedatasubmittedtotheAUSand2)thatthedocumentationsupportingthedatainputshasbeenappropriatelyevaluated.

2.1.3 DocumentationTheDU/LPdecision(finalAUSreport)mustbepresentinthefileandallapprovalconditionsrelatedtotheAUSdecisionmustbesatisfiedinaccordancewithagencyrequirements.Anyredflagsidentifiedinthereportorinthecourseofevaluatingthefilemustbesatisfactorilyaddressedintheloanfile.WhenafileissubmittedtoNationalMIforunderwriting,allconditionsnecessaryfortheMIunderwritingapprovalmustbesatisfiedanddocumented(excludingclosingconditions)priortoissuanceofourCommitmentandCertificateofInsurance.Attimeofclosing,allconditionsmustbesatisfiedanddocumentedinthefile.

2.1.4 Comprehensive Credit AssessmentTheinsuredoriginatormustmakeaprudentcomprehensivecreditassessmentconsideringallfactorsrelevanttothegrantingofcredit.ThisassessmentisnotlimitedsolelytofactorsthatareconsideredintheAUSbutalsoincludesrelatedagencycrediteligibilitycriterianotevaluatedbytheAUSandNationalMIcreditrequirements.Anyinformationthatarisesduringtheoriginationprocessraisingquestionsabout,orpotentiallycontradictoryto;variablesthatarepartofthebasisofthecreditapprovalmustbefullyinvestigatedto


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conclusion.Iftheinsuredoriginatorisunabletoobtainadditionalinformationnecessarytoallaytheconcerns,theloanisnotinsurable.

Lendersexercisingdelegatedauthoritywarrantthattheloanmeetstherequirementsoftheapplicableagency’sguidelines(includinganyfactorsthatmustbeconsideredoutsideof the AUS).

Lendernegotiatedvariancestostandardagencyrequirements(“custom”DUorLP)arenotinsurableunlessthevariancesarespecificallyreviewedandapprovedbyNationalMI.

LenderswarrantthatloansmeetbothagencyandNationaleligibilitycriteria.Consequently,whentherearedifferencesbetweenagencyandNationalrequirements,thelendermustoriginatetothemorerestrictiveofthetwoguidelines.Thisruleappliesatthelevel of individual policy topics.

2.2 General eligibility requirements

2.2.1 ProductsBothfixedandadjustablerateproductsareinsurable.ARMswithinterestonly,negativeamortization(scheduledorpotential),orpay-optionfeaturesarenoteligible.ARMswithinitialfixedperiodsoflessthan3yearsarenotpermitted.

2.2.2 PurposePurchase,rate-and-termrefinance,andcash-outrefinanceloansareinsurable.Seasonedloans(insuranceapplicationreceivedafterfirstpaymentduedate)arenotinsurable.

2.2.3 ConstructiontoPermanentConstructiontoPermanentloansmayonlybeoriginatedfollowingNationalMI’sreviewandapprovaloftheinsuredoriginator’sprocedures.NationalMIwillinsureone-timecloseloanstoamaximum95%LTVwithcoveragebeginningfollowingcompletionofconstruction(withcertificateofoccupancy)andpermanentend-loanclosing.

2.2.4 RenovationLoansRenovationloansmayonlybeoriginatedfollowingNationalMI’sreviewandapprovaloftheinsuredoriginator’sprocedures.NationalMIwillinsuresinglefamilyprimaryresidencerenovationloanstoborrowerswhoareindividuals.Coverageonrenovationloansbeginswhentherenovationiscomplete,andwhenrequiredbylocalordinanceduetothescaleoftherenovation,acertificateofoccupancyisobtained.


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2.2.5 occupancyPrimaryresidence,secondhomeandinvestmentpropertiesareeligible.Primaryresidencepurchasedocumentationmustincludeastatementfromtheborrowersthattheyintendto occupy the property as a primary residence. Occupancy should occur within 60 days of closing.

2.2.6 residencyBorrowerswhoareUnitedStatescitizens,permanentresidentaliens,ornon-permanentresidentaliensareinsurable.Non-permanentresidentaliensmustbeauthorizedtoworkintheU.S.Individualswithdiplomaticimmunityarenoteligibleborrowers.

2.2.7 CreditHistoryBorrowersmusthaveanacceptableU.S.credithistory.Non-traditionalcredit,non-traditionalcreditreports,foreigncreditreports,andborrowerswithoutacredithistoryarenoteligible.

2.2.8 Non-arm’sLengthTransactionsNon-arm’slengthtransactionsarenoteligiblefordelegatedunderwritingandmustbesubmittedtoNationalMIforapproval.Anon-arm’slengthpurchasetransactionoccurswhenthereisadirectrelationshiporbusinessaffiliation(family,employer,employee,etc.)betweentheborrowerandanotherparty(includingbutnotlimitedtotheseller,realestatebroker,loanoriginator,builder,appraiser,closingagent,etc.).

2.2.9 Assets and equityCash-on-handandsweatequitydonotqualifyaseligibleassetsforverificationpurposes.

2.2.10 Wholesale LendingLoanssourcedthroughtheWholesalechannel(broker)areonlyeligibleforinsuranceifthelenderhasbeenspecificallyapprovedforWholesalefollowingNationalMI’sreviewofthelender’spractices.


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2.3 Credit overlay requirementsNationalMI’screditoverlaysareincludedonthefollowingproductmatrices.overlays establish minimumrequirementsaccordingtoNationalMIpolicy–iftheagencyhasamorerestrictivepolicyrequirement,themorerestrictiveagencyrequirementmustbemet. Insured loans must meettheeligibilitycriteriainthematricesonthefollowingpages:

2.3.1 Product eligibility Matrix - Conforming Loans

2.3.2 ProductEligibilityMatrix-ConformingHighBalanceLoans

2.3.3 ProductEligibilityMatrix–AffordableLending


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Per AUS Approval

Per AUS Approval

Per AUS Approval

Maximum DTi

Pr od u c t El ig ib il ity Conforming Loans

AuS PluS ovErlAyS guidElinE SummAry – conforming loAnS

ADUApprove/EligibleorLPAccept/Eligibleloanisinsurableprovideditmeetsthefollowingunderwritingoverlays*:

�� ARMmaximumLTV95%,minimuminitialfixedterm3years,andminimum660FICOifinitialfixedterm<5years�� Minimum3%fromoccupantborrower’sownfunds.�� Exterioronlyappraisalsorevaluations;propertyinspectionwaivers,AVMsorBPOsarenotpermitted�� GeographicExclusions:AttachedcondosinClarkcountyNevada2

standard market gu idel ines

occupancy

Primary Residence

Second Home

Investment Property

All

Loan Purpose

Purchase or Rate/TermRefinance

Cash-OutRefinance

ConstructiontoPermanent***



Purchase

All

Property Type

Single Family Condo or Co-op



Single Family

Two-Unit

Single Family or Condo

Single Family

Manufactured Homes

Loan Amount

$417,000**

$417,000**

$417,000**

$417,000**

$533,850**

$417,000**

$417,000**

All

Maximum LTv/CLTv

97

95

85

95

90

90

85

Not Eligible

Minimum FiCo

700

620

660

700

680

680

680

Not Eligible

Per AUS Approval

Per AUS Approval

Per AUS Approval

Per AUS Approval

Not Eligible

restr icted market gu idel ines

Therearenomarketsidentifiedasrestricted.

* WhentherearedifferencesbetweenagencyandNationalMIrequirements,lendersmustoriginatetothemorerestrictiveofthe two guidelines. This rule applies at the level of individual policy topics.

** CooppropertiesareeligibleinNewYork,NewJersey,Maryland,IllinoisandWashington,D.C.only MaximumAmountsforAKandHIare$625,500(1unit)and$800,775(2units)

*** LenderCtoPapprovalrequired-coveragebeginsaftercompletionwithpermanentendloanclosing.

2 As of May 31, 2013, we are not licensed to issue mortgage insurance policies in Florida and Wyoming.


16 A S 0.13.02E f f E c t i v E : 9 .15.2013

Not Eligible

Not Eligible

Not Eligible

Maximum DTi

Pr od u c t El ig ib il ity ConformingHighBalanceLoans

AuS PluS ovErlAyS guidElinE SummAry – conforming HigH bAlAncE loAnS


�� ARMminimuminitialfixedterm3years,andminimum660FICOifinitialfixedterm<5years�� Minimum3%fromoccupantborrower’sownfunds.�� Exterioronlyappraisalsorevaluations;propertyinspectionwaivers,AVMsorBPOsarenotpermitted�� GeographicExclusions:AttachedcondosinClarkcountyNevada3


occupancy

Primary Residence

Second Home

Investment Property

All

Loan Purpose


Cash-OutRefinance


All

All

All

All

Property Type

All


All

Single Family

Two-Unit

All

All

Manufactured Homes

Loan Amount

All

$625,500**

All

$625,500**

All

All

All

All

Maximum LTv/CLTv

>90% NotEligible

90

Not Eligible

90

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Minimum FiCo

Not Eligible

620

Not Eligible

700

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Per AUS Approval

Per AUS Approval

Not Eligible

Not Eligible




** CooppropertiesareeligibleinNewYork,NewJersey,Maryland,IllinoisandWashington,D.C.only MaximumAmountsforAKandHIare$938,250(1unit)and$1,201,150(2units) Refertothecountyspecificloanlimitstodeterminethemaximumamountforaspecificarea

*** LenderCtoPapprovalrequired-coveragebeginsaftercompletionwithpermanentendloanclosing.



17 A S 0.13.02E f f E c t i v E : 9 .15.2013

Not Eligible

Not Eligible

Not Eligible

Maximum DTi

Pr od u c t El ig ib il ity AffordableLending

AuS PluS ovErlAyS guidElinE SummAry – conforming AffordAblE lEnding

ADUApprove/EligibleMyCommunityMortgageorLPAccept/EligibleHomePossibleMortgageloanisinsurable provideditmeetsthefollowingunderwritingoverlays*:�� ARMminimuminitialfixedterm3yearsandmaximumLTV90%�� Exterioronlyappraisalsorevaluations,propertyinspectionwaivers,AVMsorBPOsarenotpermitted�� Non-traditionalcreditisnotpermitted�� Giftspermittedbutdonotcounttowardrequiredminimum3%verifiedassets(minimum1%borrowercontribution isrequiredfromthe3%verifiedassets)�� GeographicExclusions:AttachedcondosinClarkcountyNevada4


occupancy

Primary Residence

Second Home

Investment Property

All

Loan Purpose


Cash-OutRefinance


All

All

All

All

Property Type




All

All

Two-Unit

All

All

Manufactured Homes

Loan Amount

$417,000

$417,000

$417,000

All

All

All

All

All

All

Maximum LTv/CLTv

97/103%**

95/101%**

90/96%

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Minimum FiCo

680 or 700***

660 or 680***

660 or 680***

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Not Eligible

45% or 41%***

45% or 41%***

45% or 41%***

Not Eligible

Not Eligible

Not Eligible


* WhentherearedifferencesbetweenagencyandNationalMIrequirements,lendersmustoriginate tothemorerestrictiveofthetwoguidelines.Thisruleappliesatthelevelofindividualpolicytopics.

** MinimumLTVis95.01%for103%CLTVandminimumLTVis90.01%for101%LTV. *** 97%LTV:680/45%ifborrowercontribution>=3%,else700/41%. <=95%LTV:660/45%ifborrowercontribution>=3%,else680/41%.




18 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.0 Mortgage insurance eligibility – non AUs Dependent – standard Guidelines

Loansthatdonotmeettherequirementsofsection2.0ofthismanualmustbemanuallyunderwrittenandmeettheeligibilitycriteriadescribedinthissectionofthemanual.

Wheretheseguidelinesaresilentonatopic,standardagencyguidelines(excludinganynegotiatedvariances)apply.Lendersthatdobusinesswithbothagenciesorneitheragencymustdesignateanagencyforpurposesofapplicationofthisdefaultguidelinerule.Lendersmaynotpickandchoosebetweentheguidelinesofthedifferentagenciesonindividualpolicyquestions.

3.1 MortgageProducts(LoanType)

3.1.1 Fixed rate MortgagesFixedratefullyamortizingproductsareeligibleuptoamaximumtermof40years.Fixedrateinterestonlyproductsarenoteligible.

3.1.2 Graduated Payment MortgagesFixedoradjustablerategraduatedpaymentmortgagesarenoteligible.

3.1.3 BalloonMortgagesBalloonmortgagesarenoteligible.Note:Balloonmortgagestaketheformofinterest-onlyloansorpartiallyamortizingmortgages.Balloonmortgagesrequireborrowerstomakeregularpaymentsforaspecificintervalandthenpayofftheremainingbalancewithinarelativelyshorttime.Sometypesofballoonmortgagescanbeinterest-onlyfor10years,andthefinal“balloon”paymenttopayoffthebalancecomesasonelargeinstallmentatthe end of the term.

3.1.4 AdjustableRateMortgages(ARMs)ARMsthatarefullyamortizingareeligibleuptoamaximumtermof30years.ARMswithinterestonly,negativeamortization(potentialorscheduled)orpaymentoptionfeaturesarenoteligible.

ThemostcommonARMcapsarethe“initialcap,”“periodiccap”and“lifetimecap.”Theinitialcaplimitshowmuchtheinterestratecanbeincreasedthefirsttimeitisadjusted.Theperiodiccaplimitshowmuchtheinterestratecanbeincreasedeachsubsequenttimethatitisadjustedaftertheinitialadjustment.Thelifetimecapsetsamaximumamountbywhichtheinterestratecanbeincreasedduringthelifeoftheloan.


19 A S 0.13.02E f f E c t i v E : 9 .15.2013

ThefollowingadditionalrequirementsapplytoARMs:

EligibleIndices: Treasury,Libor,11thDistrictCostofFunds, or Federal Reserve CD rates

InitialFixedPeriods: Minimum36months

InitialAdjustmentCap: RequiredforallARMs

Maximum3%forARMswithaninitialfixedperiod of less than 7 years

Maximum5%forallotherARMs

Per Adjustment Cap: Required for all ARMs Maximum2%

LifetimeRateCap: RequiredforallARMs Maximum6%

MaximumShortfall: Themaximuminitialdiscountfrom thefullyindexedrateis300bps

TemporaryBuydowns: Disregardedforqualifyingpurposes

3.1.5 subordinate Financing

General requirementsPurchaseloanswithnewsubordinatefinancingarenotpermitted.

Newsubordinatefinancingisnotpermittedinrefinancetransactions.Existingsubordinatefinancingmaybere-subordinatedinarefinancetransactionthatdoesnotincludecashout.Anexistinglienmaybere-subordinatedinacash-outrefinanceonlyifthejuniorlienis a term loan (not a line of credit) and all of the cash out is paying down the second lien balance(butisinsufficienttofullyextinguishthejuniorlien).

AffordableLendingProgramsSubordinatefinancingispermittedforaffordablelendingprogramsmeetingthefollowingrequirements:

�� ProgramisindividuallyreviewedandapprovedbyNationalMI


20 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.1.6 BuydownsTemporaryinterestratebuydownsarepermittedsubjecttothefollowingrestrictions:

�� NotpermittedforARMs,cash-outrefinances,orinvestorproperties

�� Mustbeestablishedandfullyfundedatclosing�� Agreementmustbeinwriting�� Fundsmayonlybepaidtotheborroweriftheloanispaidoff,usedtoreducethebalanceintheeventofforeclosure,orretainedanappliedgoingforwardifthepropertyistransferredandtheexistingloanisassumed�� Fundsmaynotbeusedtopaypastdueamountsortopaydowntheloanbalance

Thetemporarybuydownmustbeignoredforqualifyingpurposes.

3.2 BorrowerEligibility

3.2.1 CitizenshipandResidencyRequirementsBorrowersmustbeU.S.citizens,permanentresidentaliens,ornon-permanentresidentaliens.Non-permanentresidentsmustbeeligibletoworkintheU.S.AnInterVivosRevocable(Living)TrustisaneligibleborrowerifitcomplieswithFannieMaeorFreddieMaceligibilitycriteria.

Thefollowingareineligibleborrowers:

�� BorrowerswithoutavalidsocialsecuritynumberorITINnumber�� CorporationsorLimitedLiabilityCorporations�� Foreignnationalsornon-permanentresidentalienswithdiplomaticimmunity�� Foreignnationalsthatarenotlegalpermanentornon-permanentresidents�� Illegal aliens�� IrrevocableTrusts�� Partnerships or Limited Partnerships

3.2.2 non-occupant Co-borrowersThissectionoftheguidelinesappliestoprimaryresidenceloansonly.

Anon-occupantco-borrowerisanindividualwhoisaborrowerobligatedonthenote,notresidinginthesubjectproperty,andmayormaynothaveanownershipinterestintheproperty(mayormaynotbeanownerofrecordontitle).

Non-occupantco-borrowersarepermittedsubjecttothefollowingrestrictions:

�� Maximum95%LTV/CLTV�� Minimum3%OccupantBorrowerFunds


21 A S 0.13.02E f f E c t i v E : 9 .15.2013

�� Theincomeanddebtsofnon-occupantco-borrowersmustbeignoredforqualifyingpurposes(theoccupantborrowersmustmeetNational’sDTIrequirements)

3.2.3 Co-signersAnoccupantco-borrower(whoisobligatedonthenote)whodoesnothaveanownershipinterest(notanownerofrecordontitle)ispermitted.

3.2.4 TrustsRevocableLivingTrustsareapermittedborrowerifthetrustcomplieswithFannieMaeorFreddieMaccriteria.Irrevocabletrustsarenoteligible.

3.2.5 Non-Arm’sLengthTransactionsAnon-arm’slengthpurchasetransactionoccurswhenthereisadirectrelationshiporbusinessaffiliation(family,employer,employee,etc.)betweentheborrowerandanotherparty(includingbutnotlimitedtotheseller,realestatebroker,loanoriginator,builder,appraiser, closing agent, etc.).

ThesetransactionsarenoteligiblefordelegatedunderwritingandmustbeunderwrittenbyNationalMI.

Forpurchasetransactionswherethereisanon-arm’slengthrelationshipbetweensellerandtheborrower:

�� Thenon-arm’slengthrelationshipshouldbedisclosedtotheappraiserandtheappraisershouldcommentabouttherelationship

�� Onlyprimaryresidencesareeligibleforinsurance

3.2.6 Maximum number of insured LoansNationalMIreservestherighttolimitnewinsurancetoborrowerswithmultipleexistingloansinsuredbyNationalMI.NationalMIwillmonitorforborrowerconcentrationsinternallyanddoesnotexpectlenderstocompletetheseassessments.

3.2.7 BorrowerswithPreviouslyPaidClaimsNationalMImaydeclinetoprovidenewinsurancetoborrowerswithpreviouslypaidclaimsonloansinvolvingsuspectedfraudormisrepresentation.NationalMIwillmonitorfortheseborrowersinternallyanddoesnotexpectlenderstocompletethisscreening.


22 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.3 occupancy

3.3.1 TypesOccupancyisdeterminedinaccordancewiththeborrower’sintentasofthetimeofloanclosing.ThefollowingoccupancytypesarepermittedsubjecttoLTVandFICOrestrictions:

�� Owner-Occupied Primary Residence

�� Owner-Occupied Second Home

�� Non-Owner Occupied

Refertotheapplicableproducteligibilitymatrixforthespecificguidelines.

Sharedequityarrangements(wherethereisbothanowner-occupantandanowner non-occupantinvestor)arenoteligibleforinsurance.

3.3.2 DocumentationOccupancymustbeconsistentwithandsupportedbydocumentationinthefile.Whencircumstancesarisethatraisequestionsabouttheborrowers’intenttooccupythepropertyasaprimaryresidence,theoriginatorshouldconfirmoccupancyandincludetheconfirmationinthefile.Circumstancesthatraisequestionsinclude:

�� Borrowerisemployedalongdistancefromtheintendedprimaryresidence�� Thesizeoftheproposedresidenceisinconsistentwiththesizeoftheborrower’sfamilyandnumberofdependents�� Borroweralreadyownsaprimaryresidencenearthesubjectpropertyandisintendingto retain it (as a rental or second home) rather than sell it�� Theproposedprimaryresidenceisneartheexistingprimaryresidencebutthenewresidenceisnotworthmateriallymorethan,orisworthlessthan,theexistingresidence�� Borroweriscurrentlypurchasinganotherpropertyorhasdonesointhelast12months�� Borrowerisinthebusinessof“flipping”homes

Primaryresidencepurchasedocumentationmustincludeastatementfromtheborrowersthat they intend to occupy the property as a primary residence. Occupancy should occur within 60 days of closing.

3.3.3 occupancy ConversionsWhenaborrowerpurchasesanewproperty,thismaycausetheoccupancyofanexistingownedpropertytochange.Therearelegitimatereasonsthatleadtoanoccupancychangeforanexistingownedproperty,butmisrepresentationsregardingintenttooccupypresentelevatedrisk.Mostoften,misrepresentationinvolvesthemis-statedintenttoconvertanexistingresidencetoarentalandoccupythenewpropertyasaprimaryresidence.


23 A S 0.13.02E f f E c t i v E : 9 .15.2013

Becauseoftheelevatedrisk,NationalMIappliesthefollowingrestrictionswhenanexistingprimaryresidenceisconvertedtoarentalorsecondhome:

�� TheDTIcalculationmustbecalculatedasfollows: » IncludingthePITIofbothresidencesintheborrower’sdebts » RentalincomemayonlybeusedtooffsetthePITIontheexistingproperty(beingconverted)ifthesignedleaseagreementisinfile

�� Reservesof6monthsPITIarerequiredforbothproperties

3.4 PurposeEligiblepurposesarelistedbelowwithapplicablerestrictions.

3.4.1 PurchaseRefertosection3.2.4forpurchaserestrictionsrelatedtonon-arm’slengthtransactions.

3.4.2 RateandTermRefinanceToqualifyforrateandtermrefinanceguidelines,cashbacktotheborrowerislimitedtothelesserof$2,000or2%ofthenewloanamountandtheborrowermaynothavetakencashout(similarlydefined)withinthelast6monthsofthenewloanclosingdate.

Inaddition,thenewloanproceedsmayonlybeusedtopayofftheexistingfirstlien,topayoffsubordinateliensusedentirelytopurchasetheproperty,andtopayreasonableandcustomaryfinancingcosts/closingcosts/prepaids.

3.4.3 CashOutRefinanceAnyrefinancethatdoesnotmeettherateandtermrefinancerequirementsisconsideredcashoutforguidelineinterpretationpurposes.

3.4.4 CorporateRelocationNationalMIdoesnothaveanyspecialguidelinesapplicabletoborrowerswithemployerassistedrelocations.Standardunderwritingguidelinesapply.

3.4.5 ConstructiontoPermanentConstructiontoPermanentloansmayonlybeoriginatedfollowingNationalMI’sreviewandapprovaloftheinsuredoriginator’sprocedures.NationalMIwillinsureone-timecloseloanstoamaximum95%LTVwithcoveragebeginningfollowingcompletionofconstruction(withcertificateofoccupancy)andpermanentend-loanclosing.


24 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.4.6 HomeRenovation(Improvement)RenovationloansmayonlybeoriginatedfollowingNationalMI’sreviewandapprovaloftheinsuredoriginator’sprocedures.NationalMIwillinsuresinglefamilyprimaryresidencerenovationloanstoborrowerswhoareindividuals.Coverageonrenovationloansbeginswhentherenovationiscomplete,andwhenrequiredbylocalordinanceduetothescaleoftherenovation,acertificateofoccupancyisobtained.

3.5 UnderwritingtheBorrower

3.5.1 IncomeDocumentationandCalculations

3.5.1.1 General and Form 4506 requirementsThissectionoftheguidelinesdescribesminimumincomedocumentationrequirements.

Insuredoriginatorsshouldrequireadditionaldocumentationattheirdiscretionwhen necessary to verify income.

Incomeshouldbeexpectedtocontinueforaminimumofthreeyears.Incomethatisnotexpectedtocontinueforaminimumofthreeyearswillnotbeconsidered.Originatorsdonotneedtodocumenta3-yearcontinuanceforthefollowingtypesof income:

�� Automobileallowance�� Basesalary�� Bonus,overtime,commissionortipincome�� Corporateretirementorpension�� Long-termdisability�� Foster care income�� Interestanddividendincomeunlessevidenceexiststherelatedassetswillbedepleted�� Military income�� Parttime,secondjob,orseasonalincome�� Rental income�� Self-employed income�� Socialsecurity,VA,orothergovernmentalretirementorannuity

income stabilityIncometrendingisarelevantconsiderationforborrowerswithvariableorself-employmentincome.Ifthetrendisstableorincreasing,thecalculatedincome(asdescribedbydetailedincometypewithinsection3.5.1)shouldbeutilized.Iftheincomewasdecliningbuthassincestabilized,thelowercurrentlevelshouldbeused.Iftheincomecontinuestodecline,butmaynotbestable,furtheranalysismustbeconductedtodocumenttheappropriateincome,ifany,toutilize.


25 A S 0.13.02E f f E c t i v E : 9 .15.2013

Gross UpIncomethatisverifiedtobenontaxable,withatax-exemptstatusthatislikelytocontinue,maybeadjustedupbyaddinganamountequivalentto25%oftheincome.

Form 4506AcompleteandsignedIRSForm4506-Tisrequiredfromeachborrower.Thetaxinformationmustbeobtainedandevaluatedintheunderwritingalongwiththedocumentationdescribedbelow.

3.5.1.2 Alimony or Child support

Alimony and Child support received�� AcopyofthefinalcourtapprovedDivorceDecree(separationagreementorotherwrittenagreement/courtdecree)containingtheamountandduration.Theincomemustcontinueforaminimumof3years(checkforlimitationsondurationsuchastheagesofchildren)�� Evidence of regular receipt for the last 6 months (inconsistent or sporadic paymentsmaynotbeincludedasincome)�� Calculation

» Utilizethecurrentpaymentamount

Alimony and Child support Paid�� Alimonypaidisconsideredadebt(refertosection3.5.5.1)�� Childsupportpaidisconsideredadebt(refertosection3.5.5.1)

3.5.1.3 Auto Allowance�� Requires a two-year history�� Utilizeautoallowanceamountfromcurrentpaystub�� Calculation

» Addamounttoincomeunlessborrowerreportsautoallowanceexpenses(inwhichcasethenetincomeorexpenseshouldbereflectedintheDTI)

» Note:Anyautopaymentsmadebytheborrowerwillbeincludedinthedebtpayments

3.5.1.4 BonusorOvertime�� Minimumofmostrecentpaystubwithyear-to-dateinformationrepresentingaminimum of 30 days AND�� Last 2 years W-2s�� Note:Last2yearssignedfederaltaxreturnsmaybesubstitutedfortheabove�� Calculation

» Develop a 2 year average of the income.


26 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.1.5 Capital Gains�� CapitalGainsareoftenone-timeeventsthatarenotexpectedtocontinuefor3ormoreyears.Thesetypesofcapitalgainsarenotaneligibleincomesource.�� Incomefromcapitalgainsthatmeetsallofthefollowingrequirementsmaybeconsidered:

» CopyoftwoyearssignedpersonaltaxreturnsobtainedAND » Documentationisobtainedshowingtheborrowerhassufficientassetstogeneratesimilarincomeoverthenext3years

» Calculation•Utilizethetwo-yearaverageamount

3.5.1.6 CommissionCommission<25%ofBorrower’stotalannualemploymentincome

�� Minimumofmostrecentpaystubwithyear-to-dateinformationrepresentingaminimum of 30 days AND�� EitherA)Last2yearsW-2sorB)Last2yearstaxreturns


Commission>=25%ofBorrower’stotalannualemploymentincome

�� Last2yearssignedfederaltaxreturnsandeither » 1monthmostrecentpaystubwithYTDearningsfor30daysandlast2years W-2s OR

» WrittenVOE�� Calculation


3.5.1.7 DisabilityThispolicysectiondoesnotapplytotemporaryleaves(see3.5.1.28).

�� Copyofawardletterorcurrentdisabilitystatement�� Ifamountanddurationisnotdisclosedinawardsletter,acopyofthedisabilitypolicymayberequired�� Ifthebenefitshaveadefinedexpirationdate(notlong-termdisability),verifythat the remaining term is at least 3 years from the date of the mortgage application.�� Calculation

» Ifhighershort-termdisabilitypaymentwillfalltolowerlong-termpaymentduringthenext3years,usethelowerlong-termpaymentforqualifyingpurposes.Otherwiseusethecurrentpayment.Ifdisabilityincomewillnotcontinuefor3years,itcannotbeincludedinincome.


27 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.1.8 EmploymentOffers�� Employmentoffersmayonlybeutilizedifallofthefollowingrequirementsaremet:

» Offerisdocumentedbyanemploymentcontractsignedbyboththeborrowerandtheemployer

» Theborrower’sfirstdayofemploymentispriortothefirstpaymentduedate�� Calculation:Usetheofferamount

3.5.1.9 Foreign income�� IncludeforeignincomethatisreportedontheU.S.individualtaxreturnsonly

» Verifythattheforeignincomewillcontinueforatleast3yearsfromthedate of the application

3.5.1.10 Foster Care�� Borrowersmusthavea24monthhistoryoffostercareincome(12monthsiftheincomedoesnotexceed30%ofqualifyingincome)�� LettersfromorganizationprovidingincomeORcopiesofdepositslipsorbankstatementsconfirmingregulardepositofthepaymentsOR�� Copyoftwoyearspersonaltaxreturns�� Calculation

» Utilizecurrentpaymentamounts

3.5.1.11HourlyReferto“Salaried/Hourly”section

3.5.1.12 interest and Dividend�� Maybeusedasincomeifreceivedforthelast2yearsandborrowermusthaveassetsusedtogeneratethisincome(subtractinganyfundsutilizedtoclose)�� Copyoftwoyearspersonaltaxreturns�� If interest and dividend income is greater than 25% of the applicants total income, sufficient remaining asset balances must be verified via copies of current statements or other documentation�� Calculation

» Develop a 2 year average of the income from the 1040’s.


28 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.1.13 MilitaryMilitarypersonnelmaybeeligibleforpayinadditiontotheirbasepay.Theseadditionalsources(hazard,clothingallowance,etc.)areacceptableprovidedtheyare documented.

�� VOEorLeaveandEarningsStatement(LESStatement)�� Calculation

» UsesumofBase,BasicHousingAllowance(BAH),andBasicAllowanceforSubsistence(BAS)andotherdocumentedamountsfromcurrentLESstatementorVOE

3.5.1.14 note receivable�� Copy of note including amount, frequency, and term of at least 3 years from thedateofthemortgageapplicationAND�� Documentregularreceiptofincomeforthepast12monthsasverifiedbyconsistentdepositsintotheborrower’sbankaccountorcopiesofsigned1040’s�� Calculation

» Usecurrentamountasspecifiedbythenote

3.5.1.15OvertimeSee“BonusorOvertime”section

3.5.1.16 Part-Time or secondary:�� Minimum24monthtotalhistory(multipleemployers)�� Minimumofmostrecentpaystubwithyear-to-dateinformationrepresentingaminimum of 30 days AND�� Last 2 years W-2s�� Note:Last2yearssignedfederaltaxreturnsmaybesubstitutedfortheabove�� Calculation


3.5.1.17PublicAssistance(IncludingHousingChoiceVoucher–Section8)�� Lettersorexhibitsfrompayingagencystatingamount,frequency,anddurationofbenefitpayments(canbeexpectedtocontinueforaminimumthreeyears)AND�� Documentat2yearhistoryofincomefrompublicassistance(notrequiredforSection8)�� Calculation

» Use current amount


29 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.1.18 rental

rental Property other Than subject Property�� Iftheborrowerhasahistoryofrentingthepropertyextendingbackintothelasttaxfilingyear:

» CopyofmostrecentyearofsignedfederalpersonaltaxreturnwithSchedule E including the rental property

» Calculation:Utilizepre-incometaxcashflow�� Iftheborrowerdoesnothaveahistoryofrentingtheproperty,ortheborrower’shistorydoesnotextendbackintothelasttaxfilingyear:

» Obtainrentfromleaseagreementor » Ifthereisnoleaseagreement,rentalincomecannotbecountedunlessanappraisaloftherentalpropertyisobtainedwithamarketrentanalysisfrom the appraiser

» Calculation: Estimate cash flow using 75% of gross rent less PITI and HOA dues• If resulting income is positive, add to income. If result is loss, add to debtpayments.

subject Property is rental Property�� Iftheborrowerhasahistoryofrentingthepropertyextendingbackintothelasttaxfilingyear(refinancetransaction):

» CopyofmostrecentyearofsignedfederalpersonaltaxreturnwithSchedule E including the rental property

» Calculation:Utilizepre-incometaxcashflow�� Iftheborrowerdoesnothaveahistoryofrentingtheproperty(purchasetransaction),ortheborrower’shistorydoesnotextendbackintothelasttaxfilingyear:

» Obtainappraisalincludingmarketrentanalysisand » Obtainsubjectpropertyleaseagreement•Copy of lease not required for purchase loan•Copy of lease required for prior purchase unless the owner can

document that the property was not leased during a period of renovation or improvement

» Calculation: Estimate cash flow using 75% of gross rent less PITI and HOAdues.Whenboththeappraisalmarketrentanalysisandtheleasearerequiredorpresent,thelowerofthetwomustbeusedintheabovecalculation.• If resulting income is positive, add to income. If result is loss, add to debtpayments.


30 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.1.19RetirementAssetLiquidation(FundIncome)Monthlyretirementincomedistributionsfrom401(K),IRA,orKeoghaccountsmustmeet the following criteria:

�� Borrowermusthaveunrestrictedaccesswithoutpenaltytothefunds�� Remainingbalancesmustbeadjustedtoconsideramaximumof70%ofthevalueofstock,bonds,andmutualfunds(ifany)�� Calculation

» Monthlyincomeequalsadjustedbalancedividedby360months(regardless of loan term)

3.5.1.20Retirement,GovernmentAnnuity,andPension�� CopiesofretirementawardlettersorcurrentstatementsOR�� 1040’sshowingretirementincomeOR�� 1099 forms OR�� Copiesofborrower’s2mostrecentbankstatementsshowingdeposits�� Calculation

» Use the current amount

3.5.1.21 reverse Mortgage income�� Reversemortgagesmaybeusedassourceofincomeprovidedallofthefollowingrequirementsaresatisfied:

» Borrowermustprovideacopyofthereversemortgageagreementtovalidate the ongoing nature of the income

» TermofthenewMIinsuredloancannotexceedthetermofthereversemortgage » Lineofcreditorlumpsumreversemortgagesarenoteligible

�� Calculation » Thereversemortgagepaymentshouldnotbeconsideredintheapplicant’sDTIcalculation.Incomemaybeusedifitmeetstheaboverequirements.

3.5.1.22 royalty Payments�� Minimum 24 month history required�� Two-yearssignedfederaltaxreturnsincludingScheduleE�� Documentthatpaymentswillcontinueforaminimumof3yearsatlevelsequalto the calculated 2-year average

» Calculation: Use current amount�� Ifdocumentationshowingcontinuingpaymentsasdescribedabovecannotbeobtained:

» Calculation: Use 70% of the current 2-year average amount or » Calculation:Utilizea4-yearaverageamountbasedonadocumented4-year history


31 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.5.1.23Salaried/Hourly�� Minimumofmostrecentpaystubwithyear-to-dateinformationrepresentingaminimum of 30 days�� Last 2 years W-2s�� Applicantmustbecurrentlyemployedattheemployerlistedonthepaystub.�� Note:AwrittenVOEmaybesubstitutedfortheabove�� Calculation

» Usethebasesalary(semi-monthly,bi-weekly,orhourlyrateassupportedbyYTD)fromcurrentpaystub.Examples:• Semi-monthly:Semi-monthlyamountmultipliedby2equalsmonthlyincome• Bi-weekly:Bi-weeklyamountmultipliedby26dividedby12equals

monthly income

3.5.1.24 seasonal�� Minimum24monthtotalhistory(multipleemployers)�� Documentationfromemployersisrequiredthat:

» Describesthenatureoftheseasonalemploymentworkand » Statesthatthereisareasonablechanceofre-employment

�� Minimumofmostrecentpaystubwithyear-to-dateinformationrepresentingaminimum of 30 days AND�� Last 2 years W-2s�� Note:Last2yearssignedfederaltaxreturnsmaybesubstitutedfortheabove�� Calculation

» Develop a 2 year average of the income » Referalsotounemploymentbenefits

3.5.1.25SecondaryEmployment(SecondJob)Referto“Part-TimeorSecondary”section

3.5.1.26 self-employment�� CopyoftwoyearssignedpersonaltaxreturnsAND�� ScheduleK-1’s(ifapplicable)AND�� Corporatetaxreturns(ifapplicable)�� Calculation

» Develop a 2 year average of the income. Refer to Fannie Mae or Freddie Macrequirementsfordetailsonunderwritingself-employedborrowers.


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3.5.1.27 social security�� CopyoftheawardletterOR�� SocialSecurityBenefitStatementOR�� CopyofthemostrecentcheckorbankstatementreflectingreceiptOR�� Last year’s 1040’s showing amount of Social Security received for the year�� Calculation

» Use current amount from documentation. Refer to 3.5.1.1 for guidelines regardinggrossupofnon-taxableincome.

3.5.1.28 Temporary LeaveTemporaryleavesincludematernityorparentalleave,short-termmedicaldisability,orothertemporaryleavetypesthatareacceptablebylawortheemployer

�� Aborrowerontemporaryleaveisconsideredemployed�� Inorderforincometobecounted,theborrowermustprovide:

» Writtenconfirmationofhisorherintenttoreturntoworkonaspecificdate and

» Confirmationoftheagreedupondateofreturnevidencedbywrittendocumentation from the employer or employer designee (if a third party manages leave for the employer).

�� Whentheborrowerdocumentsreturntoworkwilloccuronorbeforethefirstmortgagepaymentduedate,documentedpre-leaveincomeshouldbeusedortheborrower’sverifiedpostleaveincomeifdifferent.�� Iftheborrowerwillnotreturntoworkbythefirstpaymentduedate,thelesserofthefollowingmustbeused:

» Documentedpre-leaveincomeortheborrower’sverifiedpostleaveincome if different

» Documented temporary leave income. If needed to qualify, an additional amountmaybeaddedtotemporaryleaveincomeforqualifyingpurposes–theadditionisfromverifiedliquidassetsavailabletopayshort-termlivingexpenses.Theadditionalamountiscalculatedbydividingtheborrower’sverifiedliquidassets(minusanyfundsneededtocloseandrequiredreserves)bythenumberofmonthstheliquidassetswillbeusedto supplement income. • Thenumberofmonthsshouldbethesumofthemonthsbeginning

with the month in which the first payment is due and ending with the monthwhichtheborrowerreturnstowork.Forexample,ifthefirstpaymentwillbedueJanuary1st,andtheborrowerwillreturntoworkonApril15,thenumberofmonthsis4intheabovecalculation.


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• Liquid assets include cash and other assets that are easily converted to cashbytheborrowers.Theyinclude:�� Checkingorsavingsaccounts�� Investmentsinstocks,bonds,mutualfunds,certificatesofdeposit,moneymarketfundsandtrustaccounts(excludingthoseinretirement/taxdeferredaccounts)�� Iftaxdeferredretirement/IRA/401k/etc.fundswillbeused,theamountutilizedinthecalculationshouldbenetofestimatedincometaxes(basedontheborrower’sincomelevel)andestimatedpenaltiesforearlywithdrawal(ifapplicable).Note:Ifaloansecuredbytheseassetsisobtainedtogenerateliquidassets,thecorrespondingpaymentmustbeincludedinthequalifyingratios.�� Cash value of fully vested life insurance

�� Calculation » UseRegularemploymentincomeortemporaryincomeasdescribedabove

3.5.1.29 Tips�� Minimumofmostrecentpaystubwithyear-to-dateinformationrepresentingaminimum of 30 days AND�� Two-years W-2 form�� Note:AwrittenVOEmaybesubstitutedfortheabove�� Calculation

» Use a two-year average

3.5.1.30 Trust�� TrustAgreementcontainingtheamountofdisbursement,frequencyanddurationofpayments.Verifythatthetrustincomewillcontinueforatleast3yearsfromthedateoftheapplicationAND�� Signedtwoyears1040’siftheabovedoesnotestablishprioramounts�� Calculation

» Use current amount listed in trust agreement or average if not specified

3.5.1.31 UnemploymentBenefitsUnemploymentbenefitssuchasthosereceivedbyseasonalworkersmaybeconsideredstableincomeifproperlydocumentedasreceivedforthelast2yearsandlikelytocontinue.

�� Signedcopyoftwoyearspersonaltaxreturns�� Calculation:

» Developa2yearaverageoftheunemploymentbenefitfromthe1040’s


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3.5.1.32 VABenefits�� Acopyoftheawardletterordocumentationofreceiptofbenefits�� Documentationmustevidencetheincomeisexpectedtocontinueforaminimum of 3 years�� Calculation

» Use current amount

3.5.1.33 ineligible sources of income�� income types described above that cannot be documented in accordance withNational’srequirements�� Boarderincome(typicallyincomefromrentingabedroominasinglefamilyresidence)�� expense account payments(reimbursementofout-of-pocketworkrelatedexpensesisnotincome)�� Future incomenotyetbeingreceivedanddocumented�� MortgageCreditCertificates(specialsubsidyforqualifyingfirsttimehomebuyers–afederaltaxcredit(ratherthanadeduction)applicabletoapercentage of mortgage interest paid)�� MortgageDifferentialPayments(employersubsidyrelatedtothedifferencebetweentheemployee’spresentandproposedmortgagepayment)�� retained earnings(whenaself-employedborrowerreceivesincomepaidoutofretainedearningsthatissubstantiallyinexcessoftheearningcapabilityofthebusiness(fromprioryears)ratherthanthebusiness’currentperiodincome,thisisnotsustainableindefinitelyandcannotbeexpectedtocontinuefor 3 or more years)�� SecondHomerentalincome�� Trailing Co-borrower(inarelocationscenario,incomeearnedfromanon-relocatedco-borrower(followingor“trailing”theborrowerwhohasthenewjobrelatedtotherelocation)thatisstillworkinginthepriorlocationinajobthatwillbeabandoned(incomecannotbeexpectedtocontinuefor3ormoreyears))�� Unreported incomedocumentedbybankstatementsorotheralternativedocumentation�� Unverifiablesources(whendocumentationisrequiredandcannotbeprovided)�� VAeducationalbenefits(notincomebutreimbursementforexpenses)


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3.5.2 VerbalVerificationofEmploymentIncomemustbeverballyverifiedwithin10daysand30daysofthenotedateforemployment(includingMilitary)andself-employmentincomerespectively.

Thephonenumberusedtoverifyemploymentincomeshouldbeobtainedindependentlyandtheconversationshouldbedocumented(includingsourceofnumber,dateofverification,name/titleofpersonconfirmingemployment,andname/titleofpersoncompletingverification).AthirdpartyvendorsuchastheWorkNumberisanacceptablesourceofverification.

Awrittenverificationmaybesubstitutedfortheverbaloneiftheemployerdoesnotcompleteverificationsbyphoneandthesameinformationiscaptured.Formilitarypersonnel,verificationthroughtheDefenseManpowerDataCenterorLeaveandEarningsStatementdatednomorethan31dayspriortothenotedatemaybesubstituted.

Theexistenceofbusinessesthatarethesourceofself-employmentincomemustbeverifiedwithin31daysofthenotedateviaaphonelisting(telephonebook,directoryassistance,internet)orthirdparty(licensingbureau,regulatoryagency,CPA,etc.).Thesourceoftheinformationandname/titleofpersoncompletingtheverificationshouldbedocumentedinthefile.

3.5.3 AssetDocumentationandCalculationsFunds required to close the loan (down payment, closing costs, pre-paids) and for reserves mustmeetNationalMI’srequirements.

FundssufficienttomeetNationalMI’sminimumborrowercontributionrequirementsarerequiredtobefromtheborrower’sownfunds.Theremainingfundsmaycomefromadditionaleligiblesources.Certainassetsmaynotbeconsidered(areineligible)forpurposesofmortgageinsuranceunderwritingandapproval.

3.5.3.1 SourceofMinimumBorrowerContributions(Borrower’sOwnFunds)Minimumrequiredborrowercontributionsaredocumentedontheapplicableproducteligibilitymatrix.Eligiblefundsmustbeundertheownershipandcontroloftheborrowerforaminimumof90dayspriortotheloanapplication.Largedepositsorcumulativelargedeposits(exceeding25%ofmonthlyincome)identifiedonanassetstatementmustbeinvestigatediftheyarenotrelatedtonormaltransactionactivity(payrolldeposits,rentalincomedeposits,socialsecuritydeposits,etc.).Thesourceofthesedepositsmustbedocumented.Largedepositsfromsourcesthatdonotmeettherequirementsfortheminimumborrowercontributioncannotbeusedto meet the requirement.


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Thefollowingareacceptablesourcesoftheborrower’sownfunds:

�� Bridgeloansprovideda)thebridgeloanisnotcross-collateralizedagainstthesubjectpropertyandb)borrowerqualifiesincludingmortgagepaymentsonthecurrenthome(PITIAandBridgeloanpayments)�� Businessassetsprovidedtheborrowerownsamajorityofthebusinessandremovaloftheassetswillnotimpairtheabilityofthebusinesstocontinueoperating.Assetbalancesmustbeverifiedbydepositoryorotherassetstatements(asdescribedbelow).Businessviabilitymustbeevaluatedusing2yearsbusinesstaxreturnsandbalancesheets.�� Depository balances(checking,savings,CDs,etc.)verifiedviaaVOD(with2monthhistory)or2monthsbankstatements.Ifthelenderisalsothedepositoryforaborrower’saccount,thelendermayverifyfundsusingaprintoutorotheralternativeverificationproduceddirectlyfromthelender’ssystem.�� earnest Money Deposit–thesourceneednotbeverifiedifsufficientborrowercontributionsandfundstocloseareverifiedseparately�� individual Development Account:Somenonprofitagencieswillmatchthefundsaborrowerregularlydepositsintoasavingsaccountthathasbeendesignatedasanaccountthatisusedsolelyfortheaccumulationoffundstopurchase a home. Such accounts are referred to as individual development accounts,orIDAs.Sometimesthenonprofitagenciesrequiretheborrowertorepaythefunds,andsometimestheydonot.Sometimes,whenrepaymentisrequired,alienisfiledandtheobligationthereforebecomesajuniorlien.

FundsthattheborrowerdepositedintoanIDAmaybeusedtomeettheborrower’sminimumcontributionprovidedallofthefollowingrequirementsare met:

» Astatementsegregatingborrowercontributionsandmatchingfunds(withvesting)isobtained.Iftheborrowercontributionscannotbesegregated,thefundscannotbeusedtomeetminimumborrowercontributionrequirements

» Documentationisobtainedtodeterminewhetherornotrepaymentofmatchingfundsisrequired,andifrequired,whetherornotalienwillberecorded

Whentheborrowermustrepaymatchingfunds,thefollowingadditionalrequirements apply:

» Thepaymentmustbeincludedinthedebt-to-incomeratiocalculation » NolienwillbefiledonthepropertyrelatedtotheIDA.Theloanisnoteligibleforinsuranceifalienwillbefiled.


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�� investment balances(stocks,bonds,mutualfunds,savingsbonds,etc.)verifiedviaaVOD(with2monthhistory)orstatementscoveringaminimumof2months�� Lot valueverifiedviaanappraisedvalue(lowerofpurchaseorappraisedvalueif acquired within the last 12 months)�� Proceeds from the sale of assets other than real estate owned(Verifiedbyabillofsale,documentationofreceiptoffundsandevidencethatthesalespriceatmarket)�� Proceeds from the sale of real estate owned(verifiedviaHUD1)�� rentexceedingfairmarketrentaccumulatedunderadocumentedRent(orLease)withOptiontoPurchaseagreementandincludedinthepurchasecontract as down payment�� Trust fundsverifiedbydocumentationfromthetrustee�� Tax(Income)refunds(eitherfederalorstate)evidencedbycopyofreturnshowingrefundamount,copyofcheckandproofofincreaseindepositbalances

3.5.3.2 AdditionalEligibleAssetsInadditiontotheapprovedsourcesdescribedintheprecedingsection,thefollowingarealsoacceptablesourcesoffundsoncetheminimumborrowercontributionrequirementhasbeenmet:

�� employer Assistancemaybeutilizedifallofthefollowingrequirementsaremet:�� Maynotbeusedtosatisfyborrowercontributionrequirements

» Utilizedonaprimaryresidence » Madepursuanttoanestablishedcompanyprogram » Borrowereligibilityisdocumented » Repayment terms, if any, are evaluated and factored into the credit decision

» Employermaynotbeaninterestedpartytothetransaction

�� GiftsofEquityinthesubjectpropertyprovidedthesellerisrelatedtotheborrowerbyblood,marriage,adoptionorlegalguardianship�� GiftsofFundsevidencedbyasignedgiftletterfromadonorwhoiseitherrelatedtotheborrowerbyblood,marriage,adoptionorlegalguardianship;orcandocumentanestablishedrelationshipwiththeborrower(domesticpartneror future spouse)�� Grant Fundspermittedforprimaryresidencesonlyevidencedbydocumentationfromadonorthatisapublicornon-profitorganization,church,or governmental agency (federal, state or local). In the event the grant results inarecordedlienonthesubjectproperty,LTVrequirementsmustbemet


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includingthelienrelatedtothegrant.Repaymentofthegrantmaynotberequiredexceptuponsaleorrefinanceoftheproperty.�� individual Development Account(IDA)fundscontributedbytheborrower,vestedmatchingfunds,orvestedfundswherethedistinctionbetweenthetwoisnotknown,providedtheotherIDArequirementsdescribedintheprecedingsection(3.5.3.1)aremet.�� InterestedPartyContributionsprovidedtheyarewithinthemaximumspermittedbyNationalMI’sguidelines�� Pooled or Community savings Accountscannotbeconsideredtheborrower’sownfundsandusedtosatisfyborrowercontributionamounts.However,theyareanapprovedadditionaleligibleassetprovidedthefundsaredepositedandverifiedinafinancialinstitutionpriortoclosingandthefollowingrequirementsare met:

» Theborrower’participationmustbeverifiedfromthepartymanagingthe pool

» Documentationmustbeobtainedevidencingboththeborrower’shistoryofcontributionsandobligationtomakecontinuedcontributions

» Iftheborrowerisobligatedtomakefuturecontributions,thenthedebtmustbeincludedwhencalculatingthedebt-to-incomeratio

» Repaymentofthepooledamountmaynotberequiredandalienrelatedto the pooled amount is not permitted

3.5.3.3 ineligible AssetsThefollowingareineligibleassets(sourcesoffunds)forpurposesofMIapproval:

�� Advances against future earnings�� Cash on Hand�� Giftsrequiringrepayment�� Loans against assets or unsecured loans where proceeds do not meet 90 days seasoning requirement�� Pledged assets in lieu of down payment (an asset transferred to the lender for thepurposeofsecuringdebtandretainedbythelenderuntilpayoff)�� Secondary Financing�� Sellerfundsdispersedindirectlyviathirdpartiesinawayintendedtocircumventrequirementsrelatedtoassets,interestedpartycontributions,etc.�� Sweat Equity


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3.5.3.4 InterestedPartyContributionsInterestedpartiesarepartiesinvolvedinthetransactionsuchasthebuilder,seller,realtor,etc.Contributionsfromthesepartiesarelimitedsotheydonotinflatethepropertyvalue.Interestedpartycontributionsmustmeetthefollowingrequirements:

�� Maybeusedtofundnormalandcustomaryclosingcosts,theMIpremiumandprepaids;butcannotbeutilizedtocoverthedownpayment.�� PrimaryResidenceLimitedto3%forLTVsabove90%and6%forLTVs<=90%(ifajuniorlienispresent,utilizedCLTVratherthanLTVwhenestablishing the limit)�� Second Homes limited to 3%�� Investment Property limited to 2%�� Mustbeidentifiedinthesalescontractandevaluatedbytheappraiserinthe appraisal report to determine the impact, if any, on value. Unplanned buydownsarisingjustbeforeclosingandpaidbytheseller/buildertoallowtheborrowertomaintainaninterestrateafterratesriseareconsideredcontributions.�� Amountsinexcessofthelimitmustbededucteddollar-for-dollarfromthesalespriceforpurposesofcalculatingtheLTVtodetermineeligibility�� Non-monetarysalesincentivesmustbededucteddollar-for-dollarfromthesalespriceforpurposesofcalculatingtheLTVtodetermineeligibility�� Lenderfundedtransactioncostsarenotconsideredcontributionsunlessthelenderisaffiliatedwithaninterestedparty

3.5.3.5 reserve requirementsA minimum of two months reserves are required. Amounts to cover principal, interest,propertytaxes,insurance(floodandhazard)andhomeowner’sassociationduesshouldbeincludedinthecalculation.Higherreservesarerequiredasfollows:

�� Iftheborrowerhasanexistingprimaryresidenceorsecondhomeforsale,sixmonthsverifiedreservesarerequiredonboththecurrentandproposedproperties.However,iftheborrowerisqualifiedusingbothpayments,onlyfourmonthsofreservesisrequiredonbothproperties(refertosection3.5.5.2of this manual)�� Ifahigheramountisspecifiedontheapplicableproducteligibilitymatrix


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3.5.4 Credit reports and scores

3.5.4.1 TraditionalCreditRequirementsAcreditreportisrequiredforeveryborrowerbasedondataprovidedbythenationalcreditrepositories.Reportedinformationcannotbechangedbutduplicateinformationmaybedeleted.Creditinformationmustbedevelopedbycombiningdatafromatleasttwoofthenationalrepositories(Experian,EquifaxandTransUnion) as follows:

�� Atwoorthree-repositorymergedin-filecreditreport�� AResidentialMortgageCreditReport(RMCR)

Eacheligibleborrowermusthave:

�� Aminimumof3tradelines(excludingauthorizeduser,charge-off,collections,judgment,repossession,foreclosure,bankruptcy,creditcounselingtradesandtradelinesforwhichapaymenthasneverbeenmade(i.e.deferredstudentloan))reportingforaminimumof12monthseach�� Two FICO scores�� Iftheborrowerhasapreviousforeclosure,deed-in-lieu,short-saleorbankruptcy,thefollowingadditionalrequirementsapply:

» Mustbedischargedmorethan4yearsago » Musthavere-establishedcreditafterdischarge(similartoabove3tradelinesruleexcept24monthsandnodelinquenciesarerequired)

�� Iftheborrowerhadpreviouscreditcounseling,creditmustbere-establishedfollowingcompletion(similartoabove3tradelinesruleexcept24monthsandno delinquencies are required)

3.5.4.2 Non-TraditionalCreditBorrowersmusthaveanacceptableU.S.credithistorymeetingtheTraditionalCreditRequirementsdescribedabove.Non-traditionalcredit,non-traditionalcreditreports,foreigncreditreports,andborrowerswithoutacredithistoryorcreditscorearenoteligible.

3.5.4.3 Foreign CreditRefertoNon-TraditionalCreditrequirementsabove.

3.5.4.4 RepresentativeFICOScoreforUnderwritingEachborrower’sindividualrepresentativeFICOscoreisdeterminedbytakingthemiddleofthreeorloweroftwoFICOscores.TherepresentativeFICOfortheloanthatmustbeusedforunderwritingisthelowestoftherepresentativeFICOscoresamongtheborrowers.


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3.5.4.5 Minimum FiCo scoreTheminimumFICOscoreisdescribedontheapplicableproductmatrix.

3.5.4.6 Payment of Derogatory AmountsJudgments,taxliens,collections,charge-offsandrepossessionsmustbepaidinfullatthetimeofloanapplication.Collectionaccountswithdocumenteddisputesareexcluded.

3.5.4.7 Fraud Alert Messages on Credit reportsThecreditreportingagenciesincludemessagesonthecreditreportidentifyingpotentialfraudulentactivitiesinvolvingsocialsecuritynumbers,telephonenumbers,borroweraddress,etc.Allsuchmessagesappearingonthecreditreportmustbesufficientlyinvestigatedtoconclusiontoensurethattheinformationuponwhich the insurance is approved is correct.

3.5.5 LiabilitiesandRatios

3.5.5.1 General requirementsTheincomeanddebtsoftheapplicantsshouldbeutilizedtocalculatequalifyingratios.Incomeshouldbedocumentedandcalculatedasdescribedinsection3.5.1ofthismanual.LiabilitiesshouldbedeterminedinaccordancewiththecreditreportrequirementsdescribedinSection3.5.4ofthismanual.

Alldebtsforwhichtheborrowersareobligatedshouldbeincludedinthedebtratiocalculationswiththefollowingexceptions:

�� Installmentpayments(includingchildsupportandalimony)whereithasbeendocumentedthat10orfewerpaymentsremain(butleasepaymentsmustbeincludedregardlessofthenumberofremainingpayments)�� Court-OrderedAssignmentofDebt:Whentheborrowerhasoutstandingdebtthatwasassignedtoanotherpartybycourtorder(suchasunderadivorcedecreeorseparationagreement),thedebtshouldnotbecountedasarecurringdebtobligationunlesstheprimaryobligorhasahistoryofbeingdelinquentinmakingpaymentsonthedebt.Forpurposesofthisguideline,ahistoryofbeingdelinquentisdefinedasanyoneormoreofthefollowing:a)currently30+days-past-due(DPD),orb)oneormore60DPD+ortwoormore30DPD+ in the last 12 months.

�� Borrowerhascosignedforaloan:Whentheborrowerhasanoutstandingdebtthatwasco-signed,thedebtshouldnotbecountedasarecurringdebtobligationiftheborrowercandocumentthattheprimaryobligorhasbeenmakingpaymentsonthedebtforatleast12monthsandtheprimaryobligordoesnothaveahistoryofbeingdelinquentasdefinedabove.


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�� Debtpaymentsmadebythebusinessmaybeexcludedifitisdocumentedthatthebusinessispayingthedebt(foraminimumofthepreceding12months)andthedebtpaymentwasincludedinthebusinesscashflowsuponwhichtheself-employment income was calculated

�� Debtsthatarepaidoffpriortoloanapplication

Adebtpaymentshouldbeincludedforthefollowingeveniftheborrowerisnotcurrentlyobligatedtomakepaymentsatthetimeloanclosing:

�� Student loans payments for loans with payment deferment. The payment amountmaybeestablishedfromdocumentationfromtheserviceroramonthlypaymentestimatedusing2%oftheoutstandingbalance�� Afutureobligationtomakereversemortgagepaymentsonapropertybeingvacatedandretainedbytheborrower

3.5.5.2 Qualifying Payment AmountsUnlessotherwiserequiredinthisorothersectionsofthismanual(refertosection3.1.6(Buydowns)),thefollowingqualifyingpaymentsshouldbeutilizedunlesstheUnderwriter has determined it is more appropriate to use a higher amount:

�� installment Debts: Current Payment Amount�� revolving Credit: CurrentPaymentAmountbasedonoutstandingbalance.IftheCurrentPaymentAmountisnotavailable,usethegreaterof$10or5%oftheoutstandingbalance.�� new Mortgage Payment:

» InitialFixedTerm≤5Years:Fullyamortizingpaymentcalculatedusingthegreaterofthefullyindexedrateortheinitialnoterateplus2%;andincludingpropertytaxes,insurance(hazardandflood)andHOAdues

» AllOthers:Fullyamortizingpaymentcalculatedusingtheinitialnoterate;andincludingpropertytaxes,insurance(hazardandflood)andHOAdues

�� Conversion of Property to rental:Refertosection3.3.3ofthismanual. » Pending sale of current primary residence or second home: Provided theborrowerhasatleast6monthsofverifiedreserves(refertosection3.5.3.5) for the current (for sale) and proposed properties, the payment onthecurrent“forsale”primaryresidenceorsecondhomemaybeexcluded.Iftheborrowerhaslessthan6monthsreservesonbothproperties,boththecurrentandproposedmonthlypayment(PITIA)mustbeincludedwhenqualifying.

�� BridgeLoans:Borrowermustbequalifiedincludingmortgagepaymentsonthecurrenthome(PITIAplusBridgeloanpayments)


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3.5.5.3 Debt-To-Income(DTI)RatiosMaximumDTIratiosaredocumentedintheapplicableproducteligibilitymatrix.

3.6 UnderwritingtheProperty

3.6.1 eligible Property TypesNationalMIwillinsureloanssecuredbythefollowingeligiblepropertytypes:

3.6.1.1 single Family/PUDPropertieswhereownershipincludesthelotunderthedwellingfallintothiscategory.Thecategoryincludesdetached,semi-detachedandattachedunits.

3.6.1.2 CondominiumsPropertieswhereownershipexcludesthelotunderthedwellingfallintothiscategory.Condominiumsmustmeetagencyeligibilityandprojectrequirements.

Detachedsitecondominiums(similartoaregularcondominiumexcepttheunitsaredetached)areunderwrittenasdetachedsinglefamilyproperties.Alsoreferto3.6.1.7(Factory-BuiltHousingOtherThanManufacturedHousing)asapplicableand3.6.1.5(MixedUse)foradditionalrestrictions.

NationalMIreservestherighttolimitnewinsurancetoborrowersseekingtofinancepropertiesincondominiumprojectswhereNationalMIhasahighexistingconcentrationofinsuredloans.

3.6.1.3 Co-opsCo-opshareloansfinancetheborrower’sownershipinterestinaco-ophousingcorporationandaccompanyingoccupancyrightstoaparticularunitownedbytheco-op.Aco-opshareloanissecuredbyapledgeoftheborrower’sco-opsharesandanassignmentoftheborrower’srightsunderaproprietaryleaseoroccupancyagreementwiththeco-ophousingcorporation.

Co-oppropertiesmustmeetagencyrequirements.Inaddition,co-opsmaybelimitedtospecificmarkets–refertotheapplicableproducteligibilitymatricesforrestrictions.


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3.6.1.4 Two-UnitTwo-unitpropertiesmustmeetagencyrequirements.

3.6.1.5 Mixed UseMixedusepropertiesmustmeetthefollowingrequirements:

�� One-Unit Primary residence only�� Borrowerisalsoboththeownerandoperatorofthebusiness�� Businessuseiscompatiblewithresidentialuse�� Thepropertymustbeprimarilyresidentialinnatureandthemarketvalueofthepropertymustbeprimarilyafunctionofitsresidentialcharacteristics(ratherthanbusinessuseorbusiness-specificmodifications)�� Themixedusagerepresentsalegal,permissibleuseofthepropertyunderlocalzoningandtheneighborhoodmustbeprimarilyresidentialinnature�� Property is not a condominium�� Appraiseradequatelydescribesthemixed-usecharacteristicsofthesubjectproperty

3.6.1.6 AcreageThepropertyshouldnotexceed10acres.Valuecannotbegiventoagriculturalusage(suchascrops)orcommercialusage–mustberesidentialinnature(andappraisedasresidential)andzonedasaresidentialproperty.

3.6.1.7 Factory-BuiltHousingOtherThanManufacturedHousing“Amanufacturedhome”isanydwellingunitbuiltonapermanentchassisandattachedtoapermanentfoundationsystem.Manufacturedhomesarenoteligiblecollateral.Othertypesoffactorybuilthousing(modular,prefabricated,panelizedorsectional)thatarenotbuiltonapermanentchassis(anddonotthereforemeetthedefinitionofManufacturedHousing)areeligible.Otherfactory-builthousingmustassumethecharacteristicsofsite-builthousing,belegallyclassifiedandtaxedasrealproperty,andconformtoapplicablelocalbuildingcodes.

3.6.1.8 ZoningThepropertymustbealegallypermissibleuseofthelandandtheremaynotbeanygovernmentalrestrictionsorregulationsprohibitingreconstructionormaintenance of the property.


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3.6.1.9 Accessory UnitA single family or two-unit property with an accessory unit (unit over detached garage,basementunit,guesthouse,etc.)iseligibleprovidedallofthefollowingrequirements are met:

Thepropertyandimprovementsmustbealegallypermissibleuseoftheland

�� Thelegaldescriptionandpropertytaxassessmentmustshowthepropertyassinglefamilyortwo-unit(asapplicable)withoutcountingtheaccessoryunit�� Incomefromtheaccessoryunit,ifany,cannotbeconsideredwhenqualifyingtheborrower�� The appraisal report must demonstrate that the improvements are typical and marketablefortheareathroughananalysisincludingatleastonecomparablesale with an accessory unit

3.6.1.10 PropertyCondition

General requirementsTheappraisalreportmustidentifyanddescribephysicaldeficienciesthatcouldaffectaproperty’ssafety,soundness,orstructuralintegrity.Iftheappraiserhasidentifiedanyofthesedeficiencies,thepropertymustbeappraisedsubjecttocompletionofthespecificrepairsoralterationsneededtoremedythedeficiency.Intheseinstances,thepropertyconditionandqualityratingsmustreflecttheconditionandqualityofthepropertybasedonthehypotheticalconditionthattherepairsoralterationshavebeencompleted.

Iftheappraiserisnotqualifiedtoevaluatethealterationsorrepairsneeded,theappraisalmustidentifyanddescribethedeficienciesandthepropertymustbeappraisedsubjecttoasatisfactoryinspectionbyaqualifiedprofessional.

Theappraisalmayhavetoberevisedbasedupontheresultsoftheinspection.Ifso,thereportmustindicatetheimpact,ifany,onthefinalopinionofvalue.Thelendermustreviewtherevisedappraisalreporttoensurethatnophysicaldeficienciesorconditionsthatwouldaffectthesafety,soundness,orstructuralintegrityofthepropertyareindicated.Acertificationofcompletionisrequiredtoensurethenecessaryalterationsorrepairshavebeencompletedpriortoclosing.

And“asis”valuationisacceptableprovidinganyexistingconditionsareminoranddonotaffectthesafety,soundness,orstructuralintegrityoftheproperty;andtheappraiser’svalueopinionreflectstheseconditions.


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natural DisastersNaturaldisasterscausedbyfloods,hurricanes,tornados,earthquakes,forestfires,orothercatastrophesmayimpactpropertyconditionandvalue.Ifthedisasteroccurspriortotheappraisal,theimpact,ifany,ofthedisastermustbereflectedinthevalueconclusion.Whenthedisasteroccursfollowingtheappraisalbutpriortoloanclosingandissuingofinsurance,thelendermusttakeprudentandreasonableactionstodeterminewhethertheconditionofthepropertywasaffectedbythedisasterandthoseactionsandconclusionsmustbedocumentedinthefile.Lendersmustwarrantthattheinsuredpropertyhasnodamageaffectingsafety,soundness,structuralintegrityorpropertyvalue.Ifthepropertyhasdamageaffectinganyofthesethings,thepropertymustberepairedpriortotheissuanceofthemortgageinsurance.

3.6.1.11 PostponedImprovements–CompletionEscrowsThissectionoftheguidelinesappliesonlytopropertieswithconditionsthatdonotaffectthesafety,soundnessorstructuralintegrityoftheproperty(alsorefertoPropertyConditionsectionabove).

Appraised value “As is”Whenthereareminorconditionanddeferredmaintenanceissuesthatdonotaffectsafety,soundness,structuralintegrityorabilitytoobtaintheoccupancypermit;andtheappraiserhascompletedtheappraisal“asis”;repairsneednotbemadepriortoclosing.Lendersmayescrowfortheseitemsattheirdiscretionwithoutlimitation.Additionally,theconditionissuesshouldnothaveasignificantimpactonmarketabilityasevidencedbytheappraiser’scommentsandmarketingtimenotinexcessof6months.

Appraised value “As Completed”Whentherearenoconditionissuesorminorconditionanddeferredmaintenanceissuesthatdonotaffectsafety,soundness,structuralintegrityorabilitytoobtaintheoccupancypermit;andtheappraiserhascompletedtheappraisal“ascompleted”;theloaniseligibleforinsuranceonlywhenallofthefollowingrequirements are met:

�� Theappraiserprovidesalistoftheitemsneedingcompletion�� Adisinterestedbutrelevantpartyprovidesacostestimatetocompletetheitemslistedbytheappraiser(mustbepartofthesalescontractifnewconstruction)andatimelinetocompletetheitemsinnomorethan180daysfollowing closing�� Thecostofcompletingtheimprovementsdoesnotexceed15%ofthe“ascompleted”value�� Thelenderestablishesacompletionescrowaccountcontrolledbythelenderinanamountnolessthan150%oftheestimatedcostofimprovements


47 A S 0.13.02E f f E c t i v E : 9 .15.2013

�� Acertificateofcompletioniscompletedbytheappraiserstatingtheimprovements were completed in accordance with the requirements/conditionsintheoriginalappraisalreportandisaccompaniedbyphotographsof completed improvements�� Titlereportisobtainedshowingnomechanicsliensarepresentonthesubjectproperty

3.6.1.12PropertiesListedorPreviouslyListedforSaleForrefinancetransactions,propertiesmaynotcurrentlybelistedforsaleandmusthavebeentakenoffthemarketonorbeforetheapplicationdate.Forrateandtermrefinancetransactions,ifthesubjectpropertywaslistedforsalewithinthe6monthspriortotheapplicationdate,thedocumentationmustincludeasignedstatementfromtheborrowersindicatingtheirintenttoretaintheproperty.Forcash-outrefinancetransactions,thesubjectpropertymaynothavebeenlistedforsale in the last 6 months.

3.6.2 ineligible Property Types�� Apartment/hotel conversions�� Condotels�� Berm,dome,earth,geothermal,log,andstrawbalehomes�� Float Homes�� Houseboats�� Kiddiecondominiums�� Land (including improved or unimproved lots)�� Locatedoutsideofthe48statesandtheDistrictofColumbia�� Lot loans�� ManufacturedHomes:Anydwellingunitbuiltonapermanentchassisandattachedtoapermanentfoundationsystemisamanufacturedhomeforpurposesoftheseguidelines.Referto“Factory-BuiltHousingOtherThanManufacturedHousing”insection3.6.1.7ofthismanualforrequirementsforotherfactorybuilthousing.�� Mobilehomes�� Propertiesnotappraisedasresidential�� Propertiesnotprimarilyresidentialinnature(farms,ranches,orchards,vineyards, etc.)�� Propertiesnotsuitableforyear-roundoccupancy�� Propertyofatypethatispotentiallyeligiblebutfailstomeetthespecificrequirementsabove�� Propertiesoperatedasahotel�� Timeshares�� Uniquepropertieswheremarketabilityinthelocalmarketcannotbeestablished�� Unitsinexcessof2


48 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.6.3 eligible ownership Types

3.6.3.1 Fee simple estateAbsoluteexclusiveownershipinperpetuitywithgreatestrightsofpossession,useanddisposition

3.6.3.2 Leasehold estatesPropertieslocatedonleaseholdlandareeligibleprovidedallofthefollowingrequirements are met:

�� Agencyrequirementsmustbemet�� Theremustbeanestablishedmarketforleaseholdsintheareaandthecomparablepropertiesintheappraisalmustincludeatleastthreeleaseholdproperties�� Increases in the ground rent, if any, must occur according to a pre-determined schedule,inaccordancewithacost-of-livingorsimilarindex,orinaccordancewithareappraisalprocesswithreasonablelimitations�� Theleaseholdtermmustexceedthetermofthemortgagebyatleast5years

3.6.4 Property FlipsProperty Flips occur when a property is resold within 6 months (close of escrow to close of escrow)ofpurchase.Thefollowingareexcludedfromthedefinitionofpropertyflips:

�� Propertyobtainedbythesellerviaforeclosureordeed-in-lieuofforeclosure

�� Apropertythatwasrecentlyinheritedorobtainedviaadivorcesettlement

�� Saleoccurringinconjunctionwithacorporatesponsoredemployeerelocation

Loanstopurchasepropertiessoldviasimultaneousordoubleclosings(purchasedandflippedsimultaneouslyorconcurrently)arenoteligibleforinsurance.

Transactionsinvolvingpropertyflipsarenoteligiblefordelegatedunderwriting.Requireddocumentationincludesanexplanationandevidenceofanyimprovementsmadetotheproperty and the HUD-1 statement from the original purchase.

3.6.5 GeographicandMarketConsiderationsNationalMortgageInsuranceCorporation(NationalMI)offersmortgageinsurance(MI)inthe48statesandtheDistrictofColumbia.5

InordertoprotectNationalMIanditsinsuredpolicyholders,mortgageinsurancemaynotbeofferedinmarketsexperiencingorlikelytoexperienceseveredeclinesineconomicconditionsand/orpropertyvalues.Theserestrictions,ifany,aredescribedontheapplicableproducteligibilitymatrix.

5 AsofMay3,2013NationalMortgageInsuranceCorporationwaslicensedin48statesandtheDistrictofColumbiatowriteinsurance.


49 A S 0.13.02E f f E c t i v E : 9 .15.2013

NationalMIperiodicallyevaluatesthehealthofnational,regionalandlocalrealestatemarkets.NationalMImaydesignatecertainmarketsas“restricted”.Thisindicatesthemarketcarrieselevatedriskandmorerestrictiveguidelineswillapply.Inaddition,NationalMImayestablishspecificunderwritingcriteriaforindividualmarketswhennecessary.

3.6.5.1 restricted MarketsRestrictedmarketsandtherelatedguidelinerestrictionsaredescribedintheapplicableproductmatrix.

3.6.5.2 Appraisal indicates Declining MarketIftheappraiserindicatesthatvaluesaredeclining,evenifthelargermarketitselfisnotidentifiedbyNationalMIasrestricted,themaximumLTVislimitedto95%.Inaddition,theUnderwritershouldtakespecialcareinthereviewoftheappraisaltoensure the value conclusion is appropriately supported.

3.6.6 Appraisal TypesNationalMIrequiresatraditionalfullappraisalwithaninteriorinspection.Exterioronlyappraisalsorevaluations,propertyinspectionwaivers,AVMsorBPOsarenotpermitted.

Appraisalsshouldincludeallrequiredphotos,exhibitsandaddendumsandbeononeofthefollowingacceptableforms:

�� UniformResidentialAppraisalReport (Fannie Mae 1004 / Freddie Mac 70)

�� Individual Condominium Unit Appraisal Report (Fannie Mae 1073 / Freddie Mac 465)

�� IndividualCooperativeInterestAppraisalReport (Fannie Mae 2090)

�� SmallResidentialIncomePropertyAppraisalReport (Fannie Mae 1025 / Freddie Mac 72)

�� AppraisalUpdateorCompletionCertificate (Fannie Mae 1004D / Freddie Mac 442)

Theappraisalmustbeincompliancewith:

�� UniformStandardsofProfessionalAppraisalPractice(USPAP)

�� Federal Housing Finance Agency (FHFA) Appraisal Independence Requirements (AIR)


50 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.7 Loan-to-Value(LTV)andHomeEquityCombinedLoan-to-Value(HCLTV)LTVrequirementsaredescribedontheapplicableproductmatrix.

3.7.1 Financed Premiums and LTvWhenpremiumsarefinancedinwholeorinpart(split),LTViscalculatedexcludingtheamountofthefinancedpremium.

3.7.2 HomeEquityCombinedLoan-to-Value(HCLTV)TheHCLTViscalculatedbyaddingthefirstlienamounttothecombinedtotalofthejuniorliens(addingtheoutstandingbalanceofloans,theremainingbalanceoflinesinrepaymentwithoutabilitytomakenewdraws,andthegreaterofthelineamountoroutstandingbalanceforlinesofcreditthatareactivewheretheborrowercontinuestohavetheabilitytomakenewdraws).Whenajuniorlienispresent,paymentmustbeincludedwhencalculatingthequalifyingratiosandtheHCLTVmustnotexceedprogramguidelines.

3.8 Loan AmountThemaximumloanamountiscontainedintheapplicableproducteligibilitymatrix.

3.9 insurance requirements

3.9.1 Flood insuranceFloodinsuranceconsistentwithstandardFannieMae/FreddieMacrequirementsmustbein place.

3.9.2 HazardInsuranceHazardinsuranceconsistentwithstandardFannieMae/FreddieMacrequirementsmustbein place.

3.9.3 Title insuranceTitleinsuranceconsistentwithstandardFannieMae/FreddieMacrequirementsmustbeinplace.

3.10 Legal and regulatory requirementsLoansmustbeoriginatedinaccordancewithapplicablefederal,stateandlocallawsandregulations.

3.11 AgeofDocumentation

3.11.1 CreditBureauandFICOScoreMustbedatedwithin120daysofclosing


51 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.11.2 IncomeandAssetDocumentationMustbedatedwithin120daysofclosing

3.11.3 VerbalVerificationofEmploymentRefertosection3.5.2ofthismanualfortheapplicablerequirements.

3.11.4 AppraisalEligibleappraisalsmustbedatedwithin120daysofclosing.

Iftheappraisalismorethan120daysold(butlessthan6monthsold),anupdatetotheexistingappraisalisrequired.Theupdatemustmeetthefollowingrequirements:

�� Includeaninspectionoftheexteriorofthepropertyand

�� Includeareviewofthecurrentmarketdatatodeterminewhetherornotthevalueofthe property has declined since the original appraisal

�� Determineifthesubjectpropertyforarefinancetransactionislistedforsaleorwaslisted following the date of the original appraisal

�� Becompletedbytheoriginalappraiser(ofifasubstituteappraiserisusedthefilemustincludeanexplanationastowhytheoriginalappraiserwasnotusedandthesubstituteappraisermustreviewtheoriginalappraisalandconfirminwritingthatthe original appraiser’s value conclusion as of the date of the original appraisal was reasonable)

�� If the update indicates that the value has not declined, the appraiser must provide thelenderwithasignedwrittendocumentevidencingtheappraiser’sconclusionanddescribingthescopeoftheappraiser’sworkevidencingtheaboverequirementshavebeenmet

If the update indicates that the property value has declined, then a new appraisal is required.

Whentheoriginalappraisalbecomesmorethan6monthsold,anewappraisalisrequired.

3.12 AdditionalRequirements

3.12.1 OriginationChannel(RetailandNon-Retail)Anon-retailloanisaloanwheretheentitytakingtheapplicationandprocessingtheloandiffersfromtheentitythatcloses,fundsandinsurestheloan.Aretailloanisaloanforwhichthesefunctionsareunifiedwithinthesameentity.

Retailloansareeligibleforinsurance.Non-retailloansarenoteligibleforinsurancewithoneexception:LoanssourcedthroughtheWholesalechannel(broker)areonlyeligiblefor


52 A S 0.13.02E f f E c t i v E : 9 .15.2013

insuranceifthelenderhasbeenspecificallyapprovedforWholesalefollowingNational’sreviewofthelender’spractices.

3.12.2 Fraud ToolsToolsareincreasinglyavailablefromamultitudeofvendorsthatcanassistlenderstoidentifyfraudandmisrepresentationrelatedtoidentity,occupancy,employment,income,assets,property,undiscloseddebtandotherriskissues.Toolsthataredeveloped“inhouse”bylendersmayalsobedeployedintheoriginationprocess.

NationalMIdoesnotcurrentlyrequiretheuseofsuchtools,butdoesconsiderthemabestpracticeandencourageslenderstoincorporatethemintotheiroriginationprocesses.HowlendersmakeuseofsuchtoolsisonefactorintheapprovalprocessutilizedbyNationalMItoassessprospectivelenders.

Whenfraudtoolsareincorporatedintothelender’soriginationprocess,thelendermustevaluatetheresultswhenmakingthecreditdecision.Anyissuesraisedbythetoolsshouldbeinvestigatedtoconclusionandtheresultsshouldbedocumentedinthefile.

3.12.3 Changes to Mi CommitmentsWhenaloanwithanapprovedMIcommitmentischangedduringthecourseoforiginationprocess,theloanmustbere-approvedifthechangeimpactsanyaspectofthevariablesaffectingeligibilityandqualification.

Lendersmaymakesomechangeswithoutobtaininganewapprovalincluding:

�� Decreasingtheloanamount(providedsufficientdownpaymentsandreserveshavebeenpreviouslyverifiedtocovertheassociatedincreaseindownpayment,ifany)

�� Decreasing the interest rate

�� Correctionstotypographicalerrorstonamesoraddress

�� Changestotherenewalpremiumoption(amortizingorlevel)

3.12.4 Incomplete/DeniedApplicationsandBorrowerCommunicationTheFairCreditReportingAct(FCRA)requiresthatwhenaninsuranceapplicationisdeniedonthebasisofinformationprovidedbyaconsumerreportingagency,theapplicantmustbegivennoticeidentifyingtheconsumerreportingagencyandincludesastatementoftheapplicant’srightsunderFCRA.IfthelenderhasapprovedtherequestandNationalMIhasdeniedit,theStatementofDenialwillbesentdirectlytotheapplicantbyNationalMI.


53 A S 0.13.02E f f E c t i v E : 9 .15.2013

3.12.5 Pre-Funding AuditNationalMIstronglyrecommendsbutdoesnotrequirethatlender’simplementapre-fundingauditprocess(suchasthoseprescribedbyFannieMaeandFreddieMac)toimproveloanoriginationquality.

3.13 ProductEligibilityMatrices–NonAUSConformingandJumboLoanAmountsThefollowingproducteligibilitymatricessummarizeNationalMI’sstandardor“nonAUS”guidelines.ThematricesmayincludenonAUSdependentguidelinesthataremorerestrictivethan,andtakeprecedenceover,thosedescribedabove.


54 A S 0.13.02E f f E c t i v E : 9 .15.2013

$417,000** 90 700 45%Single Family or Condo

Second Home


45%

45%

45%

45%

45%

Maximum DTi

Pr od u c t El ig ib il ity non AUs Conforming Loans

non AuS guidElinE SummAry – conforming loAnS

Loans that are notoriginatedinaccordancewithoneofNationalMI’s“AUSPlusOverlays”programsmustmeetthefollowingunder-writingrulesandbeoriginatedinaccordancewithNationalMI’sStandardUnderwritingGuidelines:

�� Fullincomedocumentationisrequired(Paystub+W2s;2YearsTaxReturns;and/orstandardrequirementsasapplicable)*�� Minimum 2 months reserves �� ARMmaximumLTV95%,minimuminitialfixedterm3years(5yearsforinvestment),andineligibleforcash-outrefinance�� Minimum3%fromoccupantborrower’sownfunds.Non-occupantsarenotconsideredwhendeterminingqualifyingDTI.�� Exterioronlyappraisalsorevaluations;propertyinspectionwaivers,AVMsorBPOsarenotpermitted�� GeographicExclusions:AttachedcondosinClarkcountyNevada6


occupancy

Primary Residence

Investment Property

All

Loan Purpose


Cash-OutRefinance



Purchase

All

Property Type





Single Family

Two-Unit

Single Family

Manufactured Homes

Loan Amount

$417,000**

$417,000**

$417,000**

$417,000**

$417,000**

$533,850**

$417,000**

All

Maximum LTv/CLTv

97

95

90

85

95

90

85

Not Eligible

Minimum FiCo

720

700

680

720

700

700

720

Not Eligible

45%

45%

Not Eligible



CooppropertiesareeligibleinNewYork,NewJersey,Maryland,IllinoisandWashington,D.C.only

* Refertosection3.5.1ofthemanualfordetailsondocumentationforspecifictypesofincome ** MaximumAmountsforAKandHIare$625,500(1unit)and$800,775(2units) *** LenderCtoPapprovalrequired-coveragebeginsaftercompletionwithpermanentendloanclosing.



55 A S 0.13.02E f f E c t i v E : 9 .15.2013

Not Eligible

Not Eligible

Not Eligible

Maximum DTi

Pr od u c t El ig ib il ity NonAUSJumboLoans

non AuS guidElinE SummAry – Jumbo loAn AmountS

LoansthatarenotoriginatedinaccordancewithoneofNationalMI’s“AUSPlusOverlays”programsmustmeetthefollowingunder-writingrulesandbeoriginatedinaccordancewithNationalMI’sStandardUnderwritingGuidelines:

�� Fullincomedocumentationisrequired(Paystub+W2s;2YearsTaxReturns;and/orstandardrequirementsasapplicable)*�� Minimum 6 months reserves�� ARMmaximumLTV95%andminimuminitialfixedterm5years�� Minimum3%fromoccupantborrower’sownfunds.Non-occupantsarenotconsideredwhendeterminingqualifyingDTI.�� ManufacturedHomes,SecondHomes,InvestmentPropertiesandRestrictedMarketsareineligible�� Exterioronlyappraisalsorevaluations;propertyinspectionwaivers,AVMsorBPOsarenotpermitted�� GeographicExclusions:AttachedcondosinClarkcountyNevada7


occupancy

Primary Residence

Second Home

Investment Property

All

Loan Purpose


Cash-OutRefinance


All

All

All

All

Property Type



All

Single Family

Two-Unit

All

All

Manufactured Homes

Loan Amount

$625,500**

$850,000

All

$850,000

All

All

All

All

Maximum LTv/CLTv

95

90

Not Eligible

90

Not Eligible

Not Eligible

Not Eligible

Not Eligible

Minimum FiCo

700

720

Not Eligible

720

Not Eligible

Not Eligible

Not Eligible

Not Eligible

45%

45%

45%

Not Eligible

Not Eligible



CooppropertiesareeligibleinNewYork,NewJersey,Maryland,IllinoisandWashington,D.C.only

* Refertosection3.5.1ofthemanualfordetailsondocumentationforspecifictypesofincome ** LimitedtoFHFAHighBalanceMarketsonly *** LenderCtoPapprovalrequired-coveragebeginsaftercompletionwithpermanentendloanclosing.



56 A S 0.13.02E f f E c t i v E : 9 .15.2013

4.0 CommitmentsandCertificates

4.1 ConditionalCommitmentsand/orPre-qualificationsNationalMIdoesnotissuepre-qualificationsfornon-delegatedapprovals.Allpertinentdatamustbetransmittedtoobtainacommitmentforinsurance.

Originatorswithdelegatedauthoritymayhavevarioustypesoforiginationandprequalificationprocesses.However,delegatedloansmustbefullydocumented,underwrittenandqualifiedforinsurancepriortosubmissiontoNationalMIformortgageinsurance.

4.2 submission requirements

4.2.1 Delegated submissionsNationalMIrequiresthatthefollowinginformationbesubmittedsothataninsurancecertificatemaybeissued:

�� AfullycompletedNationalMIApplicationforMortgageInsurance(datatobeenteredintoNationalMI’sweb-portal)

�� Oneofthefollowingmustbecompleted(wheredataisdefinedasallofthe1003(LoanApplication)and1008(UnderwritingTransmittalSummary)mortgageinformation):

» Abusinesstobusinesstransferofallloandata » AnuploadofeitheranXMLorDU3.2filewithalloftheloandata » LendertomanuallyenteralloftheloandatadirectlyintoNationalMI’sweb-portal

4.2.2 non-delegated submissions NationalMIrequiresthatthefollowinginformationbesubmittedsothataninsuranceunderwritingmayoccur:

�� NationalMIApplication(notrequiredforonlinesubmissions orelectronicdeliveriesthatincludedetailedMIinformation)

�� 1003LoanApplication

�� 1008UnderwritingTransmittalSummary

�� AUSfinalreports–DUFindings/LPFeedback(ifapplicable)

�� CreditReports(includingallrequiredlettersofexplanation(LOX))

�� VerificationofRent(VOR)/VerificationofMortgage(VOM)asrequired

�� EmploymentandIncomeverification(paystubs,W-2’s,taxreturns, verificationsofemployment,verbalVOEs,andlettersofexplanation)


57 A S 0.13.02E f f E c t i v E : 9 .15.2013

�� Executed4506-T(orGSEapprovedequivalent)withIRSTranscripts fromthemostrecenttwoyears(ortimeframeasrequiredbyDU/LP)

�� Assetverifications(bank/investmentstatements,verificationsofdeposit(VOD), giftletters,communityoremployergrants)

�� AppraisalReport(includingallattachments)

�� SalesContract(finalexecutedwithallattachments-ifapplicable)

�� HUD-1 from previous sale

�� Underwriternotes/worksheetsutilized

�� Other documents as required

4.3 submission Methods

4.3.1 Upload(partial)withDataEntryADU3.2orXMLuploadoftheLoanApplicationdatawithadditionaldataentryofMIinformationintoNationalMI’sInsuranceManagementSystem

4.3.2 Data entry onlyDataentryoftheborrowerLoanApplicationandMIinformationintheNationalMIInsurance Management System

4.3.3 electronic DeliveryRegister,checkeligibilityanduploadviaNationalMI’selectronicinterface/channel(EDI/XML)

4.3.4 FaxFaxtoNationalMI’sUnderwritingFulfillmentdepartmentat510.858.0340

4.3.5 emailContactyourSalesAdvisorshouldsecureemailsubmissionbenecessary.

4.3.6 otherTherearenootherapprovedsubmissionmethodsatthistime.

4.4 NationalMICommitmentofInsuranceandInsuranceActivationAfterinsuranceisapproved,NationalMIsendsormakesavailableaninsurancecommitment.ThecommitmentevidencesapprovalandobligatesNationalMItoinsuretheloanprovidedthelendersatisfiesalloftheconditionsofthecommitmentandtheclosedloancomplieswithNationalMIpolicyrequirements(includingageofdocumentationatclosing)ineffectatthetimeofthecommitment.


58 A S 0.13.02E f f E c t i v E : 9 .15.2013

Commitmentsaregoodfor120days(12monthsforConstructiontoPermanent).Ifanextensionisneeded,NationalMImayrequireanupdatedapplication,income/assetdocumentation,borrowercreditinformation,andappraisal.ExtensionsaresubjecttoNationalMIguidelinesineffectatthetimetheextensionrequestoccurs.

Changestoexistingcommitmentsaltertheriskprofileofthecommitment.Consequently,changesrequirere-approvalandwillbeevaluatedaccordingtoNationalMIguidelinesineffectatthetimeofthechange.Anewcertificateshouldbeobtainedreflectingthechanges.The120daytimeframestartsagainfromthedateofthenewcommitment.

ActivationistriggeredbyloanclosingorreceiptofthefirstMIpaymentbyNationalMI.RefertotheNationalMIproductdescriptionfordetailsregardingactivation.Uponactivation,thecommitmentbecomesaninsurancecertificate.


59 A S 0.13.02E f f E c t i v E : 9 .15.2013

5.0 ChangesAfterInsuranceIssued (Certification)

5.1 InsuringLoansafterClosingNationalMIdoesnotinsureloansiftheapplicationforinsuranceoccurredafterthefollowingdates:

�� BorrowerPaidMI:Firstpaymentduedate

�� Lender Paid MI: First payment due date

5.2 Assumptions,PartialReleasesandTransferofTitleMortgageinsuranceisissuedbasedonthespecificriskcharacteristicspresentattimeoforigination,includingthespecificborrowersinvolved.Assumptions,partialreleases,transfersoftitleand/orothertransactionsthatreleaseoneormoreborrowersortransferownershipwillinvalidateinsuranceunlessspecificallyapprovedbyNationalMI.Note:TheremovalofadeceasedborrowerfromtitledoesnotinvalidateinsuranceorrequireNationalMIapproval.

5.3 ModificationstoExistingNationalMIInsuredLoansModificationstoexistingloansinsuredbyNationalMIareoutsidethescopeoftheseguidelines.PleasecontactyourNationalMIrepresentativetoobtaininformationonmodificationprograms.

5.4 ReinstatementofCancelledCertificateReinstatementwillbeconsideredonacase-by-casebasis.ContactNationalMI’sPolicyServicingdepartmentforconsiderationandrequireddocumentation.


60 A S 0.13.02E f f E c t i v E : 9 .15.2013

6.0 UnderwritingGuidelineManual RevisionHistory

UnderwritingGuidelineManualRevisionHistory

e F F e C T i v e D AT e r e v i s i o n s U M M A r y

4.3.2013 Version1.0–FirstEffective

4.22.2013 Version1.1–ClarificationtoSection4.2.2describingwhenaNationalMIApplicationisnotrequired

5.3.2013 Version1.2–Added(Section1.1)andupdated(Section3.6.5)footnotesdocumentingthenumberofapprovedstates

6.1.2013 Version1.3–Updatedfootnotesandtextreferencingthenumberofapprovedstates

9.15.2013 Version1.4:

• Clarified3.5.1.7(Disability)todocumentthatitdoesnotapply to temporary leave (3.5.1.28)

• Clarifiedandmodifiedthetemporaryleave(3.5.1.28)incomecalculationtoincludeanalternativethatconsiderssupplementalincomefromtheuseofverifiedliquidreserves.

• Clarificationsmadetocalculationportionsofboth3.5.1.26(Self Employment) and 3.5.1.27 (Social Security)

• Addednewguidelines(Section2.3.3):ProductEligibilityMatrix–AffordableLending

• InSection3.5.3.1,changedthethresholdtriggeringinvestigationoflargedepositsfromexceeding20%toexceeding25%ofmonthlyincome.


61 A S 0.13.02E f f E c t i v E : 9 .15.2013

7.0 NationalMITrueSolutionssM summary

QualifiedMortgageInsurerStandard–NationalMIClearsthePath

�� Willing and Able to Pay Claims Wearewell-capitalizedandwillbetheretopayyourclaims.WithNationalMISafeGuardSM coverage,yourclaimwillnotberescindedordeniedprovidedthattheborrowermakesjust18consecutive,timelypayments—50%fasterthantheindustrystandard.*

�� ValueAddedBusinessPartner WithNationalMITrueInsightSM,wewillreview100%ofloans.Gettheconfidencethatavalidclaimwillbepaidbyreducingtheriskoffuturerescissionsduetoinsufficientdocumentationand/ormisrepresentation.NationalMIcanbeyoursecondpair ofeyestokeepupwithnewregulations.

�� Close More Loans LoanswhichreceiveaDU®/ApproveRecommendationora LP®Accept/EligibleResponsewillgenerallymeetNationalMI’seligibilitycriteria.NationalMITrueGuideSMalsocoversnon-GSEloans—andwe’rereadytoworkwithportfoliolenderstodevelopandimplementcustomizedmortgageinsurancesolutions.

�� EasytoUseandCommittedtoService Ourprocessworkswithinyourexistingbusinessmodel.Fromoriginationsandunderwritingtoservicingandclaims—ourtalentedandexperiencedteamandourend-to-endplatform,NationalMIAXIS,arecommittedtohelpingyoumakeyourjobeasier.

*Fromtheirownfundsaslongasthereisnotlenderfraudormisrepresentation.

RefertoNationalMI’sMasterPolicyandUnderwritingGuidelineManualforcompletedescriptionofpoliciesandrequirements.


62 A S 0.13.02E f f E c t i v E : 9 .15.2013

AUs Approval Plus overlays GuidelinesFannieMaeorFreddieMacAUSapprovals(DUApprove/EligibleorLPAccept/Eligible)maybeutilizedtogetherwiththefollowingcriteriatodetermineinsuranceeligibility.

�� DataIntegrity:The“Eligible”decisionfromtheAUSisbasedonvalidandverifiedinputstothe decision engine.

�� Documentation:TheDU/LPdecision(finalAUSreport)ispresentinthefileandallapprovalconditionsrelatedtotheAUSdecisionaresatisfied

�� Comprehensive Credit Assessment: A prudent comprehensive credit assessment is completedconsideringallfactorsrelevanttothegrantingofcredit.ThisincludesagencycrediteligibilitycriterianotevaluatedbytheAUSandNationalMIcreditrequirements.

�� GeneralEligibilityRequirements:MeetsNationalMI’requirementsincluding: » Nointerest-only,negativeamortization,orpayoptionARMs » No seasoned loans » Eligibleresidents(U.S.citizens,permanentresidentsornon-permanentresidentswithpermissiontoworkintheU.S.whodonothavediplomaticimmunity)

» AcceptabletraditionalU.S.credithistory » Cash-on-hand and sweat equity not relied upon for approval » Specialapprovalsobtainedforcertainloansincludingwholesale,constructiontopermanent,andrenovation.Non-arm’slengthtransactionsrequirenon-delegatedapproval.

�� CreditOverlays:NationalMI’screditoverlaysareincludedintheattachedproductmatrix.OverlaysestablishminimumrequirementsaccordingtoNationalMIpolicy–iftheagencyhasamorerestrictivepolicyrequirement,themorerestrictiveagencyrequirementmustbemet.

» ProductEligibilityMatrix-ConformingandConformingHighBalanceLoans

standard GuidelinesLoansthatarenotrunthroughaGSEAUSordonotmeetNationalMI’s“AUSApprovalPlusOverlays”guidelinesdescribedabovemustbemanuallyunderwrittenandmeettheeligibilitycriteriadescribedinNationalMI’sstandardguidelines.

StandardGuidelinesaredescribedinNationalMI’sUnderwritingGuidelineManual.

WhereNationalMI’sstandardguidelinesaresilentonatopic,standardagencyguidelines(excludinganynegotiatedvariances)apply.


63 A S 0.13.02E f f E c t i v E : 9 .15.2013

Per AUS Approval

Per AUS Approval

Per AUS Approval

Maximum DTi

Pr od u ct El ig ib il ity ConformingandConformingHighBalanceLoans

AuS PluS ovErlAyS guidElinE SummAry – conforming loAnS


�� ARMmaximumLTV95%,minimuminitialfixedterm3years,andminimum660FICOifinitialfixedterm<5years�� Minimum3%fromoccupantborrower’sownfunds.�� Exterioronlyappraisalsorevaluations;propertyinspectionwaivers,AVMsorBPOsarenotpermitted�� GeographicExclusions:AttachedcondosinClarkcountyNevada8


occupancy

Primary Residence

Second Home

Investment Property

All

Loan Purpose


Cash-OutRefinance




Purchase

All

Property Type




Single Family

Two-Unit


Single Family

Manufactured Homes

Loan Amount

$417,000** $417,000**

$625,500**

$417,000**

$417,000** $625,500**

$533,850**

$417,000**

$417,000**

All

Maximum LTv/CLTv

97 95

95

85

95 90

90

90

85

Not Eligible

Minimum FiCo

700 620

620

660

700 700

680

680

680

Not Eligible

Per AUS Approval

Per AUS Approval

Per AUS Approval

Per AUS Approval

Not Eligible




** $625,500maximumavailableinFHFAhighbalancemarketsonly–otherwiselimitedto$417,000 Refertothecountyspecificloanlimitstodeterminethemaximumamountforaspecificarea CooppropertiesareeligibleinNewYork,NewJersey,Maryland,IllinoisandWashington,D.C.only MaximumAmountsforAKandHIare:

• Conforming-$625,500(1unit)and$800,775(2units) • ConformingHighBalance-$938,250(1unit)and$1,201,150(2units)

*** LenderCtoPapprovalrequired-coveragebeginsaftercompletionwithpermanentendloanclosing


SM Underwriting Guidelines - National MI...2013/09/15 · national Mi TrueGuidesM: Underwriting...

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