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Effective June 1, 2008
UNDERWRITING GUIDELINES
Radian Guaranty Inc. UNDERWRITING GUIDELINES
Contents
Introduction ................................................................................................................ 4
Full Documentation Prime Credit (“Industry A”) .................................................. 4
Limited Documentation Prime Credit (“Alternative A” or “Alt A”) .................... 6
Full Documentation Non-Prime Credit (“A Minus”) ............................................. 6
Guideline Criteria for All Programs ........................................................................ 7
Credit—Philosophy and General Handling ......................................... 7
Credit—Credit Report Requirements .................................................. 7
Credit—Definitions .............................................................................. 8
Credit—Non-Traditional Credit (No or Invalid FICO Score) ............. 8
General Pricing Information .................................................................................. 10
General Radian Requirements ................................................................................11
Borrower Qualification .............................................................................................11
Individual Tax Identification Number (ITIN) .................................... 11
Resident Aliens .................................................................................. 11
Qualifying Ratios ..................................................................................................... 12
Temporary Buydowns ........................................................................ 12
Loan Repayment Types ........................................................................................... 12
Fixed Rate .......................................................................................... 12
Adjustable Rate Mortgages ................................................................ 12
Interest Only....................................................................................... 13
Loan Term .......................................................................................... 13
Temporary Buydowns ........................................................................ 14
Loan Features ........................................................................................................... 14
Borrower Equity................................................................................. 14
Financing Concessions....................................................................... 15
Non-Occupant Co-Borrower .............................................................. 15
Refinances .......................................................................................... 15
Secondary Financing.......................................................................... 17
Property Qualifications/Restrictions ...................................................................... 17
Cooperatives ...................................................................................... 17
Condominium/Attached PUD ............................................................ 17
Manufactured Housing....................................................................... 18
Geographic Guidelines....................................................................... 18
Declining Markets Policy .................................................................. 19
Appraisal Requirements ..................................................................... 19
Maximum Loans to One Borrower Policy ............................................................. 20
Maximum Mortgage Insurance Risk Exposure ................................. 20
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UNDERWRITING GUIDELINES Radian Guaranty Inc.
Maximum Compliance Loans to One Borrower ................................ 20
General MI Restrictions .......................................................................................... 20
General Submission Requirements ........................................................................ 21
Requirements for Loan Amounts Up to $650,000 ............................. 21
Requirements for Loan Amounts Greater Than $650,000 ................. 21
Delegated Authority ........................................................................... 21
Radian’s MI Online ............................................................................ 22
Revision notes ........................................................................................................... 23
Revisions for April 30, 2008 .............................................................. 23
Revisions for June 1, 2008 ................................................................. 23
Rev 20080521
Effective June 1, 2008 3
Radian Guaranty Inc. UNDERWRITING GUIDELINES
Introduction
These guidelines are applicable to mortgage insurance applications for 1 to
4-unit properties. Borrower-paid mortgage insurance (BPMI) applications must
be submitted prior to loan closing/funding date; lender-paid mortgage insurance
(LPMI) must be submitted prior to the first payment due date. A 1-unit property is
defined as a single-family detached dwelling, a single-family attached dwelling, a
co-operative unit, or a condominium unit. Please refer to the guidelines for details on
manufactured housing.
Full Documentation Prime Credit (“Industry A”)
Radian’s Full Documentation Prime program (“Industry A”) is designed for loans
with full/alternative documentation verifying income, employment, and assets
as defined by Fannie Mae/Freddie Mac and maintained by the lender, and have a
minimum FICO score of 620.
All loans must comply with Radian’s Declining Markets Policy and property/
appraisal guidelines. In addition, loans with all of the following characteristics are
eligible for Radian Full Documentation Prime mortgage insurance, subject to prudent
underwriting, and are not required to meet the additional guidelines as stated herein:
■ DU Approve/Eligible or LP Accept/Eligible response
■ Primary residence, 1–2 units
■ Purchase or Rate/Term Refinance transaction
■ Minimum 620 FICO score (minimum 680 FICO score for 95.01–97% LTV)
■ Uniform Standards of Professional Appraisal Practice (USPAP)-compliant ap-
praisal required; see the Appraisal Requirements section for guidance
Eligible per AUS
PrImAry resIDenCe
PURchaSE & RaTE/ Max loan Min FICO Loan
TERm REfINaNcE LTV amount score notes
1 Unit Single Family 97 $ 417,000 680 ci
95 $ 417,000 620 ci
2 Units 97 $ 533,850 680 ci
95 $ 533,850 620 ci
Condominium 97 $ 417,000 680 i
95 $ 417,000 620 i
Co-op 97 $ 417,000 680 i
95 $ 417,000 620 i
Manufactured Housing 95 $ 417,000 620
Key to Loan Notes: c–Eligible for Construction-to-Permanent, i–Eligible for Interest Only
(minimum term of 60 months)
All other Full Documentation Prime loans not meeting the above criteria must meet
the following Radian Full Documentation Prime guidelines contained herein.
4 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
Manual and/or Not Eligible per AUS
PrImAry resIDenCe seConD Home
PURchaSE & RaTE/ Max loan Min FICO Max Loan PURchaSE & RaTE/ Max loan Min FICO Max Loan
TERm REfINaNcE LTV amount score DTI% notes TERm REfINaNcE LTV amount score DTI% notes
1 Unit Single Family 97 $ 450,000 680 38 1 Unit Single Family 95 $ 650,000 700 41
95 $ 650,000 660 41 ci 90 $ 750,000 660 41 c
$ 550,000 620 41 ci Condominium 95 $ 650,000 700 41
90 $ 850,000 660 41 ci 90 $ 750,000 660 41
$ 650,000 620 41 ci
85 $ 900,000 660 41 ci caSh-OUT REfINaNcE Max loan Min FICO Max Loan
(Maximum $150,000 cash-out) LTV amount score DTI% notes
2 Units 95 $ 650,000 660 41 i 90 $ 450,000 680 41
1 Unit Single Family
$ 550,000 620 41 i 90 $ 450,000 680 41
Condominium
90 $ 850,000 660 41 i
$ 650,000 620 41 i Investment ProPerty
85 $ 900,000 660 41 i PURchaSE & RaTE/ Max loan Min FICO Max Loan
3–4 Units 90 $ 850,000 660 33 TERm REfINaNcE LTV amount score DTI% notes
Condominium 97 $ 450,000 680 38 1 Unit Single Family 90 $ 650,000 660 33
95 $ 650,000 660 41 i 2 Units 90 $ 650,000 660 33
$ 550,000 620 41 i
90 $ 850,000 660 41 i caSh-OUT REfINaNcE Max loan Min FICO Max Loan
(Maximum $150,000 cash-out) LTV amount score DTI% notes
$ 650,000 620 41 i
1 Unit Single Family 85 $ 450,000 720 33
85 $ 900,000 660 41 i
2 Units 85 $ 550,000 720 33
Co-op 95 $ 650,000 660 41
Manufactured Housing 90 $ 450,000 660 41
caSh-OUT REfINaNcE Max loan Min FICO Max Loan
(Maximum $150,000 cash-out) LTV amount score DTI% notes
1 Unit Single Family 90 $ 450,000 660 41 i
2 Units 90 $ 550,000 660 41 i
Condo 90 $ 450,000 660 41 i
Co-op 90 $ 450,000 660 41
Key to Loan Notes: c–Eligible for Construction-to-Permanent, i–Eligible for Interest Only (minimum term of 60 months)
Traditional full documentation or alternative documentation (pay-stubs, bank
statements) as defined by standard Fannie Mae/Freddie Mac guidelines is required.
A loan application receiving a DU response of Approve/Eligible or an LP response
of Accept/Eligible which includes the waiver of income or asset documentation, and
validated closed per the findings, is eligible as full documentation. Please see the
Radian Documentation Types guide on our Web site at www.radian.biz for details.
Notes
■ Investment Property Guidelines and pricing apply to 3–4 units.
■ Debt consolidation is priced as cash-out and this occurrence should be treated as
a cash-out refinance. Payoff from loan proceeds of any debt which is not secured
by a lien on the subject real estate is considered a cash-out transaction. Borrowers
Effective June 1, 2008 5
Radian Guaranty Inc. UNDERWRITING GUIDELINES
may leave the closing table with a maximum of cash per program guidelines and
including debts paid as referenced herein.
■ Generally, a lender’s delegated authority is limited to a maximum $650,000 loan
amount. Please see the Delegated Authority section for details.
Limited Documentation Prime Credit (“Alternative A” or “Alt A”)
Loans which do not conform to all of the requirements of Full Documentation
are deemed to be Limited Documentation loans, which are ineligible for Radian.
This includes any GSE standard or negotiated program or commitment that allows
reduced or limited documentation. Please see the Radian Documentation Types
Guide for more details.
Full Documentation non-Prime Credit (“A minus”)
Radian’s Full Documentation Non-Prime program (“A Minus”) is designed for the
borrower who has credit criteria that do not meet the Radian Full Documentation
Prime guidelines, but who is identified as an insurable risk. Radian’s Full
Documentation Non-Prime program requires a minimum representative FICO score
of 660.
Eligible loans must meet Radian’s published Full Documentation Non-Prime
guidelines, regardless of any Automated Underwriting System (AUS) response.
Traditional full documentation or alternative documentation (pay-stubs, bank
statements) as defined by standard Fannie Mae/Freddie Mac guidelines is required.
Please see the Radian Documentation Types guide on our Web site at www.radian.biz
for details.
Ineligible AUS responses
■ DU EA-IV
■ DU Refer
■ LP Refer
■ LP Caution/Ineligible
■ Out of Scope
Manual and/or Not Eligible per AUS
PrImAry resIDenCe
PURchaSE & RaTE/ Max Loan Min FICO Max
TERm REfINaNcE LTV Amount Score DTI%
1 Unit Single Family 95 $ 450,000 660 50
2 Units 95 $ 550,000 660 50
Condominium 95 $ 450,000 660 50
Notes
■ Debt consolidation is considered as cash-out refinance. Payoff from loan proceeds
of any debt which is not secured by a lien on the subject property is considered a
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UNDERWRITING GUIDELINES Radian Guaranty Inc.
cash-out refinance. Cash-out refinance is not eligible for Radian’s Full Documen-
tation Non-Prime program.
Guideline Criteria for All Programs
The following guidelines cover all Radian mortgage insurance programs, including
Full Documentation Prime and Full Documentation Non-Prime. Program-specific
exceptions are noted.
credit—Philosophy and General handling
The basis for any credit analysis should be a review of each borrower’s complete
credit history, length of time accounts have been opened, types of credit used,
balance to credit limit comparisons, and number of recent inquiries. At Radian, we
feel that the credit score should be only a part of the total credit consideration. To
evaluate the complete credit picture, Radian will apply the following credit criteria
in order to determine if a borrower’s FICO score is a true representation of the
borrower’s credit profile when determining insurability of a loan.
■ IF the borrower has 24+ months primary housing (mortgage or rent) history
reported/documented with 0x30 late THEN a minimum of 2 additional tradelines
with 12 months reported activity on each is required.
■ IF the borrower has 12–24 months primary housing (mortgage or rent) history
reported/documented with 0x30 late THEN a minimum of 3 additional tradelines
with 24 months reported activity on each is required.
■ IF the borrower has 0–12 months primary housing (mortgage or rent) history
reported/documented and/or prior derogatory history on the current mortgage/
rental history (as permitted in the Credit Definitions below) THEN a minimum of
4 additional tradelines with 24 months reported activity on each is required.
■ IF the borrower’s credit only contains non-traditional credit history, THEN the
borrower must provide four non-traditional verifications, each of which must indi-
cate a 12-month history. One of the four verifications must be a primary housing
(mortgage or rent) payment history. The other three verifications may be utilities,
insurance, receipts for cash rental payments, or any other documented non-tradi-
tional credit source.
Note: A tradeline is defined as a revolving or installment payment account. The
tradeline must not be in dispute and must clearly belong to the borrower in
order to be eligible for consideration. Collections, judgments, charge-offs, repos-
sessions, foreclosures, bankruptcy repayment plans, and credit counseling do
not apply.
credit—credit Report Requirements
Radian will underwrite mortgage insurance based on the lowest representative FICO
score of all borrowers. At least two national repositories must be checked for each
Effective June 1, 2008 7
Radian Guaranty Inc. UNDERWRITING GUIDELINES
borrower. The representative FICO score for each borrower will be determined as
follows:
■ If two scores are provided, the lower score will be used.
■ If three scores are provided, the middle score will be used.
credit—Definitions
Full Documentation Prime above
Full Documentation Prime $650,000 Full Documentation Non-Prime
minimum fIcO aND 620 660 660
mortgage or rental history aND ■ No more than 1x30 (no ■ 0x30 for last 24 months ■ No more than 2x30 or 0x60 in last 12 months.
rolling lates) in last 12 ■ All mortgages must be ■ Rolling lates of 2x30 successively are considered 1x30 to
months current at time of subject qualify.
■ All mortgages must be loan application and ■ All mortgages must be current at time of subject loan
current at time of subject closing. application and closing.
loan application and
closing.
Installment debt history aND No more than 1x30 in last 12 No more than 2x30 or 1x60 in ■ No more than 3x30 or 1x60 in last 12 months.
months last 24 months ■ Three successive 30-day lates may count as one event.
■ All delinquent consumer credit must be current at loan
closing.
Revolving debt history aND No more than 2x30 in last 12 No more than 2x30 or 1x60 in ■ No more than 3x30 or 1x60 in last 12 months.
months last 24 months ■ Three successive 30-day lates may count as one event.
■ All delinquent consumer credit must be current at loan
closing.
major derogatory credit aND None in last 12 months None in last 24 months ■ Charge-off and collection accounts greater than $2,500
(cumulative balance) must be paid at or before closing.
■ Medical collections of any amount must show a resolution
plan in place.
minimum duration of credit 12 months 24 months 12 months
history aND
Bankruptcy aND Minimum 48 months since Ineligible Minimum 36 months since discharge/ dismissal date, with
discharge/dismissal date, satisfactory credit re-established
with satisfactory credit re-
established
foreclosure, short sale, deed- Minimum 60 months since date Ineligible Minimum 36 months since date of activity prior to date of
in-lieu of foreclosure activity of activity and satisfactory credit application and satisfactory credit re-established
re-established
credit—Non-Traditional credit (No or Invalid fIcO Score)
Radian’s non-traditional credit guidelines are acceptable only for fully documented
loan files that would align with a traditional manually underwritten “A credit”
borrower credit profile. A valid Social Security number is required for all borrowers
contributing to the qualification for the mortgage, and the lender’s file submission
to Radian must include the credit reporting agency’s response to the lender’s order
for a tri-merged traditional credit report for each borrower, including a FICO score
calculation and public records search.
Non-traditional credit is acceptable for Radian insurance when a borrower
contributing to the qualification for the mortgage does not have enough of the types
8 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
of credit that would appear on a traditional tri-merged credit report to generate
a usable FICO score OR if all borrowers on a loan application have insufficient
credit references to develop a traditional credit report and usable FICO score. Under
no circumstances should a lender use a non-traditional credit evaluation to offset
derogatory information that appears in a tri-merged traditional credit report.
The following features define eligibility criteria:
■ Full third-party verification of assets, income, employment is required
■ 1–2 units detached/attached or condominium
■ Primary residence only
■ Purchase only
■ Maximum 95% LTV (Radian’s Declining Markets Policy will apply)
■ Full file submission to a Radian Service Center
■ Loan amounts limited to maximum of GSE conforming for the 48 contiguous
states
Ineligible for non-traditional credit
■ Full Documentation Non-Prime
■ Co-ops
■ Manufactured housing
■ Construction-to-permanent
Acceptable non-traditional credit references must be only those types of credit that
require the borrower to make periodic payments on a regular basis at intervals that
are no longer than every three (3) months. A minimum of four (4) such references
(held singly or jointly) must be verified for each borrower contributing to the
qualification for the mortgage.
Effective June 1, 2008 9
Radian Guaranty Inc. UNDERWRITING GUIDELINES
The types of credit that can be used fall into five categories, some of which are
required:
Full Documentation Prime Credit
Credit Category Acceptability
Type 1 credit Housing payment: Required to be verified by a ■ 0x30 days delinquent in past 12
non-interested third party for the most previous 12 months
months minimum ■ 1x30 in previous 12 months, if
available; no rolling lates
Type 2 credit Automobile financing/leasing and/or cell phone 0x30 days delinquent in past 12
carrier(s): Required if applicable for past 12 months months
Type 3 credit Housing-related (over the past 12 months; at least 0x30 days delinquent in past 12
one from this category is required), such as: months
■ Utilities
■ Cable television
■ Furniture rental
■ Land-line telephone service
Type 4 credit Insurance (over the past 12 months), such as: 1x30 days delinquent in past 12
■ Medical insurance months; no rolling lates
■ Renter’s insurance
■ Automobile insurance
Type 5 credit Other (over the past 12 months), such as: 1x30 days delinquent in past 12
■ Department store months; no rolling lates
■ Furniture store
■ Child care
Reported Traditional credit If any on the tri-merged traditional credit report No derogatories (since non-traditional
credit references can not be used to
offset adverse traditional credit)
Public Records Required to be checked (with findings affirmatively ■ No collections (other than
stated on response document to lender’s request for explainable medical collections)
tri-merged traditional credit report) ■ No repossessions
■ No judgments, liens, or bankruptcy
foreclosure in past 5 years
Full Documentation Prime
If a valid FICO score is not provided or unavailable for the borrower(s), a verified
credit history must comply with all of the credit criteria noted above in order to be
eligible for Radian mortgage insurance at Industry A rates. Loans without a valid
FICO score, or with no FICO score, must be submitted to a Radian Service Center
for review. Please provide a completed Radian Mortgage Insurance Application, a
completed 1008 and 1003, credit report (along with alternative credit information if
credit report information does not meet Radian’s minimum criteria), and the subject
property appraisal.
General Pricing Information
Please refer to the Radian rate cards posted at www.radian.biz for specific pricing
criteria or contact your Radian representative for additional information. Loan
amounts greater than $650,000 are subject to an additional premium surcharge as
disclosed on the Radian pricing material.
10 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
General radian requirements
Radian mortgage insurance underwriters retain the right to exercise prudent risk
underwriting and modify or decline to insure a mortgage insurance request based on
the overall risk profile. However, we would appreciate the opportunity to work with
you on any loan which you believe is an insurable risk.
■ Guidelines not specifically addressed herein default to standard Fannie Mae/Fred-
die Mac guidelines, i.e., non-Desktop Underwriter/non-Loan Prospector.
■ Loans originated by a third party must first be underwritten by the submitting
lender before submission to Radian for mortgage insurance.
■ First-lien mortgages only.
Borrower Qualification
Radian does not provide mortgage insurance if borrowers are corporations,
partnerships, or limited partnerships (LLCs). Corporate and business tax ID numbers
are unacceptable as a substitute for Social Security numbers. Radian will only
provide mortgage insurance on loans to individuals, with the exception of living/
inter-vivos trusts.
Individual Tax Identification Number (ITIN)
Loans to borrowers having an Individual Tax Identification Number (ITIN) in lieu
of a Social Security number are ineligible for Radian mortgage insurance. ITIN
numbers are issued regardless of immigration status of the applicant and, as such,
do not allow identification as to resident or non-resident aliens and legal or illegal
immigrants.
An ITIN is a tax processing number issued by the IRS. Although an ITIN is
formatted like a Social Security number, all ITINs begin with the number 9 and
contain a 7 or 8 as the fourth digit (9xx-7x-xxxx or 9xx-8x-xxx).
Resident aliens
■ Permanent resident aliens are eligible for all Radian insurance products.
■ Non-permanent resident aliens, in the United States on a temporary permit/visa,
are eligible for Full Documentation Prime insurance only with LP’s Accept/Eli-
gible or DU’s Approve/Eligible response. Non-permanent resident borrowers are
eligible under Full Documentation Non-Prime for 1-unit primary residence, 90%
LTV, with all necessary assets in U.S. funds, and showing two years of employ-
ment and credit history in the U.S.
Ineligible resident aliens
■ Non-resident aliens/foreign nationals/diplomats
Effective June 1, 2008 11
Radian Guaranty Inc. UNDERWRITING GUIDELINES
Qualifying ratios
A borrower’s Debt-to-Income Ratio (DTI) includes all monthly debts as defined in
the Fannie Mae/Freddie Mac guides, divided by the monthly qualifying income. The
DTI ratio must not exceed the maximum allowed per the following:
full Documentation Prime, except as noted below 41%
■ 95.01–97% LTV 38%
■ Temporary buydowns 38%
■ 3–4 units and investment properties 33%
full Documentation Non-Prime 50%
ARMs with an initial adjustment period of less than 60 months must qualify using
the higher of the Note Rate or the fully indexed accrual rate (margin plus index
value), also referred to as FIAR.
ARMs with an initial interest rate adjustment period of 60 months or more may
qualify using the start rate.
Interest Only mortgages must be qualified with a fully amortizing principal and
interest payment (PITI).
Temporary Buydowns
Primary Residence and Second Home
■ Fixed rate loans and ARMs with an initial adjustment period less than 60 months
must qualify using the higher of the Note Rate or the fully indexed accrual rate
(margin plus index value), also referred to as FIAR.
■ ARMs with an initial interest rate adjustment period of 60 months or more may
qualify using the start rate.
Investment Property
■ Qualified at the higher of the Note Rate or the fully indexed accrual rate.
Loan repayment types
fixed Rate
Fixed Rate mortgages include positively amortizing ARMs with an initial fixed rate
and payment period of five years or more.
adjustable Rate mortgages
Interest rate caps
Radian requires that all adjustable rate mortgages include an interest rate cap. The
following represents Radian’s maximum interest rate caps for ARMs:
12 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
Periodic Lifetime
ARM product Initial cap cap cap
Full Documentation Prime
6 Month 1% 1% 6%
1–2 Year 2% 2% 6%
3–5 Year 3% 2% 6%
> 5 Year 5% 2% 5%
Full Documentation Non-Prime
< 5-year initial interest rate adjustment period is ineligible
5 Year 3% 2% 6%
> 5 Year 5% 2% 5%
Interest Only
■ Maximum IO period of 15 years, minimum IO period 5 years, except for proper-
ties located in the state of New York as noted in the grid below:
All states other than NY NY interest-only terms (must be exact interest only term
based on loan term)
Minimum/Maximum interest-only term Loan term/Interest-only term
5 years/15 years 15 years/5 years
20 years/7 years
25 years/8 years
30 years/10 years
40 years/11 years
Ineligible for Interest Only
■ Full Documentation Non-Prime loans
■ 3–4 unit properties, second homes, and investment properties
■ Temporary buydowns
■ Co-ops and manufactured housing
Loan Term
Loans with an amortization period and/or a Note term greater than 40 years up to 50
years are eligible, subject to the following conditions:
■ Property is limited to 1 unit, primary residence only
■ Maximum 95% LTV
■ Maximum Note term is 50 years
Ineligible for loan terms over 40 years
■ Manufactured housing
Effective June 1, 2008 13
Radian Guaranty Inc. UNDERWRITING GUIDELINES
Temporary Buydowns
■ Primary Residence, Second Home, and Investment Property are eligible with a
maximum 3-2-1 buydown.
■ Eligible up to 97% LTV (95% for Full Documentation Non-Prime loans) and must
meet Fannie Mae/Freddie Mac requirements.
Loan Features
Borrower Equity
The borrower is required to have the following minimum equity or down payment
from their own funds:
Primary residence Second home Investment property
Full Documentation Prime
LTV 95.01–97% 3% NA NA
LTV 95% and below 5% 5% 10%
Full Documentation Non-Prime 5% NA NA
Gift funds
■ For primary residence only, gifts from immediate family members are acceptable,
provided the borrower(s) has the minimum equity/cash down payment.
■ Gifts are not an acceptable source of down payment on investment property and
second homes.
■ Gift documentation meeting Fannie Mae/Freddie Mac requirements must be
obtained.
Reserves
Radian defines reserves as the number of months of principal, interest, and escrow
deposits for taxes and insurance that a borrower could pay by using his or her liquid
financial assets.
For full-documentation loans with an Agency Eligible response, Radian will
generally rely on the AUS response and the reserve requirement necessary to
generate that response.
For loan amounts greater than $650,000, six (6) months’ reserves are required for
each property owned by the borrower, including the subject loan. An equity position
of $50,000 per property is also acceptable.
For all other loans (i.e., Agency Ineligible or non-AUS underwriting), Radian
requires two (2) months’ reserves for Primary Residences and Second Homes, and
four (4) months’ reserves for Investment Properties.
14 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
financing concessions
Closing costs and/or pre-paid expenses typically paid by the borrower, but paid on
behalf of the borrower by an interested party, are subject to the following limitations:
Primary Second Investment
LTV residence home property
Full Documentation Prime
97% 3% NA NA
95% 3% 3% NA
90% 6% 6% 2%
Full Documentation Non-Prime
95% 3% NA NA
90% 6% NA NA
Financing concessions in excess of the limitations above require a downward
adjustment to the sales price by the amount that the concessions exceed the limits.
Additionally, sales concessions, such as furniture or other inducements, require a
dollar-for-dollar deduction from the sales price prior to calculation of the LTV.
Non-Occupant co-Borrower
Non-occupant co-borrowers are only permitted for Full Documentation Prime loan
amounts up to $650,000.
■ Maximum LTV is 95%.
■ Primary residence only; 1-2 units.
■ Non-occupant co-borrower is to be a disinterested third party to the sales trans-
action (e.g., cannot be the property seller, builder, real estate broker, etc.). The
non-occupant co-borrower does not have to take title to the property but must sign
the mortgage note.
■ Occupying borrower’s DTI ratio should not exceed guidelines by more than 7%.
■ Occupying borrower must have minimum equity/cash down payment of 5% from
their own funds.
Refinances
■ Cash-out refinance requires 12 months’ seasoning.
■ Debt consolidation is considered as cash-out refinance.
■ Payoff from loan proceeds of any debt which is not secured by lien on subject
property is considered a cash-out refinance.
Streamline refinance
A Streamline Refinance is a Rate/Term (Limited Cash-Out) Refinance transaction
where the borrower is not subject to standard qualification and/or where the
documentation of the original file is used.
■ Radian must be the insurer of the current mortgage.
Effective June 1, 2008 15
Radian Guaranty Inc. UNDERWRITING GUIDELINES
■ Existing Radian certificate can not currently be Radian “Alt A” or Limited Doc
(SISA, SIVA, No Doc, NINA, No Ratio), Documentation Type not provided, or
Documentation Type unknown.
■ Must meet current eligibility for “A” (Full Doc Prime) and “A Minus” (Full Doc
Non-Prime) for determination of whether the insurance is eligible for this docu-
mentation efficiency process. If the insurance request does not meet current Full
Doc Prime or Non-Prime criteria, the request may have to go to Customer Service
as an MI modification, or be considered as a Full Doc Prime/Non-Prime Rate/
Term Refinance.
Documentation Required (in
Current In-Force Certificate lender’s file) Credit Eligibility Eligibility/Pricing
Industry “a” (full Doc Prime) ■ 1003 Mortgage history maximum 1x30 in previous 12 Full Doc Prime/Industry “A”
with original fIcO score ■ 1008 months or life, if less than 12 months
■ Current mortgage history
Industry “a” (full Doc Prime), ■ 1003 Mortgage history maximum 1x30 in previous 12 Full Doc Prime/Industry “A”
no original fIcO score ■ 1008 months or life, if less than 12 months
■ Current mortgage history
a minus (full Doc Non-Prime) ■ 1003 FICO greater than or equal to 660 and mortgage Full Doc Non-Prime/A Minus
with original fIcO less than ■ 1008 history maximum 1x30 in previous 12 months or
660 life, if less than 12 months
■ Current mortgage history
■ New credit report with FICO
a minus (full Doc Non-Prime) ■ 1003 Mortgage history maximum 1x30 in previous 12 Full Doc Non-Prime/A Minus
with original fIcO greater ■ 1008 months or life, if less than 12 months
than or equal to 660
■ Current mortgage history
a minus (full Doc Non-Prime), ■ 1003 FICO greater than or equal to 660 and mortgage Full Doc Non-Prime/A Minus
no original fIcO score ■ 1008 history maximum 1x30 in previous 12 months or
life, if less than 12 months
■ Current mortgage history
■ New credit report with FICO
■ Delegated submission to a Radian Service Center is required (1008 and MI ap-
plication which includes rep and warrant of original appraisal value); MI applica-
tions must be fully completed by the lender.
■ Loan can not be currently delinquent.
■ New loan amount can not exceed original UPB plus $2,500 for closing costs.
■ All occupancy and property types (as eligible in Radian’s published guidelines)
are eligible.
■ Maximum 97% LTV for Full Doc Prime, maximum 95% LTV for Full Doc Non-
Prime (Radian’s Declining Markets Policy does not apply to streamline refinance
transactions).
■ New loan must be fully amortizing: Fixed Rate or ARM (minimum 5 years to first
adjustment); Interest Only ineligible; temporary buydown ineligible.
■ Radian’s current MI rates apply.
16 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
cLTV/Secondary financing
Purchase transactions
Radian does not insure purchase transactions with simultaneous secondary financing
from any source.
Rate/Term Refinance Transactions
Existing subordinate mortgage liens may be re-subordinated, but the maximum
aggregate mortgage lien encumbrance to the subject property—first mortgage plus
any secondary financing (whether a fixed mortgage, line of credit, or other recorded
mortgage liens)—may never exceed the maximum LTV per the transaction type per
Radian’s published guidelines.
New subordinate mortgage liens/secondary financing simultaneous with the closing
of the first mortgage refinance transaction are not permitted.
Cash-Out Refinance Transactions
Radian does not insure cash-out refinance transactions with simultaneous secondary
financing from any source. Existing subordinate mortgage liens must be paid off
from loan proceeds or borrower’s own funds; re-subordination of mortgage liens is
not permitted.
Property Qualifications/restrictions
Ineligible Property categories
The following property categories are ineligible for Radian mortgage insurance:
■ Condotels
■ Single-wide manufactured homes
■ Mobile homes
■ Time share properties
■ Lot loans
cooperatives
■ Must be located in markets where co-ops are typical.
■ Property must conform to Fannie Mae standard co-op property guidelines.
condominium/attached PUD
■ Investor concentration generally limited to 40% of project
■ Generally, minimum 1,000 sq. ft. per unit; variations for local markets must be
supported by three comparables in the appraisal report with similar square footage
■ Must be warrantable to Freddie Mac or Fannie Mae
Effective June 1, 2008 17
Radian Guaranty Inc. UNDERWRITING GUIDELINES
manufactured housing
■ Multi-width, one-family dwellings
■ Permanently affixed to the lot; legally classified and taxed as real estate
■ Minimum 1,000 square feet of living area
■ Must assume the characteristics and functional utility of site-built housing
Please contact a Radian Service Center for additional details regarding eligibility of
manufactured housing.
Geographic Guidelines
This section references geographic guidelines that are applicable to all Radian
mortgage insurance programs, unless otherwise noted.
Alaska
Loan amounts greater than $417,000 are eligible per Radian’s Manual and/or Not
Eligible per AUS loan guidelines.
Florida
Condominiums and co-ops are not eligible for mortgage insurance in Miami-Dade
and Broward counties.
Guam
Only the following are eligible for Radian mortgage insurance:
■ Full Documentation Prime only
■ Maximum $650,000 loan amount
■ 1-unit only
■ Owner-occupied property only
■ 90% LTV maximum
■ Purchase and rate/term refinance only
Applications must be submitted to a Radian Service Center as non-delegated.
Submission to include: 1003, 1008, appraisal, credit report, AUS findings (if
applicable), and MI Application.
Ineligible for Radian mortgage insurance in Guam
■ Condominiums
Hawaii
Loan amounts greater than $417,000 are eligible per Radian’s Manual and/or Not
Eligible per AUS loan guidelines.
Nevada
Condominiums and co-ops are not eligible for mortgage insurance in Nevada.
18 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
New York
Specific Interest Only terms apply for New York. See the Interest Only section.
Puerto Rico
■ Not eligible for Radian mortgage insurance
U.S. Virgin Islands
■ Not eligible for Radian mortgage insurance
Declining markets Policy
The maximum eligible LTV is reduced by 5% in declining markets for all products,
except for loans above 95% LTV, which are reduced to 95%. Radian defines a
declining market as one for which any of the following conditions are met:
■ An AUS reports the market as declining.
■ The appraisal indicates declining property values.
■ If a quarter-over-quarter decline in the Office of Federal Housing Enterprise Over-
sight (OFHEO) MSA-level index occurs in the MSA for the property.
If the appraisal contains one or more of the above characteristics, the appraiser
should adequately explain the trend and specific factors contributing to the current
conditions. The maximum LTV category allowed under these conditions would then
be lowered to the next category (i.e., generally 5% lower), except that maximum
financing for condominiums and cooperatives is reduced to 90% LTV. Please see also
the Radian Guideline Quick Reference Guide for Declining Markets on our Web site
at www.radian.biz.
appraisal Requirements
Radian’s appraisal requirements are determined by the amount of the loan to be
insured. Radian does not accept AVMs, PVMMs, Property Inspection Waivers
(PIWs), or Property Inspection Alternatives (PIAs) in lieu of appraisals.
The Uniform Standards of Professional Appraisal Practice (USPAP) are the generally
accepted standards for professional appraisal practice in North America. To be
accepted by Radian, a property appraisal must be USPAP-compliant.
For loan amounts up to $650,000, a USPAP-compliant appraisal (URAR, or property
type-specific equivalent, with a minimum exterior inspection) is required.
For loan amounts greater than $650,000, two independently prepared USPAP-
compliant appraisals (URAR, or property type-specific equivalent, with interior and
exterior inspection) are required.
Effective June 1, 2008 19
Radian Guaranty Inc. UNDERWRITING GUIDELINES
maximum Loans to one Borrower Policy
maximum mortgage Insurance Risk Exposure
Radian’s maximum risk exposure policy for mortgage insurance is the lesser of
$300,000 insured risk exposure or four (4) insured properties to one borrower.
The property-type mix may only consist of a primary residence, one (1) second
home, and a maximum of two (2) investor loans. All Radian investor guideline and
requirements still apply.
Note: Mortgage insurance insured risk exposure is calculated by using the origi-
nal loan amount times the percentage of MI coverage. For example, a $100,000
mortgage with 25% coverage equals $25,000 mortgage insurance risk exposure.
■ Full Documentation Non-Prime programs are limited to two (2) insured proper-
ties to one borrower. Although we will insure up to two (2) properties under Full
Documentation Non-Prime programs, in cases where a borrower has a loan under
a Limited Documentation Prime program, the maximum Full Documentation
Non-Prime exposure is limited to one (1) loan.
maximum compliance Loans to One Borrower
Radian’s policy for maximum compliance loans to one borrower is the lesser of five
(5) loans or $1,000,000 aggregate loan amount, not to exceed the investor’s own
guideline for maximum exposure to one borrower. The aggregated loan amount is
determined by totaling the entire loan amounts for all active loans. Within the above
restriction, loans submitted under less than full documentation or no documentation
programs are limited to four (4) properties per borrower. This includes the loan file(s)
currently under consideration as well as any and all Radian compliance-underwritten
loans for that borrower in the past two years and not currently in declined status.
General mI restrictions
Ineligible Loan categories
The following types of loans are ineligible for Radian mortgage insurance:
■ Government loans (FHA/VA/Rural Housing Service)
■ Second mortgages
■ Credit upgrades
■ Wraparound mortgages
■ Blanket mortgages
■ Interim construction loans
■ Negative amortization, potential or scheduled
■ Graduated payment mortgages
■ Reverse mortgages
20 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
General submission requirements
Radian will not accept BPMI loans after the loan closing/funding date and LPMI
loans after the first payment due date.
Requirements for Loan amounts Up to $650,000
Delegated: Submission to Radian requires a minimum of the completed 1008 and
a completed Radian Mortgage Insurance Application. The investor, program name,
automated underwriting system and response (if applicable), and the FICO score
must be clearly noted in the appropriate section of either the 1008 or MI Application.
The appropriate product type must be clearly noted in the Radian product section of
the MI Application.
Please note: Non-delegated lenders are permitted to submit under this proce-
dure when a loan has been underwritten via either Fannie Mae’s Desktop Un-
derwriter with a response of Approve/Eligible or Freddie Mac’s Loan Prospec-
tor with a response of Accept/Eligible.
Non Delegated: Submission to Radian requires a minimum of the completed 1008,
1003, credit report, appraisal, and a Radian MI Application. The investor, program
name, automated underwriting system and response (if applicable), and the FICO
score must be clearly noted in the appropriate section of either the 1008 or the MI
Application.
The appropriate product type must be clearly noted in the Radian product section of
the MI Application.
Requirements for Loan amounts Greater Than $650,000
Loan amounts greater than $650,000 must be submitted as a full documentation file
to Radian with a 1008, 1003, credit report, FICO score, all appraisals, and all asset
and income documentation. Submission must include a Radian Mortgage Insurance
Application with the investor name/program marked as well as Super Jumbo A noted
in the same section. All other loan amounts may be submitted per Radian’s normal
submission process as previously outlined, plus the MI Application marked as noted
above.
Delegated authority
Radian-delegated lenders may use their Radian delegated mortgage insurance
authority to underwrite in compliance with the terms of their delegated underwriting
agreement.
Radian continues to expect our valued lending partners to exercise prudent
underwriting judgment under their Radian delegated authority. Radian program
underwriting guidelines apply for all submission types (manual, EDI, MI Online).
Effective June 1, 2008 21
Radian Guaranty Inc. UNDERWRITING GUIDELINES
Radian acknowledges that exceptions may be made by Radian underwriters and/or
delegated lenders when submitting mortgage insurance applications on a delegated
basis, however prudent manual underwriting is expected and compensating factors
must exist. Generally, slight exceptions to criteria such as DTI are considered
reasonable where compensating factors are present, such as the following: significant
cash reserves; a rate/term refinance with a significant reduction in the current
housing expense; or a rate/term refinance from adjustable rate to fixed rate, purchase
transaction reflecting minimal payment difference, below-maximum LTV, etc., or a
below-maximum LTV and/or high FICO. However, exceptions to occupancy/LTV/
FICO combinations are considered more significant. Delegated lenders retain the
option of submitting marginal, high-risk, and/or exception loans to a Radian Service
Center for non-delegated mortgage insurance underwriting.
Please see Radian’s submission procedures for loan amounts up to $650,000 and
greater than $650,000.
Radian underwriting staff continues to retain the option to request additional
documentation on any loan submitted under a lender’s delegated mortgage
insurance authority with Radian.
Radian’s mI Online
Radian’s MI Online system is a data entry system for convenient transmission of
information to Radian for the ordering of mortgage insurance. All lenders using
Radian’s MI Online system (delegated and non-delegated) are responsible for
knowing and adhering to Radian’s guidelines. Use of Radian’s MI Online system
does not relieve the lender of any representations/ warranties associated with their
Radian delegated underwriting authority.
Non-delegated lenders are only permitted to use Radian’s MI Online when a loan
has been underwritten via either Fannie Mae’s Desktop Underwriter with a response
of Approve/Eligible or Freddie Mac’s Loan Prospector with a response of Accept/
Eligible.
Generally, loan amounts greater than $650,000 may not be submitted via MI Online.
Please contract your Radian representative with any questions.
22 Effective June 1, 2008
UNDERWRITING GUIDELINES Radian Guaranty Inc.
revision notes
Revisions for april 30, 2008
The following revisions have been made to the April 30, 2008 guidelines:
General
■ References to LTV have been changed to LTV/CLTV.
■ Geographic guidelines have been added for Alaska, Florida, Hawaii, and Nevada.
■ Additional financing restrictions have been placed on condominiums and co-ops
in declining markets.
■ Streamline refinance requirements have been clarified.
Full Documentation Prime
■ Loans submitted in the Eligible per AUS category (the blue table on page 4 of this
document) with 95.01–97% LTV/CLTV must have a minimum 680 FICO score.
Limited Documentation Prime
■ This program has been discontinued.
Full Documentation Non-Prime
■ Full Documentation Non-Prime loans are no longer eligible for non-traditional
credit.
Revisions for June 1, 2008
The following clarifications have been made to the April 30, 2008 guidelines,
effective June 1, 2008:
General
■ The maximum LTV for streamline refinances has been changed and the topic of
streamline refinances has been given a more thorough treatment (pages 15–16).
■ The reference to geographic restrictions on condominiums and cooperatives has
been removed from the Declining Markets Policy section (page 18, second para-
graph).
■ References to CLTV have been removed and a section discussing CLTV and sec-
ondary financing has been added (page 17).
Full Documentation Prime
■ Loans submitted in the Eligible per AUS category are still subject to prudent
underwriting and to Radian’s Declining Markets Policy (page 4, second paragraph
in Full Documentation Prime Credit).
Effective June 1, 2008 23
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