Underwriting Manual - Genworth Mortgage Insurance

Underwriting Guidelines

Genworth Mortgage Insurance underwritten by: Genworth Mortgage Insurance Corporation

July 1, 2019

12659881.0619 Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina

?2019 Genworth Financial, Inc. All rights reserved.

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GENWORTH UNDERWRITING GUIDELINE CHANGES AND CLARIFICATIONS

The following guideline changes and clarifications will be effective for MI applications received on or after July 1, 2019 unless otherwise specified. The Underwriting Guidelines with complete details will be updated and available on our website, new.mi. on July 1, 2019.

Genworth Underwriting Guideline Changes and Clarifications

Topic

Section

Old Guideline

New Guidelines

Cash-out Refinance

4.3, 4.4, Standard Guidelines:

Standard Guidelines:

Transactions

5.15

? Homes listed for sale

? Properties previously listed for

within the last six (6)

sale must be removed from the

months are ineligible.

market prior to closing.

? Maximum cash back to borrower is $200,000

? Increasing the maximum cash back to borrower to $250,000

Energy Improvement 7.15, 7.16 Simply Underwrite and

Simply Underwrite and

Features

Standard Guidelines:

Standard Guidelines:

Specific references are made Changing references to GSE

made to Fannie Mae's

Renovation Mortgage and GSE

HomeStyle Renovation and

Energy Improvement Programs to

HomeStyle Energy Programs. accommodate for similar Freddie

Mac Programs.

Energy Efficient

5.18.3

Standard Guidelines:

Standard Guidelines:

Properties

Guidelines do not address

Adding guidance regarding

payments for solar panels.

payments for solar panels subject

to a lease agreement or Power

Purchase Agreement (PPA).

Occupancy Type

5.13.1,

Standard Guidelines:

Standard Guidelines:

7.11.9

Guidelines do not address

Adding guidance to specifically

parents/guardians purchasing address parents/guardians

a property for a disabled adult purchasing a property for a

child.

disabled adult child.

Second Homes

5.13.2

Simply Underwrite and

Simply Underwrite and

Standard Guidelines:

Standard Guidelines:

Second homes must be suitable for year round occupancy.

? Allowing second homes with seasonal occupancy limitations.

? Removing requirement that a

second home must be

suitable for year round

occupancy.

Cooperative Loans

5.24.2

Standard Guidelines:

Standard Guidelines:

The pro-rata share of the

The pro-rata share of the

underlying mortgage that is

underlying mortgage that is

related to the co-op share loan related to the co-op share loan

must be 35% or less of the

must be 35% or less of the pro-

pro-rata share of the

rata share of the underlying

underlying mortgage divided by the lesser of the purchase

mortgage divided by the appraised value plus unit's share

price of the appraised value

of the underlying mortgage.

plus unit's share of the

underlying mortgage.

Collections,

7.7

Standard Guidelines:

Standard Guidelines;

Judgments or Liens

Collections, charge-offs,

Allowing IRS tax lien payments to

judgments, liens and payment be treated as installment debt per

plans for federal and state

GSE standard guidelines and

taxes must be paid in full prior documentation requirements.

to closing.

Genworth Mortgage Insurance Underwriting Guidelines July 1, 2019

?2019 Genworth Financial Inc. All Rights Reserved

Genworth Underwriting Guideline Changes and Clarifications

Topic

Section

Old Guideline

New Guidelines

Community Land

5.18.7

Simply Underwrite and

Simply Underwrite and

Trusts/Deed and

Standard Guidelines:

Standard Guidelines:

Resale Restrictions

Property must be a 1-unit

Clarifying that properties

primary residence that is not a associated with Community Land

manufactured home.

Trusts or Deed/Resale

restrictions must follow GSE

standard guidelines for eligible property types.

Commitment

5.1.4

Simply Underwrite and

Simply Underwrite and

Reinstatements

Standard Guidelines: Genworth's Reinstatement

Standard Guidelines: Adding clarification for expired

Policy for expired

commitments.

commitments did not specifically address timeframes for submitting the request for reinstatement.

? Loan close date occurred prior to commitment expiration date

? Reinstatement request must be received within 24 months

of commitment cancellation

date

Genworth Insured

8.1

Standard Guidelines:

Standard Guidelines:

Refinance Program

Product guidelines are published for Genworth

Removing all references to these products from guidelines.

Streamlined Refinance and

Non-GSE Refinance Option

GSE Home Affordable 8.1

Standard Guidelines:

Standard Guidelines:

Refinance Programs (HARP)

Product guidelines are

Removing all references to GSE

published for HARP Programs. HARP Program guidelines as

programs have ended.

Underwriting Guideline Changes Effective March 4, 2019

Borrower Eligibility

5.9

Simply Underwrite and Standard Guidelines: Expanding borrower eligibility to allow Deferred Action for

Childhood Arrivals (DACA) for Genworth Mortgage Insurance.

Documentation required:

? A current, valid visa or current (unexpired) Employment

Authorization Document (EAD) issued by the U.S. Citizenship

and Immigration Services (USCIS)

? The documentation must substantiate the borrower is eligible

to work in the U.S. and must be maintained in the Loan File

All Genworth Borrower Eligibility requirements must be met

including but not limited to the following:

? All borrowers are lawfully present in the U.S.

? All borrowers have a valid Social Security Number (SSN) or

Individual Tax Identification Number (ITIN)

o At least one borrower on the loan must have a valid

SSN

? All borrowers whose income is used to qualify have a two (2) year history of employment, income and credit that meets GSE

standard guidelines

Professional Program 4.8

Standard Guidelines:

? Expanding program's borrower eligibility to include

Chiropractors (DC) and Certified Public Accountants (CPAs) as

eligible professions

? Expanding program to allow delegated loan delivery

? Clarifying student loan debt may be excluded from the DTI calculation with documentation to evidence deferment for at

least 12 months after the loan closing date

Genworth Mortgage Insurance Underwriting Guidelines July 1, 2019

?2019 Genworth Financial Inc. All Rights Reserved

Table of Contents

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TABLE OF CONTENTS

1

USING THE MANUAL.....................................................................................................................................6

1.1 Sequence........................................................................................................................................................6

1.2 Navigation Features.......................................................................................................................................6

1.3 Notes, Footnotes and Overlays ....................................................................................................................6

2

FREQUENTLY USED TERMS ........................................................................................................................7

3

INTRODUCTION .............................................................................................................................................8

3.1 Fair Lending ...................................................................................................................................................8

3.2 Homeowners Protection Act.........................................................................................................................8

3.3 Compliance with Law ....................................................................................................................................8

3.4 Simply Underwrite? (12/10/18) ......................................................................................................................8

3.5 Standard Guidelines ......................................................................................................................................8

3.6 Affordable Housing and Housing Finance Agency Programs ...................................................................9

3.7 Portfolio Dispersion.......................................................................................................................................9

4

ELIGIBILITY MATRICES ..............................................................................................................................11

4.1 Simply Underwrite Eligibility (07/01/19) .....................................................................................................11

4.2 Simply Underwrite HFA Eligibility (07/01/19).............................................................................................13

4.3 Standard Guidelines Eligibility (07/01/19)..................................................................................................15

4.4 Standard Guidelines for Loan Amounts > $750,000 Eligibility - Single Family Properties (07/01/19) ..19

4.5 Standard Guidelines Affordable Housing Program Eligibility (12/10/18) ................................................21

4.6 Standard Guidelines HFA Eligibility (12/10/18) .........................................................................................25

4.7 Standard Guidelines Construction-to-Permanent Eligibility (12/10/18) ..................................................29

4.8 Professional Program (03/04/19) ................................................................................................................33

4.9 Pledged Assets (12/10/18)...........................................................................................................................35

5

ALL LOANS ..................................................................................................................................................37

5.1 Commitment/Certificate of Insurance Terms, Conditions, Extensions, Reinstatements (07/01/19) .....37

5.1.1 Commitment Terms .......................................................................................................................37

5.1.2 Underwriting Conditions ................................................................................................................37

5.1.3 Commitment Extensions................................................................................................................37

5.1.4 Commitment Reinstatements ........................................................................................................37

5.2 Changes Prior to Certification: Requiring Prior Approval .......................................................................37

5.3 Changes Prior to Certification: Not Requiring Prior Approval ................................................................38

5.4 Modifications................................................................................................................................................38

5.5 Closed Loans ...............................................................................................................................................38

5.6 Pre-Approvals ..............................................................................................................................................38

5.7 Certificate Activation ...................................................................................................................................38

5.7.1 Zero Monthly Commitments...........................................................................................................38

5.7.2 All Other Premium Plans (Annual, Monthly, Single Premium, Split Premium): ..............................39

5.7.3 Construction-to-Permanent Loan Activation Options.....................................................................39

5.8 Ineligible Loan Features (03/04/19) ............................................................................................................39

5.8.1 Loan Features or Programs Requiring a Genworth Underwrite.....................................................40

5.9 Borrower Eligibility (03/04/19).....................................................................................................................41

5.9.1 Non-Permanent Resident Aliens ...................................................................................................41

5.9.2 Permanent Resident Aliens ...........................................................................................................41

5.9.3 Inter Vivos Revocable Trusts.........................................................................................................42

5.10 Maximum Genworth Insured Properties ....................................................................................................42

5.11 Previously Paid Claim .................................................................................................................................42

5.12 Qualifying Ratios (07/01/19) ........................................................................................................................42

5.12.1 Debt-to-Income Ratio (DTI) ...........................................................................................................42

5.12.2 Housing Expense to Income Ratio (HDI).......................................................................................42

5.13 Occupancy Eligibility (07/01/19) .................................................................................................................42

5.13.1 Primary Residence ........................................................................................................................42

5.13.2 Second Homes ..............................................................................................................................43

5.13.3 Investment Properties....................................................................................................................43

5.14 LTV/CLTV/GLTV/TLTV .................................................................................................................................43

5.14.1 Maximum CLTV.............................................................................................................................44

5.14.2 Types of Subordinate Financing ....................................................................................................44

5.15 Refinance Transactions (07/01/19) .............................................................................................................44

5.15.1 Rate/Term Refinances (Fannie Mae's Limited Cash-Out and Freddie Mac's No Cash-out)..........44

Genworth Mortgage Insurance Underwriting Guidelines July 1, 2019

?2019 Genworth Financial Inc. All Rights Reserved

Page |4

5.15.2 Cash-out Refinance Guidelines .....................................................................................................45 5.15.3 Fannie Mae's Delayed Financing Exception..................................................................................45 5.16 Adjustable Rate Mortgages........................................................................................................................46 5.16.1 ARM Index.....................................................................................................................................46 5.16.2 Five Year Fixed Period ARM .........................................................................................................46 5.16.3 Lifetime Caps on ARM Loans ........................................................................................................46 5.16.4 Minimum Initial Fixed Period..........................................................................................................46 5.16.5 Per Adjustment Caps on ARM Loans ............................................................................................46 5.16.6 Qualifying Rate on ARMs ..............................................................................................................46 5.17 Temporary Buydowns (12/10/18) ................................................................................................................46 5.18 Guidelines for Property and Appraisals (07/01/19) ..................................................................................47 5.18.1 Ownership .....................................................................................................................................47 5.18.2 Eligible Property Types..................................................................................................................47 5.18.3 Energy-Efficient Properties ............................................................................................................47 5.18.4 Mixed Use Properties ....................................................................................................................47 5.18.5 Non-Residential Properties............................................................................................................47 5.18.6 Ineligible Properties .......................................................................................................................47 5.18.7 Community Land Trusts and Deed/Resale Restrictions ................................................................47 5.19 Detached PUDs and Detached Condominiums........................................................................................48 5.19.1 Detached PUDs.............................................................................................................................48 5.19.2 Detached (Site) Condominiums.....................................................................................................48 5.20 Project Acceptance......................................................................................................................................48 5.21 Project Concentration .................................................................................................................................48 5.22 Attached PUDs and Attached Condominiums Guidelines (06/25/18)......................................................48 5.22.1 Attached PUD Unit ........................................................................................................................48 5.22.2 Attached Condominiums ...............................................................................................................48 5.22.3 Condominium Project Review Types .............................................................................................48 5.23 Attached Condominium Eligibility Requirements.....................................................................................49 5.23.1 Leasehold Condominiums .............................................................................................................49 5.24 Cooperative Units Eligibility Requirements (07/01/19) ............................................................................50 5.24.1 Cooperative Properties Endorsement............................................................................................50 5.24.2 Co-op Project Eligibility Requirements ..........................................................................................50 5.25 Declining Property Values and Geographic Guidelines ..........................................................................51 5.26 Non-Arm's Length Transactions ................................................................................................................51 5.27 Property Flipping .........................................................................................................................................51 5.28 Disaster Policy .............................................................................................................................................51 5.29 Appraisal Documentation and Age (12/10/18) ...........................................................................................52 5.30 Builder/Seller Contributions .......................................................................................................................52 5.31 Relocation Loans ........................................................................................................................................53 5.31.1 Employer Relocation Programs .....................................................................................................53

6

SIMPLY UNDERWRITE ................................................................................................................................54

6.1 Simply Underwrite .......................................................................................................................................54

6.1.1 GSE AUS Recommendations and Risk Classifications for Simply Underwrite ..............................54

6.2 GSE AUS Underwriting Obligations (12/10/18)..........................................................................................54

6.2.1 DU Underwriting Findings Report and Loan Product Advisor Feedback Certificate ......................54

6.2.2 DU and Loan Product Advisor Data Accuracy ...............................................................................55

6.2.3 Overlays ........................................................................................................................................55

6.2.4 Eligibility Exclusions ......................................................................................................................55

7

STANDARD GUIDELINES............................................................................................................................56

7.1 Standard Guidelines Documentation Requirements (07/01/19) ...............................................................56

7.2 Standard Guidelines Documentation (12/10/18)........................................................................................56

7.2.1 LTV 95.01 ? 97%...........................................................................................................................57

7.2.2 LTV/CLTV/GLTV/TLTV..................................................................................................................58

7.3 Balloon/Call Options....................................................................................................................................58

7.4 Credit Underwriting .....................................................................................................................................58

7.5 Credit History: Using Credit Scores...........................................................................................................59

7.6 Credit Underwriting: Using Nontraditional Credit.....................................................................................61

7.7 Collections, Judgments or Liens (07/01/19) ..............................................................................................61

7.8 Consumer Credit Counseling .....................................................................................................................61

7.9 Pending Lawsuits ........................................................................................................................................61

7.10 Assets and Liabilities (12/10/18).................................................................................................................61

Genworth Mortgage Insurance Underwriting Guidelines July 1, 2019

?2019 Genworth Financial Inc. All Rights Reserved

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