Genworth Mortgage Insurance Underwriting Guidelines …

Underwriting Guidelines

Genworth Mortgage Insurance underwritten by: Genworth Mortgage Insurance Corporation

August 5, 2019

12659881.0819 Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina

?2019 Genworth Financial, Inc. All rights reserved.

1

GENWORTH UNDERWRITING GUIDELINE CHANGES AND CLARIFICATIONS

The following guideline changes and clarifications will be effective for MI applications received on or after August 5, 2019 unless otherwise specified. The Underwriting Guidelines with complete details will be updated and available on our website, new.mi. on August 5, 2019.

Genworth Underwriting Guideline Changes and Clarifications

Topic

Section

Old Guideline

New Guidelines

Investment Property

4.1, 4.2 Simply Underwrite:

Simply Underwrite:

Minimum 700 credit score

Per DU & LP with a minimum 620

credit score

3 ? 4 Unit Properties

4.1, 4.2 Simply Underwrite:

Simply Underwrite:

6.2.3

? Maximum loan amount FHFA High Cost to

? Maximum loan amount ? FHFA High Cost

$1,000,000

? Per DU & LP with a minimum

? Minimum 700 credit score

620 credit score

2 Unit Properties

4.1, 4.2 Simply Underwrite:

Simply Underwrite:

Maximum 95% LTV - FHFA

Clarifying the following:

High Cost

? Maximum 95% LTV ? Agency Base Conforming

? Maximum 85% LTV ? FHFA

High Cost

Loan amounts >

4.4

Standard Guidelines:

Standard Guidelines:

$750,000

? The initial ARM term for loan amounts $750,001 $1,000,000 must be > 3

The initial ARM term for loan amounts > $750,000 must be > 3 years for a primary residence

years for a primary

residence

? The initial ARM term for loan amounts >

$1,000,000 must be > 5

years for a primary

residence

Amortization/Loan Term 5.16

Simply Underwrite &

Simply Underwrite:

Standard Guidelines:

Maximum amortization/loan term

Not addressed

is up to 30 years

Relocation Loans

5.31

Disaster Policy

5.28

(Age of Documentation)

Simply Underwrite and Standard Guidelines: Made subject to a transferred employee or a newly hired employee to finance a primary residence at a new location

Simply Underwrite and Standard Guidelines: Not addressed

Standard Guidelines: ? Maximum amortization/loan

term is up to 40 years ? Maximum amortization/loan

term for Manufactured Housing is up to 30 years Simply Underwrite and Standard Guidelines: An owner-occupied purchase money loan originated subsequent to an established employee relocation program to finance a primary residence at a new location. Simply Underwrite and Standard Guidelines: Genworth follows GSE age of documentation requirements for loans secured by properties in eligible disaster areas.

Genworth Mortgage Insurance Underwriting Guidelines August 5, 2019

?2019 Genworth Financial Inc. All Rights Reserved

Table of Contents

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TABLE OF CONTENTS

1

USING THE MANUAL.....................................................................................................................................5

1.1 Sequence........................................................................................................................................................5

1.2 Navigation Features.......................................................................................................................................5

1.3 Notes, Footnotes and Overlays ....................................................................................................................5

2

FREQUENTLY USED TERMS ........................................................................................................................6

3

INTRODUCTION .............................................................................................................................................7

3.1 Fair Lending ...................................................................................................................................................7

3.2 Homeowners Protection Act.........................................................................................................................7

3.3 Compliance with Law ....................................................................................................................................7

3.4 Simply Underwrite? (12/10/18) ......................................................................................................................7

3.5 Standard Guidelines ......................................................................................................................................7

3.6 Affordable Housing and Housing Finance Agency Programs...................................................................8

3.7 Portfolio Dispersion.......................................................................................................................................8

4

ELIGIBILITY MATRICES ................................................................................................................................9

4.1 Simply Underwrite Eligibility (08/05/19) .......................................................................................................9

4.2 Simply Underwrite HFA Eligibility (08/05/19).............................................................................................11

4.3 Standard Guidelines Eligibility (07/01/19)..................................................................................................13

4.4 Standard Guidelines for Loan Amounts > $750,000 Eligibility - Single Family Properties (08/05/19) ..17

4.5 Standard Guidelines Affordable Housing Program Eligibility (12/10/18) ................................................19

4.6 Standard Guidelines HFA Eligibility (12/10/18) .........................................................................................23

4.7 Standard Guidelines Construction-to-Permanent Eligibility (12/10/18) ..................................................27

4.8 Professional Program (03/04/19) ................................................................................................................31

4.9 Pledged Assets (12/10/18)...........................................................................................................................33

5

ALL LOANS ..................................................................................................................................................35

5.1 Commitment/Certificate of Insurance Terms, Conditions, Extensions, Reinstatements (07/01/19) .....35

5.1.1 Commitment Terms .......................................................................................................................35

5.1.2 Underwriting Conditions ................................................................................................................35

5.1.3 Commitment Extensions................................................................................................................35

5.1.4 Commitment Reinstatements ........................................................................................................35

5.2 Changes Prior to Certification: Requiring Prior Approval .......................................................................35

5.3 Changes Prior to Certification: Not Requiring Prior Approval ................................................................36

5.4 Modifications................................................................................................................................................36

5.5 Closed Loans ...............................................................................................................................................36

5.6 Pre-Approvals ..............................................................................................................................................36

5.7 Certificate Activation ...................................................................................................................................36

5.7.1 Zero Monthly Commitments...........................................................................................................36

5.7.2 All Other Premium Plans (Annual, Monthly, Single Premium, Split Premium): ..............................37

5.7.3 Construction-to-Permanent Loan Activation Options.....................................................................37

5.8 Ineligible Loan Features (03/04/19) ............................................................................................................37

5.8.1 Loan Features or Programs Requiring a Genworth Underwrite.....................................................38

5.9 Borrower Eligibility (03/04/19).....................................................................................................................39

5.9.1 Non-Permanent Resident Aliens ...................................................................................................39

5.9.2 Permanent Resident Aliens ...........................................................................................................39

5.9.3 Inter Vivos Revocable Trusts.........................................................................................................40

5.10 Maximum Genworth Insured Properties ....................................................................................................40

5.11 Previously Paid Claim .................................................................................................................................40

5.12 Qualifying Ratios (07/01/19) ........................................................................................................................40

5.12.1 Debt-to-Income Ratio (DTI) ...........................................................................................................40

5.12.2 Housing Expense to Income Ratio (HDI).......................................................................................40

5.13 Occupancy Eligibility (07/01/19) .................................................................................................................40

5.13.1 Primary Residence ........................................................................................................................40

5.13.2 Second Homes ..............................................................................................................................41

5.13.3 Investment Properties....................................................................................................................41

5.14 LTV/CLTV/GLTV/TLTV .................................................................................................................................41

5.14.1 Maximum CLTV.............................................................................................................................42

5.14.2 Types of Subordinate Financing ....................................................................................................42

5.15 Refinance Transactions (07/01/19) .............................................................................................................42

5.15.1 Rate/Term Refinances (Fannie Mae's Limited Cash-Out and Freddie Mac's No Cash-out)..........42

Genworth Mortgage Insurance Underwriting Guidelines August 5, 2019

?2019 Genworth Financial Inc. All Rights Reserved

Table of Contents

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5.15.2 Cash-out Refinance Guidelines .....................................................................................................43 5.15.3 Fannie Mae's Delayed Financing Exception..................................................................................43 5.16 Eligible Loan Types (08/05/19) ...................................................................................................................44 5.16.1 Fixed Rate/Fixed Payment ............................................................................................................44 5.16.2 Adjustable Rate Mortgages (ARMs) ..............................................................................................44 5.16.3 ARM Index.....................................................................................................................................44 5.16.4 Five Year Fixed Period ARM .........................................................................................................44 5.16.5 Lifetime Caps on ARM Loans ........................................................................................................44 5.16.6 Minimum Initial Fixed Period..........................................................................................................44 5.16.7 Per Adjustment Caps on ARM Loans ............................................................................................44 5.16.8 Qualifying Rate on ARMs ..............................................................................................................44 5.17 Temporary Buydowns (12/10/18) ................................................................................................................44 5.18 Guidelines for Property and Appraisals (07/01/19) ..................................................................................45 5.18.1 Ownership .....................................................................................................................................45 5.18.2 Eligible Property Types..................................................................................................................45 5.18.3 Energy-Efficient Properties ............................................................................................................45 5.18.4 Mixed Use Properties ....................................................................................................................45 5.18.5 Non-Residential Properties............................................................................................................45 5.18.6 Ineligible Properties .......................................................................................................................45 5.18.7 Community Land Trusts and Deed/Resale Restrictions ................................................................45 5.19 Detached PUDs and Detached Condominiums........................................................................................46 5.19.1 Detached PUDs.............................................................................................................................46 5.19.2 Detached (Site) Condominiums.....................................................................................................46 5.20 Project Acceptance......................................................................................................................................46 5.21 Project Concentration .................................................................................................................................46 5.22 Attached PUDs and Attached Condominiums Guidelines (06/25/18)......................................................46 5.22.1 Attached PUD Unit ........................................................................................................................46 5.22.2 Attached Condominiums ...............................................................................................................46 5.22.3 Condominium Project Review Types .............................................................................................46 5.23 Attached Condominium Eligibility Requirements.....................................................................................47 5.23.1 Leasehold Condominiums .............................................................................................................47 5.24 Cooperative Units Eligibility Requirements (07/01/19) ............................................................................48 5.24.1 Cooperative Properties Endorsement............................................................................................48 5.24.2 Co-op Project Eligibility Requirements ..........................................................................................48 5.25 Declining Property Values and Geographic Guidelines ..........................................................................49 5.26 Non-Arm's Length Transactions ................................................................................................................49 5.27 Property Flipping .........................................................................................................................................49 5.28 Disaster Policy (08/05/19)............................................................................................................................49 5.29 Appraisal Documentation and Age (12/10/18) ...........................................................................................50 5.30 Builder/Seller Contributions .......................................................................................................................50 5.31 Relocation Loans (08/05/19).......................................................................................................................51 5.31.1 Employer Relocation Programs .....................................................................................................51

6

SIMPLY UNDERWRITE ................................................................................................................................52

6.1 Simply Underwrite (08/05/19) ......................................................................................................................52

6.1.1 GSE AUS Recommendations and Risk Classifications for Simply Underwrite ..............................52

6.2 GSE AUS Underwriting Obligations (08/05/19)..........................................................................................52

6.2.1 DU Underwriting Findings Report and Loan Product Advisor Feedback Certificate ......................52

6.2.2 DU and Loan Product Advisor Data Accuracy ...............................................................................53

6.2.3 Overlays ........................................................................................................................................53

6.2.4 Eligibility Exclusions ......................................................................................................................53

7

STANDARD GUIDELINES............................................................................................................................54

7.1 Standard Guidelines Documentation Requirements (07/01/19) ...............................................................54

7.2 Standard Guidelines Documentation (12/10/18)........................................................................................54

7.2.1 LTV 95.01 ? 97%...........................................................................................................................55

7.2.2 LTV/CLTV/GLTV/TLTV..................................................................................................................56

7.3 Balloon/Call Options....................................................................................................................................56

7.4 Credit Underwriting .....................................................................................................................................56

7.5 Credit History: Using Credit Scores...........................................................................................................57

7.6 Credit Underwriting: Using Nontraditional Credit.....................................................................................59

7.7 Collections, Judgments or Liens (07/01/19) ..............................................................................................59

7.8 Consumer Credit Counseling .....................................................................................................................59

Genworth Mortgage Insurance Underwriting Guidelines August 5, 2019

?2019 Genworth Financial Inc. All Rights Reserved

Table of Contents

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7.9 Pending Lawsuits ........................................................................................................................................59 7.10 Assets and Liabilities (12/10/18) .................................................................................................................59

7.10.1 Eligible Sources of Funds ..............................................................................................................60 7.10.2 Repayment of Debts......................................................................................................................61 7.10.3 Borrower's Minimum Contribution and Reserves...........................................................................61 7.10.4 Pooled Savings as Debt ................................................................................................................61 7.10.5 Asset Documentation ....................................................................................................................61 7.11 Employment and Income (07/01/19) ..........................................................................................................62 7.11.1 Self-employed Income...................................................................................................................62 7.11.2 Salaried or Other Income ..............................................................................................................62 7.11.3 New Employment Income, Compensation Increases and Employment Contracts ........................62 7.11.4 Employment Gap...........................................................................................................................63 7.11.5 Foreign Income..............................................................................................................................63 7.11.6 Deferred Income............................................................................................................................63 7.11.7 Education Benefits.........................................................................................................................63 7.11.8 Trailing Co-Borrower Income.........................................................................................................63 7.11.9 Non-Occupant Co-Borrowers ........................................................................................................63 7.11.10 Temporary Leave Income .........................................................................................................63 7.11.11 Employment and Income Documentation..................................................................................63 7.12 Manufactured Housing Requirements (08/05/19) ......................................................................................65 7.13 Two Individual Residential Dwellings on One Lot ...................................................................................66 7.14 Acreage (12/10/18) .......................................................................................................................................66 7.15 Renovation Mortgages (07/01/19) ..............................................................................................................67 7.15.1 Renovation Programs....................................................................................................................67 7.16 Energy Improvement Features (07/01/19) ..................................................................................................67 7.17 Completion Escrows ...................................................................................................................................67

8

PRODUCT GUIDELINES ..............................................................................................................................68

8.1 Fannie Mae High LTV and Freddie Mac Enhanced Relief Refinance Programs (07/01/19)....................68

8.1.1 High Loan-to-Value Refinance Option/Enhanced Relief Mortgage Loans .....................................68

9

GLOSSARY ................................................................................................................................................... 69

Genworth Mortgage Insurance Underwriting Guidelines August 5, 2019

?2019 Genworth Financial Inc. All Rights Reserved

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