Genworth mortgage insurance underwriting guideline manual

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Underwriting Guidelines

Genworth Mortgage Insurance underwritten by: Genworth Mortgage Insurance Corporation

March 1, 2020

00883.0220 Genworth Mortgage Insurance underwriters include: Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina ?2020 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 March 1, 2020 unless otherwise specified. The Underwriting Guidelines with complete details will be updated and available on our website, mi. on March 1, 2020.

Genworth Underwriting Guideline Changes and Clarifications

Topic

Section

Old Guideline

New Guidelines

Manufactured Homes 4.1, 4.2

Simply Underwrite

Simply Underwrite Guidelines:

Guidelines:

Expanded guidelines to align with

Not specifically addressed

Freddie Mac's recent Loan

Product Advisor update which will

allow Manufactured Home

Mortgages where no Borrower

has a credit score.

Rate/Term Refinance 5.15

Simply Underwrite and

Simply Underwrite and

Transactions

Standard Guidelines:

Standard Guidelines:

Payoff of the outstanding

Expanded to allow the refinance

principal balance of

proceeds to payoff or paydown

subordinate liens securing the the outstanding principal balance

property that were used in

of subordinate liens securing the

whole to acquire the subject

property that were used in whole

property

to acquire the subject property

Renovation Mortgages 7.15

Standard Guidelines:

Standard Guidelines:

We will insure GSE

Clarifying for eligibility criteria not

Renovation Mortgage

addressed in this section, such as

programs according to

loan amount, credit score and

published Fannie Mae Selling DTI, refer to the specific

Guide or Freddie Mac Seller underwriting requirements for the

Guide guidelines.

applicable transaction type

(purchase or rate/term refinance).

Master Policy Updates

Automated Tool

3.4

N\A

Refer to Master Policy 1980

posted to our Master Policy

Resources page for definition.

Cooperative Properties 5.24.1

Standard Guidelines:

Standard Guidelines:

Endorsement

The Cooperative Properties

This statement has been

Endorsement is posted to our removed from our Underwriting

Master Policy Resource

Guidelines. Effective with Master

Center.

Policy 1980, a Cooperative

Endorsement is no longer

applicable. The cooperative

property verbiage has been

incorporated into Master Policy

1980.

Origination File

All

N\A

All references to Loan File have

been changed to Origination File.

Refer to Master Policy 1980

posted to our Master Policy

Resources page for definition.

Pledged Asset Endorsement

4.9

Standard Guidelines:

The Pledged Asset

Standard Guidelines: This statement has been

Endorsement is posted to our removed from our Underwriting

Master Policy Resource

Guidelines. Effective with Master

Center.

Policy 1980, a Pledged Asset Endorsement is no longer

applicable. The pledged asset

verbiage has been incorporated

into Master Policy 1980.

Genworth Mortgage Insurance Underwriting Guidelines March 1, 2020

?2020 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? (03/01/20) ......................................................................................................................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 (12/16/19) .......................................................................................................9

4.2 Simply Underwrite Affordable Housing / HFA Eligibility (12/16/19).........................................................11

4.3 Standard Guidelines Eligibility (12/16/19)..................................................................................................15

4.4 Standard Guidelines for Loan Amounts > $765,600 Eligibility - Single Family Properties (12/16/19) ..19

4.5 Standard Guidelines Affordable Housing / HFA Program Eligibility (12/16/19)......................................23

4.6 This section has been removed. (12/16/19) ...............................................................................................27

4.7 Standard Guidelines Construction-to-Permanent Eligibility (12/16/19) ..................................................28

4.8 Professional Program (12/16/19) ................................................................................................................31

4.9 Pledged Assets (03/01/20)...........................................................................................................................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 (12/16/19) ............................................................................................................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 (03/01/20) .............................................................................................................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 March 1, 2020

?2020 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 (12/16/19) ................................................................................................................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 (03/01/20) ............................................................................48 5.24.1 This section has been removed.....................................................................................................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 (12/16/19) ...........................................................................................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 - This section has been removed. (12/16/19)...........................................56

7.3 Balloon/Call Options (12/16/19) ..................................................................................................................56

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

7.5 Credit History: Using Credit Scores...........................................................................................................56

7.6 Credit Underwriting: Using Nontraditional Credit (12/16/19) ...................................................................59

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

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

Genworth Mortgage Insurance Underwriting Guidelines March 1, 2020

?2020 Genworth Financial Inc. All Rights Reserved

Table of Contents

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7.9 Pending Lawsuits ........................................................................................................................................59 7.10 Assets and Liabilities (12/16/19) .................................................................................................................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 (12/16/19) ......................................................................................65 7.13 Two Individual Residential Dwellings on One Lot ...................................................................................66 7.14 Acreage (12/16/19) .......................................................................................................................................66 7.15 Renovation Mortgages (03/01/20) ..............................................................................................................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 March 1, 2020

?2020 Genworth Financial Inc. All Rights Reserved

Section 1 Using the Manual

Using the Manual

Page |5

1 Using the Manual

1.1 Sequence

Information in the manual is presented in the following order:

? The Introduction provides general information and an overview of doing business with Genworth Mortgage Insurance (Genworth).

? The Eligibility Matrices provide the eligibility criteria loans must meet to qualify for Genworth's mortgage insurance.

? The All Loans section provides detailed requirements for doing business with Genworth and requirements for Certificate activation. The guidelines in this section apply to both Simply Underwrite and Standard Guidelines.

? The Simply Underwrite Guidelines provide information on Genworth's program for DU Approve/Eligible, or Loan Product Advisor Accept, Eligible for Purchase loans that meet certain parameters.

? Standard Guidelines apply to loans that are manually underwritten without a GSE AUS recommendation or risk classification or loans that do not meet our Simply Underwrite Guidelines.

? Product Guidelines include Fannie Mae High LTV Refinance and Freddie Mac Enhanced Relief Refinance Mortgage.

1.2 Navigation Features

The following navigation features are available in the PDF version of the manual:

1. Use the Table of Contents to navigate directly to a topic by clicking on the topic or page number.

2. Use the Bookmarks pane in a similar manner to navigate to a section or topic. Click on the (bookmarks) icon in the Bookmarks pane to view and click on sections in the document. The location of the Bookmarks pane may vary dependent upon the web browser being used, typically it is located on the left side of the page.

3. Use the Find feature to locate all occurrences of a word or phrase. To use the Find feature: ? Press the Ctrl and F keys together on your keyboard. ? In the text box that appears, type in the word or phrase and press Enter. ? Press the Previous or Next buttons to view all occurrences of the term.

4. Hyperlinks are provided throughout the manual to navigate directly to a section or external reference. When using a hyperlink within the manual, you can easily return to the location where you first selected the hyperlink by pressing the Alt and the Left Arrow keys together on your keyboard.

5. Side-bar section indicators have been added for quick reference. Whether printed or viewing online, you will be able to easily identify which section of the manual you are in.

1.3 Notes, Footnotes and Overlays

Throughout the manual, important information is highlighted as notes within the body of the manual, and as footnotes below tables.

? Footnotes are in bold blue or white font, numbered and indicated by superscript. ? Notes are indicated by the word Note in bold black font and the text of the note is in blue italic font. ? Genworth guideline overlays are in red font throughout the manual

Genworth Mortgage Insurance Underwriting Guidelines March 1, 2020 ?2020 Genworth Financial Inc. All Rights Reserved