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Default and Claims Servicing Guide 40 Effective: September 17, 2012

Default and Claims Servicing Guide | Radian Default and Claims Contact Information

Radian Default and Claims Contact Information

Default Reporting

[email protected]

Claims

General inquiries/status: [email protected]

Claims documents: [email protected]

Appeals/Rebuttal

[email protected]

Loss Mitigation

To discuss non-delegated loan retention workouts and liquidation options, please contact your dedicated Loan Specialist.

REO Acquisitions

Primary Insured Loans: [email protected]

Radian Default and Claims Servicing Guide 42 Effective: September 17, 2012

Default and Claims Servicing Guide | Glossary

Deed-in-lieu of Foreclosure A transaction where the borrower voluntarily conveys title to the mortgagee lender as an alternative to foreclosure. Any Deed-in-Lieu transactions involving a release of the Borrower(s) from liability under the Loan require Radian approval. Default The failure of the Borrower to pay when due an amount equal to or greater than one (1) monthly regular periodic payment in accordance with the terms of a Loan. Deficiency All amounts due and owing under a Loan on which a Default has occurred, and remaining after the conclusion of Appropriate Proceedings, pursuant to applicable state law.

Denial of Coverage The cancellation of coverage as of a date after issuance of the Certificate of Insurance resulting from exclusions in the applicable Policy of insurance, servicer error or non-compliance of the terms of servicing. (Premiums are not refunded, or refunded only of those collected after the date of non-compliance).

Early Default The failure of the Borrower to make any of the initial twelve (12) monthly payments in accordance with the terms of a Loan so that sums equal to the aggregate of two (2) such monthly payments have not been paid when due.

Early Payment Default Occurs when the borrower fails to make any of the initial 12 monthly payments, the loan. When an early default occurs, a Notice of Default (NOD) must be reported to Radian within 15 days after the second payment is due.

Early Stage Default Defaults in some stage between Referral to Attorney date and the Foreclosure Scheduled Date — a time-lapse that varies on a state by state basis (i.e., in Alabama 3 months time lapse is allowed between the two dates whereas in Maine, 10 months time lapse is allowed between the two).

Effective Date With respect to an insured Loan, the effective date of mortgage insurance coverage — generally the closing date of such Loan, or, such later date as may be requested by the Insured and approved in writing by Radian.

EOB (Explanation of Benefits) A categorized breakout of a Claim payment contained in a side-by-side format detailing the losses requested in the Insured’s Claim, compared to the amount for each loss authorized by Radian. An EOB is provided by Radian to the Servicer/Insured for each Claim paid.

Fair Market Value With regard to the amount bid for any Property at a foreclosure sale, the Property’s value at the approximate time of the foreclosure sale as determined by appraisal, if available, or in accordance with customary servicing practices (which may include reliance on information provided by a local real estate broker), subject to applicable law governing foreclosure.

Forbearance Plan A forbearance provides a temporary reduction or suspension of payments on a mortgage loan; and it is typically incorporated in a payment arrangement to cure any delinquent payment after the underlying hardship has gone away.

Foreclosure Bid Price Foreclosure bid price typically reflects the minimum bid acceptable to the lender and normally includes the loan balance, all accrued interest, plus attorney’s fees and any costs association with the foreclosure process. The final determinate for foreclosure bid price is dependent on regulatory requirements and/or investor bidding instructions/guidelines.

HAFA Home Affordable Foreclosure Alternatives is a federal program where a participating mortgage lender/servicer authorize the borrower to sell the property (short sale) for a pre-approved amount to avoid foreclosure. A Deed-in-lieu of foreclosure may also be an option if selling the property is not viable. The federal government provides monetary incentives to the mortgage servicer and the borrower to participate in the program.

Effective: September 17, 2012 Radian Default and Claims Servicing Guide

43 Default and Claims Servicing Guide | Glossary

HAMP The Home Affordable Modification Program is designed to help financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use. Borrower eligibility is based on meeting specific criteria including: (1) borrower is delinquent on their mortgage or faces imminent risk of default; (2) property is occupied as borrower’s primary residence; (3) mortgage was originated on or before January 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties. After determining a borrower’s eligibility, a servicer will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower’s total pretax monthly income: First, reduce the interest rate to as low as 2%, Next, if necessary, extend the loan term to 40 years, Finally, if necessary, forbear (defer) a portion of the principal until the loan is paid off and waive interest on the deferred amount. (Note: Servicers may elect to forgive principal under HAMP on a stand-alone basis or before any modification step in order to achieve the target monthly mortgage payment)

HNC

(Handle Normal Course) Handle Normal Course. Term used to describe a Claim that is being processed in accordance with Radian’s guidelines and processes, subject to denial or adjustment based upon Radian’s rights and privileges under the applicable Policy of insurance

Imminent Default Judgment made by the Servicer when a borrower that is not yet in default is faced with circumstances that make default a likely occurrence. Insured The named Insured or any party: (1) to whom coverage has been granted by Radian; or (2) that is a subsequent assignee or transferee owner of a Loan that has requested to become the insured. If however, Radian has not been notified in writing of such assignment or transfer, or the applicable Policy does not allow transfer of the Loan, Radian’s sole obligation hereunder shall be to the named Insured.

Late Stage Default Defaults where a foreclosure sale has been held or scheduled or the property associated with the loan has been sold or listed.

Liquidating Workout A transaction that results in an elimination of the Loan. Workout types include short sales, deeds-in-lieu of foreclosure and short refinances. A Liquidating Workout will generally require Radian approval in order to be the basis for filing a Claim under the applicable Policy of mortgage insurance. Loan The indebtedness of the Borrower to the Insured in the amount and for the term specified on the face of the Certificate of Insurance, which is evidenced by a written obligation and secured by a mortgage, deed of trust or other instrument, which is a first lien or charge on the Property, and which is insured under the Master Policy or other applicable Policy or intended to be insured in accordance with the terms of a Commitment of Insurance.

Loan Modification Represents a change in the terms of a mortgage contract to incorporate past-due amounts and reduce monthly payment, extend term, reduce interest rate or any combination thereof. A recorded loan modification is a legal change to the terms of the loan and involves obtaining approval from the lender or investor and mortgage insurer.

Loss The amount of loss suffered or incurred by the Insured determined pursuant to the provisions of Condition Eleven of the Master Policy. In general, the Loss for primary mortgage insurance coverage will not include the proceeds of the sale of the REO, whereas, the Loss for Pool mortgage insurance coverage will include a credit for the net proceeds of the sale of the REO.

MDR

Radian Default and Claims Servicing Guide 44 Effective: September 17, 2012

Default and Claims Servicing Guide | Glossary

Merchantable Title Title to the Property which is readily salable and freely transferable, and which is free and clear of all liens, defects and encumbrances including, without limitation, rights of parties in possession and rights of redemption (unless, in either or both cases, Radian waives in writing its right to take the Property free of such rights), excepting only: (1) The lien of current general real estate taxes and other public charges and assessments not yet due and payable; (2) Easements for public utilities, building restrictions and the effect of building laws or regulations with which the improvements on the Property comply, which do not impair the use of the Property and the improvements thereon for their intended purposes; (3) Tenants under leases approved in writing by Radian; and (4) Such minor imperfections of title as would not impair the use and enjoyment of the Property as a residence. Merchantable Title does not exist if there is a lien on the Property pursuant to federal or state law providing for liens in connection with the cleanup of environmental conditions, or if notice has been given of commencement of proceedings which could result in such a lien.

Modified Pool Insurance A customized version of Pool insurance, Modified Pool coverage provides coverage to reimburse a lender from its bottom-line loss after the sale of the REO with a per Loan level loss limit based upon a designated percentage of coverage set forth in the Modified Pool policy.

Negative Equity (Underwater) A situation where the value of the property used as security on the mortgage Loan is less than the outstanding balance on the loan. Negative Equity loans are also known as being “underwater” or “upside down.”

NOD (Notice of Default) Notification provided by a Servicer to the mortgage insurer advising that the borrower(s) has not made their payments as scheduled and are currently in default status (60 days past due). The Servicer is required to update the insurer of the Loan status monthly until the loan has either cured or gone to a Claim.

Partial Reinstatement A Partial Reinstatement is a payment transaction wherein the Borrower(s) pays a portion of the Loan arrears and agrees to a repayment plan for the balance owed.

Perfected Claim A Claim containing all of the information and proof reasonably required by Radian to evaluate its liability with respect thereto.

Physical Damage Any tangible injury to the Property, whether caused by accident, natural occurrence or otherwise, excluding normal wear and tear.

Pool Insurance Mortgage insurance that insures multiple mortgages (often in a securitization) in a single transaction. Radian insures the individual Loans in a mortgage portfolio up to a specific level of coverage. Pool insurance many times is designed to insure specific layers of risk through the use of Policy deductibles and Aggregate Loss Limits (stop losses) — which require the Insured to bear the risk of loss up to a certain dollar amount and also capping Radian’s liability at a specific dollar limit. Unlike Primary coverage, Pool coverage insures against the Insured’s ultimate bottom line loss after the sale of the REO property.

Pre-Foreclosure (Short) Sale A sale transaction where the proceeds are not sufficient to satisfy the outstanding mortgage balance. Since all Policies require the acquisition of Borrower’s Title (and/or sale of the REO) in order to trigger a Claim, Radian approval of any Pre-Foreclosure Sale is a condition precedent to filing any Claim where a Short Sale has occurred.

Primary Mortgage Insurance Mortgage insurance that is written on an individual loan basis. Also known as “flow business,” this option is priced and applied on a per-Loan basis. Radian provides coverage by agreeing to pay the Insured a certain percentage of its Loss when a Borrower defaults.

Effective: September 17, 2012 Radian Default and Claims Servicing Guide

45 Default and Claims Servicing Guide | Glossary

Property The residential real property, designed for occupancy by not more than four (4) families, identified on the face of a Certificate of Insurance, and shall include all appurtenances, rights of access and improvements thereon which secure the Loan.

REO (Real Estate Owned) Property that a lender has taken title to through Appropriate Proceedings of a Deed-in-Lieu. Title to the REO is passed Radian if it exercises its right to pay the full claim and take title.

Repayment Plan Represents a payment arrangement plan based on a borrower’s financial situation to spread out repayment of a past-due balance over an extended period of time. A repayment plan does not change the original terms of the Loan.

Rescission of Coverage The cancellation of the Certificate of Insurance evidencing coverage, effective as of its inception, due to an uninsurable risk existing from the date of the issuance of such Certificate, identified during the course of audit (premiums collected on the certificate are fully refunded).

Reserves Those liabilities an insurance company is legally required to maintain on its balance sheet with respect to the expected future claim payments of the company.

Retention Workout A transaction that results in the cure of a default with the borrower maintaining ownership of their home. A retention workout may be either a repayment plan (with or without forbearance) or a loan modification and results in the borrower retaining their property. Barring a subsequent default on the Loan, a Retention Workout will not result in a Claim under any Policy.

Seasoned-Payment Default Occurs when a loan enters default after the first year of timely loan payments. A Notice of Default (NOD) must be reported to Radian for any loan that is due for three months or more. This must be done no later than 15 days after the third payment is due.

Serial Fraud A group of investigations with similar characteristics, reviewed as a large scale investigation based on associated data.

Servicer The entity servicing a Loan on behalf of the Insured. The Servicer is deemed to be the representative of the Insured for purposes of the Master Policy and any applicable Policy under a Special Risk agreement.

Settlement Due Date The date sixty (60) days after receipt of a Claim by Radian, subject to the extensions of time set forth in Condition Thirteen of the Master Policy.

Stipulation Agreement A Stipulation Agreement is a post foreclosure initiated agreement which terms require the borrower to waive all defenses to a foreclosure action and for the borrower to make a certain number of payments, in order to be considered for a loan modification or to reinstate the mortgage.

Supplemental Claim A Claim filed by the Insured which includes losses not available at the time of filing of the initial Claim. A Supplemental Claim will be honored by Radian if it contains losses in excess of $25.00 and if it is filed within 60 days of payment of the original Claim, a Supplemental Claim is not mandated under Radian’s policies of insurance.

Third-Party Misrepresentation

or Fraud A misrepresentation or fraud by anyone other than the Insured, its employees or agents. For purposes of this definition, the Insured’s agents shall include any mortgage broker and/or intermediary originating the Loan, or anyone under contract with such persons in connection with the origination of the Loan, such as an appraiser or escrow agent.

UPB (Unpaid Balance) The total unpaid principal balance of a mortgage or note. This term may or may not include capitalized interest depending on applicable regulatory requirements.

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Radian Guaranty Inc. 1601 Market Street Philadelphia, Pennsylvania 19103-2337

800.523.1988 215.231.1000