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Correspondent Lending Guide Update - December 22, 2016

AIG’s Correspondent Lending is pleased to announce an updated definition to our MI Policy Coverage as
defined in the Correspondent Lending Seller’s Guide Glossary (Section 11 Defined Term 83). The
previous criteria as well as the new criteria have been provided below. This addendum to our Seller’s
Guide should be considered official notification of the change to this defined term.
This update will be effective for all loans delivered on or after January 1, 2017. An update to AIG’s
Correspondent Lending’s Seller’s Guide reflecting this revision is anticipated in the first quarter of 2017.
Should you have questions, please contact your Account Vice President.

Existing Definition in Section 11 of Seller’s Guide:

83. MI Policy: A policy of mortgage guaranty insurance issued by an Eligible Mortgage Insurer that
complies with the requirements of the Underwriting Guidelines. An Eligible Mortgage Insurer means a
licensed mortgage guaranty insurance company that meets all of the following criteria:

  •  Has a financial strength rating of at least “BBB+” from S&P or at least “A2” from Moody’s;
  •  Has statutory capital (total of stakeholder’s surplus and contingency reserve) of at least $1.75
    billion;
  • Employs a comprehensive pricing model that appropriately reflects a loan’s probability of default;
    and
  • Employs effective operational processes and controls for claims, underwriting and quality
    assurance that can be audited by an Approved Buyer or by AIG Investments.

As of the publication date of this AIG Investments Correspondent Seller’s Guide, the following mortgage
insurers qualify as an Eligible Mortgage Insurer based on the above criteria:

  • United Guaranty Residential Insurance Company

Revised Definition for Section 11(83) of Seller’s Guide:

83. MI Policy: A policy of mortgage guaranty insurance issued by an Eligible Mortgage Insurer that
complies with the requirements of the Underwriting Guidelines. An “Eligible Mortgage Insurer” means a
licensed mortgage guaranty insurance company that meets all of the following criteria:

  • PMIERs Sufficiency – has a PMIERs ratio of available assets to required assets of at least 100%. If the mortgage insurer is not subject to PMIERs (i.e. does not hold GSE risk), then the mortgage insurer must maintain a minimum rating of BBB- or equivalent.
  • Minimum Capital Level – maintains a minimum of $400 million of capital (GAAP equity or stat capital).
  • Insurer Financial Strength (IFS) Rating – is rated by Moody’s, S&P or AM Best.
  • Independent Audits – is audited annually by an independent certified public accounting firm.
  • Statutory Risk to Capital – has a maximum risk to capital ratio of 25:1 (capital = 4% of risk).