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Lenders Mortgage Insurance As at June 2016 Lenders Mortgage Insurance Underwriting Policy, Product Parameters and Management Guidelines Australia LMIUWPA0616 0 Disclaimer This is the Lenders Mortgage Insurance (LMI) Underwriting Policy, Product Parameters and Management Guidelines (Underwriting Policy) by which Genworth Financial Mortgage Insurance Pty Limited (Genworth) considers and assesses proposals for LMI. The LMI Underwriting Policy has been made publicly available by Genworth to assist those involved in the mortgage lending industry to gain a better understanding of the basis on which Genworth considers proposals for LMI. Genworth reserves the right to change the LMI Underwriting Policy at any time, without prior or subsequent notice to any person. Genworth reserves the right to accept and approve LMI proposals in its absolute and sole discretion and decline any LMI proposal notwithstanding the fact that the LMI proposal may comply or appear to comply with the LMI Underwriting Policy. The LMI Underwriting Policy should not replace a credit provider’s own lending guidelines and prudent lending practices. No party may rely on the LMI Underwriting Policy when considering applications for mortgage credit and if, and to the extent that any party does so rely, then Genworth bears no liability or responsibility to that third party whatsoever. To the maximum extent permitted by law, Genworth disclaims all liability for loss or damage whether foreseeable or not, suffered or incurred by you or any other person howsoever caused (including negligence on the part of Genworth) as a result of the use of, or any purported reliance on, the LMI Underwriting Policy. Originators and mortgage managers access to LMI products is subject to the acceptance of these products by the Funding Program. This LMI Underwriting Policy is also available on our website genworth.com.au Genworth LMI Underwriting Policy, Product Parameters and Management Guidelines – Australia – June 2016 1 Table of contents 1. Glossary ............................................................................................................................................................... 5 2. Genworth ............................................................................................................................................................. 5 3. What is Lenders Mortgage Insurance (LMI)? ................................................................................................... 6 4. Product parameters ............................................................................................................................................ 7 4.1 Standard LMI ............................................................................................................................................... 8 4.2 HomeBuyer Plus ....................................................................................................................................... 10 4.3 Family Pledge ........................................................................................................................................... 11 4.4 Business Select ......................................................................................................................................... 13 5. Underwriting Policy .......................................................................................................................................... 14 5.1 Maximum loan amounts .......................................................................................................................... 14 5.1.1 Multiple securities .......................................................................................................................... 14 5.2 Maximum LVRs .......................................................................................................................................... 15 5.3 Maximum total exposure ......................................................................................................................... 15 5.4 Borrowers .................................................................................................................................................. 15 5.4.1 Companies and trusts ................................................................................................................... 15 5.4.2 Trustee/s of a Self Managed Superannuation Fund (SMSF) ..................................................... 16 5.4.3 Graduates (Graduate Package) .................................................................................................... 18 5.4.4 Borrowers of convenience ............................................................................................................ 18 5.4.5 First Homebuyers........................................................................................................................... 19 5.4.6 Non-residents ................................................................................................................................. 19 5.5 Guarantors ................................................................................................................................................ 20 5.6 Savings ....................................................................................................................................................... 20 5.6.1 Genuine savings ............................................................................................................................ 20 5.6.2 Non-genuine savings .................................................................................................................... 20 5.6.3 Savings plans/rental purchase plans ........................................................................................... 20 5.6.4 First Home Saver Accounts ........................................................................................................... 21 5.7 Employment and income ........................................................................................................................ 21 5.7.1 Acceptable employment status ................................................................................................... 21 5.7.2 Forms of acceptable income ........................................................................................................ 21 5.7.3 Income exclusions ......................................................................................................................... 22 5.7.4 Serviceability .................................................................................................................................. 22 5.7.5 Single borrower with non-applicant spouse ............................................................................... 23 5.7.6 Joint income/joint commitments ................................................................................................. 23 5.7.7 Allowable add-backs ..................................................................................................................... 23 5.7.8 Notional rental expense ................................................................................................................ 23 5.8 Security ...................................................................................................................................................... 24 5.8.1 Security Location Guide ................................................................................................................ 24 5.8.2 Security property minimum requirements .................................................................................. 24 5.8.3 Security concentration .................................................................................................................. 24 5.8.4 Security exceptions........................................................................................................................ 24 5.8.5 Unacceptable securities ................................................................................................................ 25 5.8.6 Investment/rental properties ........................................................................................................ 25 5.8.7 Rural/rural residential securities ................................................................................................... 25 5.8.8 Vacant land ..................................................................................................................................... 25 5.8.9 Stratum title (VIC) home units ....................................................................................................... 26 5.8.10 High density apartments ............................................................................................................ 26 5.8.11 Display homes ............................................................................................................................. 26 Genworth LMI Underwriting Policy, Product Parameters and Management Guidelines – Australia – June 2016 2 5.8.12 Transportable homes ................................................................................................................. 26 5.8.13 Relocated homes ........................................................................................................................ 26 5.8.14 New house and land packages ................................................................................................. 27 5.8.15 Builder/developer
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