(1)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act 1933. No exchange or over-the-counter market exists for the registrant’s common stock. Shares of the registrant’s common stock issued to qualified institutional buyers in connection with its April 2012 private placement are eligible for trading on the FBR PLUSTM System. The last sale of shares of the registrant’s common stock that was eligible for FBR PLUSTM, of which the registrant is aware, occurred on August 5, 2013 at a price of $12.00.

(2)	Includes shares issuable under certain warrants issued by the registrant.

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•	current and future economic conditions, including continued slow economic recovery from the most recent recession or the potential of the U.S. economy to reenter a recessionary period, borrower access to credit, levels of unemployment, interest rates and home prices;

•	the level of defaults, the claim rates on loans in default and the claim severity within NMIC's mortgage insurance portfolio;

•	potentially negative economic changes in geographic regions where our insurance in force is more concentrated;

•	the rate at which our MI portfolio remains in force (persistency rate);

•	future levels of new insurance written (and the profitability of such business), which will impact future premiums written and earned and future losses;

•	the performance of our investment portfolio and the extent to which issuers of the fixed-income securities that we own default on principal and interest payments or the extent to which we are required to impair portions of the portfolio as a result of deteriorating capital markets;

•	our limited operating history, which adds to the speculative nature of our loss estimates; and

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our operating performance for at least the next few years, which likely will continue to be an unreliable indicator of future performance due to the nature of the MI business and our expectation that our claims incidence is expected to be lower as a result of the typical distribution of claims over the life of a book resulting in fewer defaults during the first two to three years after loans are originated.

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•	continue to implement and improve our operational, credit, financial, management and other internal risk controls and processes and our reporting systems and procedures in order to manage a growing number of client relationships;

•	scale our technology platform; and

•	attract and retain management talent.

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•	the level of current mortgage interest rates compared to the mortgage rates on the insurance in force, which affects the vulnerability of the insurance in force to refinancings (i.e., lower current interest rates make it more attractive for borrowers to refinance and receive a lower interest rate); and

•	mortgage insurance cancellation policies of mortgage investors along with the current value of the homes underlying the mortgages in the insurance in force.

•	lenders using government MI programs, including those of the FHA and the VA;

•	state-supported mortgage insurance funds in several states, including California and New York;

•	lenders and other investors holding mortgages in portfolio and self-insuring;

•	investors using credit enhancements other than MI, using other credit enhancements in conjunction with reduced levels of MI coverage, or accepting credit risk without credit enhancement;

•	lenders originating mortgages using “piggy-back” structures to avoid MI, such as a first mortgage with an 80% LTV and a second mortgage with a 10%, 15% or 20% LTV (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with a 90%, 95% or 100% LTV that has MI; and

•	if borrowers pay cash versus securing mortgage financing, which has occurred with greater frequency in recent years.

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•	restrictions on mortgage credit due to more stringent underwriting standards and liquidity issues affecting lenders;

•	the level of home mortgage interest rates;

•	the health of the real estate industry and the national economy as well as the conditions in regional and local economies;

•	housing affordability;

•	population trends, including the rate of household formation;

•	the rate of home price appreciation, which in times of heavy refinancing can affect whether refinance loans have LTVs that require MI; and

•	U.S. government housing policy encouraging loans to first-time homebuyers.

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•	general market conditions, including price levels and volume and changes in interest rates;

•	national, regional and local economic or business conditions;

•	the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;

•	our actual or projected financial condition, liquidity, operating results, cash flows and capital levels;

•	changes in, or failure to meet, our publicly disclosed expectations as to our future financial and operating performance;

•	publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;

•	market valuations, as well as the financial and operating performance and prospects, of similar companies;

•	future issuances or sales, or anticipated issuances or sales, of our common stock or other securities convertible into or exchangeable or exercisable for our common stock;

•	expenses incurred in connection with changes in our stock price, such as changes in the value of the warrant liability;

•	the potential failure to establish and maintain effective internal controls over financial reporting; and

•	additions or departures of key personnel.

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•	institute a more comprehensive compliance function within legal, finance, accounting, operations and internal audit;

•	maintain a board of directors comprised of a majority of “independent directors” and recruit new directors as necessary;

•	design, establish, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of SOX and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

•	comply with rules promulgated by the OTCBB or the NASDAQ or other stock exchange on which we may list our common stock;

•	prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;

•	establish new internal policies, such as those relating to disclosure controls and procedures as well as controls to prevent insider trading;

•	incur increased costs for professional services for independent auditors and attorney fees (annual compliance and additional fees), as well as public relations and information technology;

•	enhance insurance coverage for Directors and Officers (“D&O”) and Errors and Omission (“E&O”) policies;

•	involve and retain to a greater degree outside counsel and accountants in the foregoing activities; and

•	establish an investor relations function.

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•	provide that special meetings of our stockholders generally can only be called by the chairman of the board of directors or the president or by resolution of the board of directors;

•	provide our board of directors the ability to issue undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may grant preferred holders super voting, special approval, dividend or other rights or preferences superior to the rights of the holder of common stock;

•	provide our board of directors the ability to issue common stock and warrants within the amount of authorized capital;

•	provide that, subject to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of our stockholders and may not be effected by any consent in writing by such stockholders;

•	provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, generally must provide timely advance notice of their intent in writing and certain other information not less than 90 days nor more than 120 days prior to the meeting; and

•	eliminate the ability of stockholders to act by consent in lieu of a meeting.

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•	our status as a recently organized corporation and lack of operating history;

•	receipt of certificates of authority to act as a mortgage insurer in Florida and Wyoming and, of the states where NMIC has received certificates of authority, approvals of our insurance rates in the state of Washington and policy forms in Alaska and Maryland;

•	retention of our existing certificates of authority in states where we have obtained them and our ability to remain a mortgage insurer in good standing in those states;

•	our ability to remain a qualified mortgage insurer under the requirements imposed by the GSEs;

•	actions of existing competitors and potential market entry by new competitors;

•	changes to laws and regulations, including changes that could affect the residential mortgage industry generally or MI in particular;

•	changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or MI;

•	changes in the regulatory environment;

•	our ability to implement our business strategy, including our ability to attract customers, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry;

•	failure of risk management or investment strategy;

•	claims exceeding our reserves or amounts we had expected to experience;

•	failure to achieve the results shown in the financial projections;

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•	failure to develop, maintain and improve necessary information technology systems or the failure of technology providers to perform;

•	ability to recruit, train and retain key personnel; and

•	emergence of claim and coverage issues.

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•	the significant conditions and factors that have affected our operating results, including the costs associated with the key start-up activities in which we are engaged and development of our investment portfolio;

•	the factors we expect will impact our future results as our mortgage insurance business continues to grow, and certain issues impacting our holding company, NMIH;

•	our sources and uses of liquidity and capital resources;

•	our operating results, which were primarily driven by our start up activities;

•	disclosures related to market risk exposures and off-balance sheet and other contractual arrangements; and

•	critical accounting policies that require management to exercise significant judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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•	we obtained certificates of authority for NMIC from state insurance regulators to write mortgage insurance in 48 states and the District of Columbia ("D.C.");

•	in January 2013, NMIC obtained approvals from the GSEs as a qualified mortgage insurer;

•	we made substantial progress in the design, development and implementation of our information technology platform;

•	we established customer relationships with mortgage originators; and

•	we have attracted and retained our employee base and support systems.

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•	NMIC (i) refrain from paying any dividends; (ii) retain all profits; and (iii) maintain a risk-to-capital ratio not to exceed 20 to 1, for three years from the date of GSE Approval (i.e., until January 15, 2016); and

•	certain start-up compensation expenses and equity compensation in the form of stock options and restricted stock units shall not be allocated to or assumed as a cost or expense by NMIC.

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Establish connectivity with the industry's largest providers of mortgage servicing systems, which automate loan servicing functions such as payment processing, escrow administration, default management, investor accounting, loan modifications, and year-end reporting. We have completed integration with the largest and leading servicing system providers, LPS MSP and Fiserv LoanServ™ , which combined process more mortgages in the United States by dollar volume than any other servicing system, creating significant opportunity to efficiently conduct business with large lenders and aggregators that require this integration;

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Establish connectivity with leading third party providers of loan origination systems, which provide the functionality to automate the mortgage loan origination process, including point of sale support, processing, settlement services, document preparation and tracking, underwriting, closing and funding. We have begun the process of integrating with the leading third-party loan origination systems, and we expect to complete some of these integrations this year, including Ellie Mae Encompass360®, RealEC®, Fiserv EasyLender®, FICS Loan Producer®, and Mortgage Builder. By mid-2014, we believe we will be integrated with additional leading third-party loan origination systems.

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Integrate with those lenders that maintain their own proprietary loan origination and servicing systems, recognizing that the time-lines for these integrations are heavily dependent upon the lenders' internal technology resource time-lines and availability. Many lenders require us to engage in their third party review processes before we can conduct integration testing with such lenders. While we are in the process of working through this process with some lenders, no direct lender connectivity has been completed as of the date of this prospectus.

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•	Obtaining approval from National Account lenders to be an authorized MI provider enables Regional Accounts to sell loans with insurance from NMIC to those National Accounts.  Consequently, these approvals are critical to making inroads with Regional Accounts.  As discussed above, 18 of the 35 National Accounts have agreed to use NMIC as an MI provider.

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Achieving connectivity with the largest loan servicing systems. Many of the loan servicers in the industry who sub-service loans originated by Regional Accounts that do not conduct their own servicing operations rely primarily on the two most significant servicing systems, LPS MSP and Fiserv LoanServTM, to subservice these loans. As discussed above in Development of our IT Platform, we have completed integration with LPS MSP and Fiserv LoanServTM. Attaining connectivity with these servicing systems is one of the important first steps with respect to Regional Accounts purchasing MI from NMIC.

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Achieving connectivity with leading third-party loan origination systems utilized by Regional Accounts. As discussed above, we have begun the process of integrating with some of the leading providers of automated loan origination systems, including Ellie Mae Encompass360®, RealEC®, Fiserv EasyLender®, FICS Loan Producer® and Mortgage Builder. The Regional Accounts who originate loans using these leading third-party loan origination systems will be able to automatically select NMIC as an MI provider within those systems. The progress we have made to date connecting

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new insurance written, which is the aggregate principal amount of the mortgages that are insured during a period. Many factors affect new insurance written, including, among others, the volume of low down payment home mortgage originations and the competition to provide credit enhancement on those mortgages, which includes competition from the FHA, other mortgage insurers, lenders or other investors holding mortgages in their portfolios without insurance, piggy-back loans and GSE programs that may reduce or eliminate the demand for MI and other alternatives to MI;

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cancellations, which reduce insurance-in-force. Cancellations due to refinancings are affected by the level of current mortgage interest rates compared to the mortgage rates on our insurance in force. Refinancings are also affected by current home values compared to values when the loans became insured and the terms on which mortgage credit is available. Cancellations also include rescissions, which require us to return any premiums received related to the rescinded policy, and policies canceled due to claim payment, which require us to return any premium received subsequent to the date the insured mortgage defaults. Finally, cancellations are affected by home price appreciation, which may give homeowners the right to cancel the MI on their loans;

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•	premium rates, which are based on the risk characteristics of the loans insured, the percentage of coverage on the loans, competition from other mortgage insurers, and general industry conditions; and

•	premiums ceded under reinsurance agreements.

•	the state of the economy, including unemployment and housing values, each of which affects the likelihood that borrowers may default on their loans and have the ability to cure such defaults;

•	the product mix of insurance-in-force, with loans having higher risk characteristics generally resulting in higher defaults and claims;

•	the size of loans insured, with higher average loan amounts tending to increase losses incurred;

•	the loan-to-value ratio, with higher average loan-to-value ratios tending to increase losses incurred;

•	the percentage of coverage on insured loans, with deeper average coverage tending to increase incurred losses;

•	changes in housing values, which affect our ability to mitigate our losses through sales of properties with loans in default as well as borrower willingness to continue to make mortgage payments when the value of the home is below or perceived to be below the mortgage balance;

•	higher debt-to-income ratios, which tend to increase incurred losses;

•	the rate at which we rescind policies. Because of tighter underwriting standards generally in the mortgage lending industry, we expect that our level of rescission activity, as well as that of the MI industry in general, will be lower than recent rescission activity experienced by the MI industry; and

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the distribution of claims over the life of a book. Historically, the first two to three years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining. Factors, such as persistency of the book, the condition of the economy, including unemployment and housing prices, and others, can affect this pattern. See “Mortgage Insurance Earnings and Cash Flow Cycle.”

•	as stated under “Losses Incurred,” the typical distribution of claims over the life of a book results in fewer defaults during the first two to three years after loans are originated, usually peaking in years three through six and declining thereafter; and

•	we expect that the frequency of claims on our initial books of business should be between 3% and 4% of mortgages insured over the life of the book. For claims that we may receive, we expect the severity of the loss to be between 85% and 95% of the coverage amount. Based on these expectations, we believe that the loss ratio over the life of each book will be between 20% and 25% of earned

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•	Expected Life - 6 years

•	Risk free interest rate - 0.85%

•	Dividend yield - 0.00%

•	Expected stock price volatility - 39.00%

•	Projected forfeiture rates - 1.00%

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•	the prices of our common stock sold to outside investors in arms-length transactions;

•	our operating and financial performance;

•	current business conditions and projections;

•	our stage of development;

•	the hiring of key personnel;

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•	the likelihood of obtaining the regulatory approvals necessary to write mortgage insurance in all 50 states and Washington D.C.;

•	the likelihood of obtaining GSE approvals;

•	the history of the company and the introductions of new products and services;

•	any adjustment necessary to recognize a lack of marketability for our common stock;

•	the market performance of comparable publicly traded companies; and

•	the U.S. capital market conditions.

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Changes to the level of interest rates. Increasing interest rates may reduce the value of certain fixed-rate bonds held in the investment portfolio. Higher rates may cause variable rate assets to generate additional income. Decreasing rates will have the reverse impact. Significant changes in interest rates can also affect persistency and claim rates to the extent that the investment portfolio must be restructured to better align it with future liabilities and claim payments. Such restructuring may cause investments to be liquidated when market conditions are adverse.

•	Changes to the term structure of interest rates. Rising or falling rates typically change by different amounts along the yield curve. These changes may have unforeseen impacts on the value of certain assets.

•	Market volatility/changes in the real or perceived credit quality of investments. Deterioration in the quality of investments, identified through changes to our own or third party (e.g., rating agency) assessments, will reduce the value and potentially the liquidity of investments.

•	Concentration Risk. If the investment portfolio is highly concentrated in one asset, or in multiple assets whose values are highly correlated, the value of the total portfolio may be greatly affected by the change in value of just one asset or a group of highly correlated assets.

•	Prepayment Risk. Bonds may have call provisions that permit debtors to repay prior to maturity when it is to their advantage. This typically occurs when rates fall below the interest rate of the debt.

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•	Level 1 - Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date for identical assets or liabilities;

•	Level 2 - Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities; and

•	Level 3 - Unobservable inputs that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

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•	our intent to sell the security and whether it is more likely than not that we would be required to sell the security before recovery;

•	extent and duration of the decline;

•	failure of the issuer to make scheduled interest or principal payments;

•	change in rating below investment grade; and

•	adverse conditions specifically related to the security, an industry, or a geographic area.

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•	Expected Life - 6 years

•	Risk free interest rate - 0.85%

•	Dividend yield - 0.00%

•	Expected stock price volatility - 39.00%

•	Projected forfeiture rate - 1.00%

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•	Expected Life - 5 years

•	Risk free interest rate - 0.86%

•	Dividend yield - 0.00%

•	Expected stock price volatility - 39.00%

•	Projected forfeiture rate - 1.00%

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Obtaining outstanding certificates of authority, or state insurance licenses, and establishing effective rates and policy forms where required. As of the date of this prospectus, NMIC is licensed in 48 states and D.C., has effective rates in 47 states and D.C. and effective policy forms in 46 states and D.C. Our objective is to obtain licenses, effective rates and policy forms in all 50 states and D.C. NMIC's application for a certificate of authority was not accepted by the Wyoming Insurance Department for formal review due to the state's two year statutory seasoning requirement. We are in the process of preparing documentation to submit to the Wyoming Insurance Department to attempt to obtain a waiver of Wyoming's seasoning requirement. In Florida, we withdrew NMIC's application in response to a request by Florida's Office of Insurance Regulation ("FL OIR"). With the goal of resolving the FL OIR's concerns as expeditiously as possible, we intend to refile NMIC's application for a certificate of authority in Florida by mid-August 2013.  NMIC's application for approval of rates is pending in Washington and its applications for approvals of policy forms are pending in Maryland and Alaska.

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Evaluating risk in a timely fashion on all insured loans. We intend to review every loan we insure through both our delegated and non-delegated channels. Through a program we call "Delegated Assurance Review", we plan to conduct a post-close underwriting review of each mortgage insurance policy issued by our customers under their delegated authority. This differs from other MI companies that typically underwrite a sampling of policies originated through their delegated underwriting channels. By underwriting each policy, we believe we can more effectively manage the risk characteristics in our portfolio and provide a high level of confidence to our lenders that valid claims will be paid. We also expect this process will allow us to provide our customers with timely, value-added feedback on the risk characteristics of their loan originations.

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Establishing customer relationships. In order to develop a diverse customer base of mortgage originators, we believe we will ultimately need to have a sales force of qualified mortgage professionals that generally have well-established relationships with industry leading lenders and significant experience in both MI and mortgage lending. Mortgage insurance is a highly competitive industry and therefore we believe establishing and maintaining relationships with many lending institutions is critical to our success. As of the date of this prospectus, we have made progress with hiring approximately 30% of our target sales force staffing goal.

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Attracting and retaining our employee base. We believe our Company will be an attractive stable place of employment, given that we are a well-capitalized insurance company that has made significant progress in commencing business in the MI marketplace, allowing us to attract what we believe to be a high-quality talent pool. We have grown from zero employees prior to our capitalization in April 2012 to over 100 employees as of July 31, 2013. We currently expect to have approximately 200 employees by the end of 2013.

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Integrating our systems with mortgage lenders, loan servicing systems and leading third-party origination systems. Many of our customers will require us to have connectivity or be integrated with one or more of the largest loan servicing and/or leading third-party loan origination systems as a precursor to doing business with them. We have completed integration with two of the largest loan servicing systems, LPS MSP and Fiserv LoanServ™. We have also begun the process of integrating with the leading third-party loan origination systems, and expect to complete some of these integrations this year, including Ellie Mae Encompass360®, RealEC®, Fiserv EasyLender®, FICS Loan Producer® and Mortgage Builder. By mid-2014, we believe we will be substantially integrated with the other leading third-party loan origination systems. We will also integrate directly with those lenders that maintain their own, proprietary loan origination and servicing system technologies, recognizing that the time-lines for these integrations are heavily dependent upon the lenders' internal technology resource time-lines and availability.

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Continuing development of our enterprise technology platform. We seek to continue to develop our enterprise technology platform to support our mortgage insurance operations, including underwriting, premium billing, policy servicing and delinquency and claims management functions. In order to adequately support our mortgage insurance operations, we expect that, when completed and all components are fully integrated, our technology platform will allow us to: (i) obtain applications and supporting documentation from our lenders on an automated basis, thereby enabling lenders to submit insurance applications in an efficient manner and facilitating our risk review, (ii) obtain real-time data on performance of individual insured loans and programs, enabling a transparent and collaborative policy acquisition and underwriting process that should reduce response times, decrease costs and streamline communication with lenders, (iii) provide real-time feedback data for monitoring underwriting guidelines and for communicating to lenders the quality

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Availability of capital to support growth. As a newly capitalized mortgage insurer, we do not have exposure to the losses caused by historical underwriting standards (which we believe to have been less than adequate) and declines in home values experienced during the recent financial crisis. We believe our current capital will support approximately $30 billion of insurance in force (“IIF”) while staying within the regulatory guidelines imposed by state insurance departments and the GSEs.

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Superior business practices and terms of trade. Existing MI companies have rescinded or denied coverage on a significant number of mortgage insurance policies in recent years. We believe this has strained the relationship between a number of the mortgage originators and some existing private mortgage insurers, providing an opportunity for a new entrant to more effectively compete with existing providers. We believe our terms of trade offer a unique approach to rescission relief that sets us apart from other MI companies. Under our master policy, after a borrower has timely made 18 consecutive monthly payments on a loan we insure, we have agreed that we will not rescind or cancel coverage of that loan for borrower fraud or underwriting defects. In addition, upon the borrower attaining 18 full and timely consecutive monthly payments, we have agreed to limitations on our ability to initiate an investigation of fraud or misrepresentation by our insureds or any other party involved in the origination of an insured loan, which we collectively refer to in our master policies as a "First Party." We believe the standard approach by most MI companies is to provide this rescission relief with respect to underwriting defects and investigation of First Party fraud or misrepresentation after 36 months of full and timely consecutive monthly payments. For this and other reasons, we believe the terms of our insurance coverage described in our Master Policy Agreement will be favorably received by our customers, allowing us to gain market share from current providers. In addition, because we review every loan we insure as described above, we believe we are well aligned with the GSEs' desire that MI providers adopt up-front quality control practices that have the effect of giving insureds assurance of coverage after a borrower has timely made 36 months of loan payments.

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Experienced management team. We have assembled a senior management team with extensive experience developing and operating MI companies. Our Chief Executive Officer, Bradley Shuster, was responsible for international operations for PMI Mortgage Insurance Co. (“PMIC”), coordinating both acquisitions in Australia and de novo operations in Canada, Europe and Hong Kong. Before leaving PMIC in 2008, Mr. Shuster was responsible for the sale of PMIC's Australian operations to QBE Group for approximately $1.0 billion. In addition to Mr. Shuster, the rest of the Company's executive management team averages over 25 years of mortgage or financial services industry experience. See "Management - Executive Directors and Officers."

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•	the level of MI coverage, subject to the requirements of the GSEs' charters (which may be changed by federal legislation) as to when MI is used as the required credit enhancement on low down payment mortgages;

•	the amount of loan level delivery fees (which result in higher costs to borrowers) that the GSEs assess on loans that require MI;

•	whether the GSEs influence the mortgage lender's selection of the mortgage insurer providing coverage and, if so, any transactions that are related to that selection;

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the availability of different loan purchase programs from the GSEs that allow different levels of MI coverage. For example, the GSEs allow lenders to deliver loans with “standard coverage” from an MI company, or, in exchange for lenders paying higher fees, lower “charter minimum” coverage levels. Historically, the large majority of loans are insured at “standard coverage” levels. If the relationship between the cost of mortgage insurance and the fees charged by the GSEs for various coverage levels changes, lenders may prefer to obtain “charter minimum” coverage levels on their loans;

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•	the underwriting standards that determine what loans are eligible for purchase by the GSEs, which can affect the quality of the risk insured by the mortgage insurer and the availability of mortgage loans;

•	the terms on which MI coverage can be canceled by the borrower before reaching the cancellation thresholds established by law;

•	the terms that the GSEs require to be included in MI policies for loans that they purchase;

•	the programs established by the GSEs intended to avoid or mitigate loss on insured mortgages and the circumstances in which mortgage servicers must implement such programs; and

•	the minimum capital levels required to be maintained by MI companies.

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•	single — all premium is paid upfront and the premium is earned based on published earnings tables which factor in the LTV and loan term;

•	annual — premium is paid in advance covering the subsequent 12 months and the premium is earned over the year, with renewals received prior to the expiration of the current coverage;

•	monthly — coverage begins on the loan close date and when the premium is received and the lender is billed each month for the next month's coverage; and

•	monthly Advantage — coverage begins as of the loan close date, when we receive notice of such close date and the lender is billed for the previous month's coverage every month.

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•	Obtaining approval from National Account lenders to be an authorized MI provider enables Regional Accounts to sell loans with insurance from NMIC to those National Accounts.  Consequently, these approvals are critical to making inroads with Regional Accounts.  As discussed above, 18 of the 35 National Accounts have agreed to use NMIC an an MI provider.

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Achieving connectivity with the largest loan servicing systems. Many of the loan servicers in the industry who sub-service loans originated by Regional Accounts that do not conduct their own servicing operations rely primarily on the two most signifcant servicing systems, LPS MSP and Fiserv LoanServTM, to subservice these loans. As discussed above in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Development of our IT Platform", we have completed integration with LPS MSP and Fiserv LoanServTM. Attaining connectivity with these servicing systems is one of the important first steps with respect to Regional Accounts purchasing MI from NMIC.

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Achieving connectivity with leading third-party loan origination systems utilized by Regional Accounts. As discussed above, we have begun the process of integrating with some of the leading providers of automated loan origination systems, including Ellie Mae Encompass360®, RealEC®, Fiserv EasyLender®, FICS Loan Producer® and Mortgage Builder. The Regional Accounts who originate loans using these leading third-party loan origination systems will be able to automatically select NMIC as an MI provider within those systems. The progress we have made to date connecting with these loan origination systems is another significant achievement with respect to our readiness to engage with the Regional Accounts.

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•	non-delegated — we underwrite the insurance application and provide a response to the lender, prior to the loan closing; or

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delegated — if deemed eligible by NMIC, certain loan originators may bind our mortgage insurance coverage following their own underwriting review. Loans submitted through the delegated program must meet certain eligibility rules. The delegated program is only available to customers that have strong underwriting experience. In addition, similar to the non-delegated program, we have processes in place to perform quality assurance reviews of our customers' underwriting of all delegated loans within several months of the loan closing date.

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•	the borrower's credit strength, including the borrower's credit history, debt-to-income ratios and cash reserves and the willingness of a borrower with sufficient resources to make mortgage payments when the mortgage balance exceeds the value of the home;

•	the loan product, which encompasses the LTV ratio, the type of loan instrument, including whether the instrument provides for fixed or variable payments and the amortization schedule, the type of property, the purpose of the loan and the interest rate;

•	origination practices of lenders;

•	the percentage coverage on insured loans;

•	the size of loans insured; and

•	the condition of the economy, including housing values and employment, in the geographic area in which the property is located.

•	for loans with higher LTV ratios compared to loans with lower LTV ratios;

•	for loans with higher debt-to-income ratios;

•	for loans to borrowers with lower FICO credit scores compared to loans to borrowers with higher FICO credit scores;

•	during periods of economic contraction and housing price depreciation, including when these conditions may not be nationwide, compared to periods of economic expansion and housing price appreciation;

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•	for ARMs when the reset interest rate significantly exceeds the interest rate of loan origination;

•	for loans in which the original loan amount exceeds the GSEs' established conforming loan limit compared to loans below that limit; and

•	for cash out refinance loans compared to purchase or rate and term refinance loans.

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Credit risk profile. Our insured loan portfolio's credit risk profile is measured by credit score, loan-to-value, debt-to-income ratio, occupancy type, purpose (e.g., owner-occupied) and other factors. This risk profile is directly impacted by our credit guidelines, pricing and operational quality. The risk profile of our new business is also affected by the mortgage market and macroeconomic conditions. Key drivers include regulatory and/or tax changes affecting the economics of residential mortgage lending; regulatory changes impacting the relative attractiveness of MI to our customers; and consumer attitudes about the relative attractiveness of real estate as an investment; structural changes to the industry made to reduce the role of the federal government (and develop a long-term plan for the GSEs).

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Changes in home prices. A decline in home prices typically makes it more difficult for a borrower to sell or refinance his or her home, generally increasing the likelihood of a default followed by a claim. In addition, a decline in home prices typically increases the severity of any claim we may pay. The inability to sell or refinance homes, due to a decline in home prices, typically leads to an increase in persistency. Conversely, an increase in home prices potentially makes it easier for a borrower to sell or refinance his or her home, decreasing the likelihood of a claim on a loan in default, decreasing the severity of any claim we may pay and decreasing the policy persistency.

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Changes in employment and income, healthcare and divorce. Borrowers able to make only small down payments often have more difficulty weathering financial hardships caused by unemployment or income reductions, or life events involving illness or divorce, because they may not have large amounts of personal savings or available credit. If they do have a significant amount of available credit, they are more likely to increase leverage to levels that prove unsustainable over the long run. Rising unemployment will increase the number of borrowers unable to remain current on their home mortgage and increase the number of new claims. Conversely, as the unemployment rate decreases, portfolio delinquency rates will fall as fewer borrowers become unemployed and those that do are able to find new jobs more quickly.

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Changes in interest rates. Increasing interest rates directly impact the borrower's ability to pay by causing their debt payments to rise. Higher payments on adjustable rate mortgages and other variable rate consumer secured and unsecured debt reduce borrowers' ability to pay and increase the frequency of loss. Conversely, falling interest rates make variable rate consumer debt payments more affordable and reduce loss frequency. Changes in interest rates will also indirectly impact the portfolio's credit risk characteristics through their effect on economic growth rates, the affordability of housing, loan persistency and other factors.

•	Regional economic developments. Credit performance in specific geographic regions can vary substantially from the national mean based on the impact of regional developments. These developments may include economic booms or busts in particular industries accounting for a material share of total employment, the impact of natural disasters and other factors.

•	Changes in home prices. A decline in home prices typically makes it more difficult for a borrower to sell or refinance his or her home, generally increasing the likelihood of a delinquency followed by a claim. In addition, a decline in home prices typically increases the severity of any claim we

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Changes in unemployment. Increases in the unemployment rate typically impair a borrower's ability to remain current on his or her home mortgage, increasing the likelihood of a delinquency followed by a claim. Conversely, as the unemployment rate decreases, a borrower's ability to remain current on their home mortgage typically improves, decreasing the likelihood of a delinquency followed by a claim.

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Changes in interest rates. An increase in interest rates typically leads to lower home affordability and less refinancing activity. This may decrease mortgage origination volume thereby reducing the number of low down payment loans available for us to insure. However, an increase in interest rates typically leads to a higher mix of purchase versus refinance activity which results in a higher overall penetration rate of MI. The higher penetration rate is also a result of overall lower total originations during a high interest rate environment. Higher interest rates also typically lead to higher persistency of our MI policies. Conversely, a decrease in interest rates typically leads to an increase in low down payment loans available for us to insure, a decrease in the penetration rate of MI and a decrease in the persistency of MI policies from higher refinance activity.

•	Process design and execution. New processes and procedures may not appropriately take into account scenarios that were unforeseen or misunderstood. Employees may make mistakes when executing defined processes and procedures.

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Vendor Performance. One component of our strategy is to leverage vendors for key functions including system development, website hosting, insurance approval, underwriting assurance review audits and human resources management, among others. Vendors may overstate their capabilities and/or be unable to meet promised service levels. Mistakes or failures may lead to business disruptions and/or losses.

•	System Functionality and Reliability. Systems may not be developed on time, be properly designed, perform as specified or be sufficiently reliable. Utility disruptions may bring systems down for extended periods.

•	Damage to Physical Assets and Human Resources. Aside from work-at-home employees residing across the country, our operations and staff are housed in a single building in a shoreline location near

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•	Fraud. Insured institutions may attempt to collect insurance benefits based on fraud and misrepresentation, and employees may attempt to misappropriate company assets.

•	Inadequate Internal Controls. Various internal controls have been established to manage operational and other risks. Inadequate internal controls expose us to greater operational risk.

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Establish connectivity with many of the industry's largest providers of mortgage servicing systems, which automate loan servicing functions such as payment processing, escrow administration, default management, investor accounting, loan modifications, and year-end reporting. We have completed integration with the largest and leading servicing system providers, LPS MSP and Fiserv LoanServ™ , which combined process more mortgages in the United States by dollar volume than any other servicing system, creating significant opportunity to efficiently conduct business with large lenders and aggregators that require this integration;

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Establish connectivity with leading third party providers of loan origination systems, which provide the functionality to automate the mortgage loan origination process, including point of sale support, processing, settlement services, document preparation and tracking, underwriting, closing and funding. We have begun the process of integrating with the leading third-party loan origination systems, and we expect to complete some of these integrations this year, including Ellie Mae Encompass360®, RealEC®, Fiserv EasyLender®, FICS Loan Producer®, and Mortgage Builder. By mid-2014, we believe we will be integrated with the other leading third-party loan origination systems.

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Integrate with those lenders that maintain their own proprietary loan origination and servicing systems, recognizing that the time-lines for these integrations are heavily dependent upon the lenders' internal technology resource time-lines and availability. Many lenders require us to engage in their third party review processes before we can conduct integration testing with such lenders. While we are in the process of working through this process with some lenders, no direct lender connectivity has been completed as of the date of this prospectus.

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•	be initially capitalized in the amount of $200 million and that its affiliate reinsurance companies, NMRI One and NMRI Two, be initially capitalized in the amount of $10 million each;

•	maintain minimum capital of $150 million;

•	operate at a risk-to-capital ratio not to exceed 15:1 for its first three (3) years and then pursuant to the Eligibility Requirements;

•	insure only (i) GSE-eligible loans or (ii) loans that are GSE-eligible, other than as related to loan amount subject to additional portfolio limitation requirements;

•	obtain prior written approval to enter into any transaction involving the issuance of insurance on other than an individual loan “flow” basis;

•	have and maintain a fully operational business and technology platform;

•	not declare or pay dividends to affiliates or to NMIH for its first three (3) years, then pursuant to the Eligibility Requirements;

•	not enter into capital support agreements or guarantees for the benefit of, or purchase or otherwise invest in the debt of, affiliates without the prior written approval of the GSEs for its first three (3) years, then pursuant to the Eligibility Requirements;

•	not invest in or make loans to affiliates for its first three (3) years, then pursuant to the Eligibility Requirements;

•	not enter into reinsurance or other risk share arrangements without the GSEs' prior written approval for its first three (3) years, then pursuant to the Eligibility Requirements; and

•	at the direction of one or both of the GSEs, re-domicile from Wisconsin to another state.

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•	licenses to transact business;

•	policy forms;

•	premium rates;

•	insurable loans;

•	annual and other reports on our financial condition;

•	the basis upon which assets and liabilities must be stated;

•	requirements regarding contingency reserves;

•	minimum capital levels and adequacy ratios;

•	reinsurance requirements;

•	limitations on the types of investment instruments which may be held in an investment portfolio;

•	the size of risks and limits on coverage of individual risks which may be insured;

•	special deposits of securities;

•	limits on dividends payable; and

•	claims handling.

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•	The insurance subsidiaries must give the WOCI up to 90 days', rather than 30 days', notice of a proposed dividend.

•	The insurance subsidiaries must give the WOCI up to 60 days' notice of any proposed substantive change in their business plans. WOCI may disapprove the proposed changes, and the insurance subsidiaries must conform at all times to their filed business plans.

•	The insurance subsidiaries' directors and officers may be disapproved by WOCI.

•	The insurance subsidiaries' investments are restricted unless otherwise approved by WOCI.

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•	we are exempted from compliance with Section 404(b) of Sarbanes-Oxley, which otherwise would have required our auditors to attest to and report on our internal control over financial reporting;

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we are not required to comply with any new or revised financial accounting standard until such date as a private company (i.e., a company that is not an “issuer” as defined by Section 2(a) of Sarbanes-Oxley) is required to comply with such new or revised accounting standard. As a result, our financial statements may not be comparable with another public company which is neither an ECG nor an ECG which has opted out of using the extended transition period;

•	we may elect to not comply with Item 402 of Regulation S-K, which requires extensive quantitative and qualitative disclosure regarding executive compensation, but instead disclose the more limited information required of a “smaller reporting company”;

•

in the event that we register our common stock under Section 12 of the Exchange Act, the JOBS Act will also exempt us from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: (i) the advisory vote on executive compensation required by Section 14A(a) of the Exchange Act, (ii) the requirements of Section 14A(b) of the Exchange Act relating to stockholder advisory votes on “golden parachute” compensation, (iii) the requirements of Section 14(i) of the Exchange Act as to disclosure relating to the relationship between executive compensation and our financial performance, and (iv) the requirement of Section 953(b)(1)of the Dodd-Frank Act, which will require disclosure as to the relationship between the compensation of the Company's chief executive officer and median employee pay.

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•	the integrity of the financial statements of the Company;

•	the independent auditor's qualifications and independence;

•	the performance of the Company's internal audit function and independent auditors;

•	the Company's system of disclosure controls and system of internal controls over financial reporting; and

•	the Company's compliance with legal and regulatory requirements.

•	overseeing our executive compensation program, including approving corporate goals relating to compensation for our Chief Executive Officer and other senior executives and determining the annual compensation of our Chief Executive Officer and other senior executives;

•	reviewing and approving the compensation policy recommended by management with respect to other employees;

•	determining, subject to ratification by our independent directors, the compensation of our independent directors; and

•	preparing the Compensation Committee Report and reviewing the Compensation Discussion and Analysis included in our proxy statements.

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•	identifying individuals qualified to become Board members, and recommending to the Board nominees for election for the next annual meeting of stockholders;

•	reviewing the qualifications and independence of the members of the Board and its committees on a regular periodic basis;

•	recommending to the Board corporate governance guidelines and reviewing such guidelines, as well as the Nominating and Governance Committee charter to confirm that they remain consistent with sound corporate governance practices and with any legal requirements;

•	leading the Board in its annual review of the Board's performance; and

•	recommending committee assignments for members of the Board.

•	discussing, reviewing and monitoring the Company's mortgage insurance products, including premium rates, underwriting guidelines and returns;

•	reviewing and approving the Company's investment policy;

•	reviewing the mortgage insurance operating environment, including the state of local and regional housing markets, competitive forces affecting the Company and the Company's relationships with residential mortgage lenders and investors; and

•	assisting the Board in its oversight of the Company's risk management policies, procedures and processes.

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(1)	The named executive officers were paid as consultants to the Company prior to its capitalization. Amounts shown include consulting fees earned during 2011 and 2012. The entire amounts shown were paid in 2012 upon capitalization.

(2)	Bonus amounts were earned in 2012 but paid in 2013.

(3)

In April 2012, Mr. McCourt entered into a letter agreement with the Company to serve as its Executive Vice President of Insurance Operations and Chief Risk Officer. At that time, Mr. McCourt was issued 151,250 stock options and 123,750 restricted stock units ("RSUs"). In October 2012, the Company and Mr. McCourt mutually agreed to terminate his April 2012 letter agreement and enter into a new letter agreement pursuant to which Mr. McCourt began serving as the Company's VP of Administration. In connection with the change to his terms of employment, Mr. McCourt forfeited 131,250 of his stock options and 113,750 of his RSUs. The values shown for Mr. McCourt's stock and option awards were calculated based on their values, as of the date of the grants, without giving effect to the forfeitures. As of December 31, 2012, Mr. McCourt held 10,000 RSUs valued at $67,900 and 20,000 option awards valued at $77,600.

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•	100% of the outstanding RSU grants vest as follows:

◦	33.3% of the performance shares will vest when our stock price equals or exceeds $12.50 for 30 days;1

◦	33.3% of the performance shares will vest when our stock price equals or exceeds $14.00 for 30 days; and

◦	33.3% of the performance shares will vest when our stock price equals or exceeds $16.00 for 30 days.

◦	50% of the time-vested shares will vest on the second anniversary of the grant date; and

◦	50% of the time-vested shares will vest on the third anniversary of the grant date.

•	100% of the stock option grants vest as follows:

◦	33.3% of the stock options will vest on the first anniversary of the grant date;

◦	33.3% of the stock options will vest on the second anniversary of the grant date; and

◦	33.3% of the stock options will vest on the third anniversary of the grant date.

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(1)	Represents stock options that vest (subject to continued employment on the vesting date) as follows:

•	33.3% vest on the first anniversary of the grant date;

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•	33.3% vest on the second anniversary of the grant date; and

•	33.3% vest on the third anniversary of the grant date.

(2)	The per share exercise price is equal to the price of a share of our common stock in our Private Placement.

(3)	Represents RSUs. As explained above under the heading - Equity Awards Granted to Certain Named Executive Officers, as of December 31, 2012, 100% of the RSUs were performance shares. In February 2013, the RSU awards were amended so that two-thirds of the grant are performance shares and one-third are time-vested shares.

(4)	There is currently no public market for our common stock, and therefore we do not have a public valuation for our security. Our securities trade in the FBRPlusTM system. To determine the value of unearned shares that have not vested, we used the 30-day average for the 30-day trading period ending on December 31, 2012 of $10.75 per share.

(5)	In 2012, Mr. McCourt was originally issued 151,250 stock options and 123,750 RSUs. In October 2012, Mr. McCourt forfeited 131,250 of his stock options and 113,750 of his RSUs.

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•	the acquisition by any individual, entity or group of “beneficial ownership” (pursuant to the meaning given in Rule 13d-3 under the Exchange Act) of 35% or more (on a fully diluted basis) of either (i) the outstanding shares of our common stock or (ii) the combined voting power of our then outstanding voting securities, with each of the foregoing subject to certain customary exceptions;

•	the replacement of a majority of the directors that constituted our Board as of the closing of the Private Placement by directors whose appointment or election is not endorsed by at least two-thirds of the directors on the Board as of the closing of the Private Placement, subject to certain exceptions;

•	approval by our stockholders of our complete dissolution or liquidation; or

•

a merger of the Company, the sale or disposition by the Company of all or substantially all of our assets or any other business combination of the Company with any other corporation, other than any merger or business combination which would result in (i) the voting securities of the Company outstanding immediately prior to the transaction continuing to represent at least 50% of the total voting power of the Company or such surviving entity outstanding immediately after such transaction, (ii) no person (other than any employee benefit plan sponsored or maintained by the surviving company) becoming the “beneficial owner,” directly or indirectly, of 35% or more of the total voting power of the parent company (or, if there is no parent company, the surviving company) and (iii) members of the Board as of the execution of the initial agreement providing for the transaction constituting at least two-thirds of the members of the board of directors of the parent company (or, if there is no parent company, the surviving company) following the consummation of the transaction.

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(1)	Under the terms of Messrs. Shuster’s and Sherwood’s respective Employment Agreements, each would be entitled to be paid his respective annual base salary in effect at the time of termination and any target annual bonus for a prior award period, both to the extent not previously paid (other than any deferred portion of such target annual bonus).

(2)	Under the terms of their respective employment arrangements, each would be entitled to be paid the amounts of any Accrued Benefits through the date of termination to the extent not previously paid or provided.

(3)

As provided in Messrs. Shuster’s and Sherwood’s respective Employment Agreements, amount includes the sum of (i) Mr. Shuster’s or Mr. Sherwood’s annual base salary plus (ii) his 2012 target annual bonus, which was 100% of the annual base salary. Further, upon a Qualifying Termination at December 31, 2012, Messrs. Shuster and Sherwood would have remained eligible to receive in the future 50% of the GSE Approval bonus and 50% of the bonuses payable upon the filing and effectiveness of this registration statement.

(4)	With a Qualifying Termination, any outstanding stock options that were not then exercisable and vested would have become fully exercisable and vested at the date of termination.

(5)	With a Qualifying Termination, unvested RSUs (100% of which were performance shares at December 31, 2012) would have remained outstanding and subject to vesting upon the later of (i) GSE approval or (ii) the achievement of the applicable stock price goals.

(6)

As provided in Messrs. Shuster’s and Sherwood’s respective Employment Agreements, amount includes three times the sum of (i) Mr. Shuster’s or Mr. Sherwood’s annual base salary plus (ii) his 2012 target annual bonus, which was 100% of the annual base salary. Further, upon a Qualifying Termination at December 31, 2012 following a change in control, Messrs. Shuster and Sherwood would have remained eligible to receive in the future 50% of the GSE Approval bonus and 50% of the bonuses payable upon the filing and effectiveness of this registration statement.

(7)	Upon a change in control, any outstanding stock options that were not then exercisable and vested would have become fully exercisable and vested immediately.

(8)	Vesting of RSUs (100% of which were performance shares at December 31, 2012) following a change in control shall be determined by the Compensation Committee of the Board based upon the Committee’s determination regarding the extent the stock price goals with respect to the performance shares have been met.

(9)	As provided in Mr. Pachura’s letter agreement, amount includes the sum of (i) Mr. Pachura’s annual base salary plus (ii) his 2012 target annual bonus, which was 75% of the annual base salary.

(10)	As provided in Mr. Pachura’s letter agreement, amount includes one and one-half times the sum of (i) Mr. Pachura’s annual base salary plus (ii) his 2012 target annual bonus, which was 75% of the annual base salary.

(11)	Under any of the hypothetical scenarios, Mr. McCourt would not have been entitled to receive cash severance payments.

(12)	Upon a change in control, with or without a termination, Mr. McCourt’s outstanding stock options that were not exercisable and vested would have become fully exercisable and vested immediately. At $10.75 per share, the cash value of Mr. McCourt’s options at December 31, 2012 was $15,000.

(13)	Upon a change in control, with or without a termination, vesting of Mr. McCourt’s outstanding RSUs (100% of which were performance shares at December 31, 2012) would have been subject to the same conditions as described in note (8) above.

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(1)	To compensate Messrs. Dean and Gambs for their overall contribution to the Board and the Company prior to their departures in July 2012, we paid each of them $16,250 during their Board membership and an additional $98,750 upon the Company's receipt of GSE Approval.

(2)	Michael Embler, James G. Jones, Michael Montgomery and John Brandon Osmon were elected to the Company's Board of Directors on July 17, 2012.

(3)	James H. Ozanne and Steven L. Scheid have been members of the Company's Board since its capitalization on April 24, 2012.

(4)

The stock options and RSUs granted to each non-employee director in 2012 vest in two equal 50% installments on each of the second and third anniversary of the date of grant. As of December 31, 2012, each of Messrs. Ozanne and Scheid held stock options with respect to 75,625 shares of our common stock and 61,875 RSUs and each of Messrs. Embler, Jones, Montgomery and Osmon held stock options with respect to 37,813 shares of our common stock and 30,940 RSUs.

(5)	Each of Mr. Dean and Mr. Gambs forfeited their stock options and RSUs in connection with their ceasing to be members of the Company's Board. The value of their stock and option awards are presented without giving effect to the forfeitures and prior to their redistribution to Messrs. Embler, Jones, Montgomery and Osmon.

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•	each person known to us to be the beneficial owner of more than five percent of our Class A common stock;

•	each named executive officer;

•	each of our directors;

•	all of our named executive officers and directors as a group; and

•	each selling stockholder.

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•	any breach of the director's duty of loyalty to us or our stockholders;

•	any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

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•	any act related to unlawful stock repurchases, redemptions or other distributions or payment of dividends; or

•	any transaction from which the director derived an improper personal benefit.

•	we will indemnify our directors and officers to the fullest extent permitted by the DGCL, subject to limited exceptions; and

•	we may purchase and maintain insurance on behalf of our current or former directors, officers, employees or agents against any liability asserted against them and incurred by them in any such capacity, or arising out of their status as such.

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•	a citizen or resident of the United States;

•	a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia, or a non-U.S. corporation treated as such;

•	an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•	a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes.

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•	the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. holder);

•	the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are satisfied; or

•	we are or have been a U.S. real property holding corporation (a “USRPHC”) for U.S. federal income tax purposes at any time within the shorter of the five-year period ending on the date of the disposition and the non-U.S. holder's holding period of our common stock and certain other conditions are satisfied. We believe that we are currently not, and we do not anticipate becoming, a USRPHC.

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•	a U.S. person;

•	a “controlled foreign corporation” for U.S. federal income tax purposes;

•	a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or

•	a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business.

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•	ordinary brokerage transactions and transactions in which the broker dealer solicits purchasers;

•	block trades in which the broker dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

•	purchases by a broker dealer as principal and resale by the broker dealer for its account;

•	an exchange distribution in accordance with the rules of the applicable exchange;

•	privately negotiated transactions;

•	broker dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

•	a combination of any such methods of sale; and

•	any other method permitted pursuant to applicable law.

•	engage in short sales of shares of the common stock in the course of hedging their positions;

•	sell shares of the common stock short and deliver shares of the common stock to close out short positions;

•	loan or pledge shares of the common stock to broker-dealers or other financial institutions that in turn may sell shares of the common stock;

•	enter into option or other transactions with broker-dealers or other financial institutions that require the delivery to the broker-dealer or other financial institution of shares of the common stock, which the broker-dealer or other financial institution may resell under the prospectus; or

•	enter into transactions in which a broker-dealer makes purchases as a principal for resale for its own account or through other types of transactions.

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•	the Company's intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery;

•	severity and duration of the decline in fair value;

•	the financial condition of the issuer;

•	failure of the issuer to make scheduled interest or principal payments;

•	recent credit downgrades of the applicable security or the issuer below investment grade; and

•	adverse conditions specifically related to the security, an industry, or a geographic area.

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•	be initially capitalized in the amount of $200 million and that its affiliate reinsurance companies, NMRI One and NMRI Two, be initially capitalized in the amount of $10 million each;

•	maintain minimum capital of $150 million;

•	operate at a risk-to-capital ratio not to exceed 15:1 for its first three (3) years and then pursuant to the Eligibility Requirements;

•	insure only (i) GSE-eligible loans or (ii) loans that are GSE-eligible, other than as related to loan amount subject to additional portfolio limitation requirements;

•	obtain prior written approval to enter into any transaction involving the issuance of insurance on other than an individual loan “flow” basis;

•	have and maintain a fully operational business and technology platform;

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•	not declare or pay dividends to affiliates or to NMIH for its first three (3) years, then pursuant to the Eligibility Requirements;

•	not enter into capital support agreements or guarantees for the benefit of, or purchase or otherwise invest in the debt of, affiliates without the prior written approval of the GSEs for its first three (3) years, then pursuant to the Eligibility Requirements;

•	not invest in or make loans to affiliates for its first three (3) years, then pursuant to the Eligibility Requirements;

•	not enter into reinsurance or other risk share arrangements without the GSEs' prior written approval for its first three (3) years, then pursuant to the Eligibility Requirements; and

•	at the direction of one or both of the GSEs, re-domicile from Wisconsin to another state.

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a)	$700,000 to be paid 10 days after obtaining the funding required for Government Sponsored Entity (“GSE”) approval

b)	$300,000 to be paid upon completion of deployment of the Insurance Management System and user acceptance testing

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*	To be filed by amendment.

+	Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions of this exhibit. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

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(a)	The undersigned registrant hereby undertakes:

(1)	To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)	To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii)	To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2)	That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)	To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(b)	Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions,

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*	To be filed by amendment.

+	Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions of this exhibit. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

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1.	Summary of Transaction Terms.

2.	The Loan Coverage Percentage shall be calculated using the Specified Exposure Percentage as shown in paragraph 1.

3.	The Aggregate Loss Limit shall be calculated using the Aggregate Loss Percentage as shown in paragraph 1.

4.	Eligibility Criteria applicable to the Portfolio are:

(a)	Selling Guide Compliance. As of the date of Fannie Mae's acquisition, the Company acknowledges Fannie Mae's representation that the Covered Loans met the requirements of the Selling Guide or variances thereto.

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(b)

Foreclosures and Bankruptcies. The Company acknowledges Fannie Mae's representation that no Borrower on any Covered Loan may have been the subject of a foreclosure proceeding within the twenty-four (24) months prior to the closing of the Covered Loan, and further that no Borrower on any Covered Loan may have been a debtor who was the subject of a bankruptcy proceeding during the twenty-four (24) months prior to the closing of the Covered Loan.

(c)

Delinquencies. The Company acknowledges Fannie Mae's representation that all Covered Loans have a next payment due date even with or after the Coverage Effective Date. For example, for a Covered Loan to be eligible with a Coverage Effective Date of June 1, the May 1 payment must have been received not later than June 1. Further, the Company acknowledges Fannie Mae's representation that no Covered Loan has been thirty (30) days' delinquent prior to its Coverage Effective Date.

5.

Pre-Settlement Loan File Review. The Company shall be permitted to review certain loans that Fannie Mae reviewed pursuant to its post-purchase review process prior to the Policy Effective Date to confirm the accuracy of the information in the Bid File. Additionally, the Company shall be permitted to review a sample of Covered Loans pursuant to Section 4.7 (b) of the Policy. Loan file reviews shall be conducted in the Company's offices at the Company's expense and shall be limited to reviewing electronic images of the Origination File. The Company agrees that loan file requests will be sent via email to: pool_document_requests@fanniemae.com.

6.	Counterparty Requirements. Until new updated MI eligibility requirements are issued by Fannie Mae, the Company agrees to maintain statutory capital equal to the greater of:

(1)	5.6% of net primary risk-in-force, plus,

(2)	for pool insurance (i.e., insurance subject to an aggregate stop loss), the lesser of

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1	Definitions

1.1	Accumulation Period - means, if applicable, the time period from the Policy Effective Date stated on the Declarations Page of this Policy until 12:01 a.m. on the Policy Settlement Date stated on such Declarations Page. If this time period is left blank or reads “N/A,” then no such period applies.

1.2	Accumulation Policy - means that Policy Type in which loans to be covered under this Policy are accumulated and added to this Policy during the Accumulation Period.

1.3	Advances - means those amounts paid by the Insured in accordance with Section 7.2(k) (Advances).

1.4

Aggregate Loss - means, at any given time, the total of all Insurance Benefits paid by the Company under this Policy, including: (a) any partial Insurance Benefit advanced by the Company pursuant to Section 7.1 (Loss Mitigation); (b) any other partial Insurance Benefit paid by the Company; and (c) any Insurance Benefit charged to the Deductible Amount of this Policy, reduced by any net recoveries received by the Company with respect to any Covered Loan or the related Property or Borrower, including but not limited to recoveries pursuant to Section 7.2(f) (Borrower Contributions) and Section 9.1 (Subrogation). If the Company acquires the Property pursuant to Section 8.5(b) (Disapproved REO Sales), the amount of the Insurance Benefit that will be included in the Aggregate Loss for the related Covered Loan shall equal: (x) the Claim Amount calculated pursuant to Section 8.4(b) (Property Acquisition Calculation); multiplied by (y) the applicable Loan Coverage Percentage; multiplied by (z) the Property Acquisition Aggregate Loss Limit Adjustment Percentage. Under no circumstances will any interest or Penalty Interest paid on the Insurance Benefit pursuant to Section 8.9 (Failure to Timely Pay Insurance Benefit) be included in the Aggregate Loss.

1.5	Aggregate Loss Limit - means the Total Initial Principal Balance multiplied by the Aggregate Loss Percentage, which dollar limit shall be specified on the Declarations Page of this Policy.

1.6	Aggregate Loss Limit Step Down - means, if applicable, one or more reductions in the Aggregate Loss Limit calculated in accordance with the timing and formula specified in the Commitment Letter. Whether such reduction applies will be specified on the Declarations Page of this Policy. If this coverage feature is left blank or reads “N/A”, then no such reduction applies.

1.7	Aggregate Loss Percentage - means that percentage so specified on the Declarations Page of this Policy.

1.8	Annual Premium Rate - means, if applicable, the premium rate so specified on the Declarations Page of this Policy to be used in computing a premium to be remitted annually.

1.9

Applicable Law - means (i) any law, statute, constitution, regulation, ordinance, or subordinate legislation in force from time to time to which a party or its affiliates is subject; (ii) the common law as applicable to the parties from time to time; (iii) any court order, judgment, or decree that is binding on a party or its affiliates; and (iv) any directive, policy, rule, or order that is binding on a party or its affiliates and that is made or given from time to time by any regulator, government or government agency of, in the case of items (i) through (iv) above, any (x) country, or other national, federal, commonwealth, state, provincial, or local jurisdiction or (y) any exchange, association or non-governmental entity that is charged with monitoring or overseeing the business practices or other activities of a party or its affiliates whose regulations are binding on either party pursuant to a self-regulating mechanism approved by a government entity.

1.10	Application - means a request by the Insured for coverage on a loan as a Covered Loan under this Policy, evidenced by the inclusion of the loan on a Set-up File delivered by the Insured to the Company and consisting of all data and information included in such Set-up File and as reflected in the Covered Loan Schedule.

1.11	Appraisal - means an appraisal or alternative method of valuation (such as an automated valuation model or AVM) used to determine the market value of a Property that complies with: (i) the valuation requirements of the Insured if the Covered Loan was required to be originated in compliance with the valuation requirements of the Insured; or (ii) customary mortgage

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1.12	Appropriate Proceedings - means any legal, administrative or non-judicial action or proceeding permissible under Applicable Law to enforce the Borrower's obligations under a Covered Loan or to apply the Property to the satisfaction of the Borrower's obligations under such loan or to evict the Borrower from the Property.

1.13	Bid File - means the information furnished to the Company by the Insured in solicitation of offers to issue mortgage guaranty insurance. The Bid File may consist of information about the actual loans intended to be insured or it may consist of a profile of the loans intended to be insured.

1.14	Borrower - means any Person required to repay the debt obligation created pursuant to the Covered Loan. The Borrower may be more than one Person, and the term shall include any co-signer or guarantor of the Covered Loan.

1.15	Borrower's Own Fund - means any funds owned by the Borrower and not borrowed or received (as a gift or otherwise) from any party to the transaction, or subject to refund, rebate, or repayment.

1.16	Borrower's Title - means such title to a Property as was vested in the Borrower at the time of a conveyance to the Insured or to a third party, extinguishing all of the Borrower's rights in the Property; provided, however, that any applicable redemption period need not have expired. The deed evidencing such transfer of title to the Insured need not be recorded unless required by Applicable Law.

1.17	Bulk Policy - means that Policy Type in which loans to be covered under this Policy are specified on the Covered Loan Schedule on the Policy Effective Date.

1.18	Business Day - means any day that the Company is normally scheduled to be open for business.

1.19	Claim - means the request to receive benefits of this Policy filed in accordance with Section 8.1 (Claim Filing) and containing all information required by the Company pursuant to Section 8.1 (Claim Filing).

1.20	Claim Denial - means written notification by the Company to the Insured that it will not pay a Claim filed in connection with a specified Covered Loan due to breach of one or more specified provisions of this Policy.

1.21	Claim Amount - means the amount calculated in accordance with Section 8.4 (Calculation of Claim Amount).

1.22	Claim Settlement Period - means, with respect to a given Claim, the date beginning on the date the Claim is perfected as specified in Section 8.1 (Claim Filing) and ending sixty (60) days from that date.

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1.28

Coverage Effective Date - means the date on which coverage of a Covered Loan becomes effective as specified on the Covered Loan Schedule. For Covered Loans acquired by the Insured prior to the Policy Effective Date, the Company and the Insured shall agree on the Coverage Effective Date. For Covered Loans acquired by the Insured on or after the Policy Effective Date, coverage shall be effective as of the first day of the month during which the Insured acquired the Covered Loans, but a loan cannot become a Covered Loan until it is acquired by the Insured. If Covered Loans are acquired over more than one (1) month, there will be a separate Coverage Effective Date applicable to all of the acquisitions in each such month.

1.29	Coverage Effective Date LTV - means that ratio calculated by multiplying the loan-to-value ratio of the Covered Loan on its origination date and the Initial Principal Balance, then dividing that product by the principal balance of the Covered Loan on its origination date.

1.30	Covered Loan - means any note or other evidence of indebtedness and the indebtedness it evidences, together with the mortgage, bond, deed of trust, or other instrument securing said indebtedness, that satisfies the Eligibility Criteria and to which coverage under this Policy has been extended by inclusion of the Covered Loan on the Covered Loan Schedule.

(a)	with respect to a Bulk Policy, that document (in either physical or electronic form) made a part of the Declarations Page of this Policy by the Company, which lists the Covered Loans insured under this Policy, and

(b)	with respect to an Accumulation Policy,

(i)	each and every Covered Loan Schedule provided by the Company to the Insured during the Accumulation Period in accordance with procedures agreed to by the Company and the Insured, each of which lists a portion of the Covered Loans insured under this Policy, and

(ii)	the cumulative Covered Loan Schedule provided by the Company to the Insured on or after the Policy Settlement Date, and

(c)	with respect to a Flow Policy, all of the Covered Loan Schedules provided by the Company to the Insured in accordance with procedures agreed to by the Company and the Insured, each of which lists a portion of the Covered Loans insured under this Policy.

1.32

Credible Evidence - means: (a) information contained in the Origination File or Servicing File (whether such information was submitted to the Company prior to or after the Certificate Effective Date); (b) information relating to the Covered Loan (whether written, electronic or oral) provided at any time by a First Party to the Company; or (c) any other information (whether written, electronic or oral) received or obtained by the Company at any time from any Person provided that such information would be viewed by a reasonable person familiar with all other Credible Evidence as having a basis in fact and not exhibiting falsity or material internal inconsistency. Credible Evidence shall not include any written or oral statement made by the Borrower to the Company or the Company's agents after the date the Covered Loan was closed unless such statement was made under oath and penalty of perjury.

1.33	Date of Default - means the date on which a Covered Loan initially Defaults. For example, if a Borrower fails to pay the monthly installments due on January 1, February 1, March 1, and April 1, and all such installments remain unpaid as of the close of business on April 1, the Date of Default is January 1.

1.34	Declarations Page - means the signed document issued by the Company pursuant to Section 2.1(c) (Approval of Coverage) that extends the coverage indicated therein to the Covered Loans identified in the Covered Loan Schedule.

1.35	Deductible Amount - means, if applicable, the Total Initial Principal Balance multiplied by the Deductible Percentage, which dollar amount shall be specified on the Declarations Page of this Policy. If this amount is left blank or reads “N/A”, then no such amount applies.

1.36	Deductible Percentage - means, if applicable, the percentage so specified on the Declarations Page of this Policy. If this percentage is left blank or reads “N/A”, then no such percentage applies.

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1.37

Default - means the failure by a Borrower to pay when due a non-accelerated amount equal to or greater than one (1) regular scheduled payment due under the terms of a Covered Loan or the failure by a Borrower to pay all amounts due under a Covered Loan after the exercise by the Insured of the "due on sale" provision of such Covered Loan. Default does not mean any non-monetary default or violation of any other term or condition of the Covered Loan that would allow for acceleration of the debt or foreclosure or other action to realize upon the security provided by the Covered Loan. A Covered Loan is deemed to be in Default for the period for which, as of the close of business on the installment due date, a scheduled installment payment has not been made. For example, a Covered Loan is “four (4) months in Default” if the monthly installments due on January 1, February 1, March 1, and April 1 remain unpaid as of the close of business on April 1 or if a basis for acceleration exists for a continuous period of four (4) months.

1.38	Default Amount - means the unpaid principal balance of a Covered Loan on the Date of Default, excluding penalties, but including: (i) amounts added to such balance, if any, as a result of Negative Amortization or a Modification; and (ii) the amount, if any, that was discharged in a Chapter 13 bankruptcy “cramdown.”

1.39	Deficiency Judgment - means a court judgment imposing personal liability on the Borrower for the unpaid amount remaining under the terms of a Covered Loan when the proceeds of a foreclosure sale of the Property securing the Covered Loan were insufficient to fully satisfy the outstanding debt.

1.40	Eligibility Criteria - means those Covered Loan eligibility conditions, if any, specified on the Eligibility Criteria Schedule.

1.41	Eligibility Criteria Schedule - means that document (in either physical or electronic form) made a part of the Declarations Page of this Policy by the Company, which lists the Eligibility Criteria exactly as such criteria were agreed to in the Commitment Letter.

1.42

Environmental Impairment - means the presence within, on, under or above the Property of: (a) any condition giving rise to liability under the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq., as amended from time to time) or any similar federal law or law of the state or locality where the Property is located; or (b) any “Hazardous Waste” or “Regulated Substance” as those terms are defined by the Resource Conservation and Recovery Act (42 U.S.C. §6901, et seq., as amended from time to time) or any similar federal law or law of the state or locality where the Property is located. Environmental Impairment does not mean the presence of radon gas, lead paint or asbestos.

1.43	Exclusions - mean those exclusions and reductions from coverage set forth in Section 6 (Exclusions from Coverage).

1.44	First Deed of Trust - means a mortgage, deed of trust, or other instrument which

(a)	constitutes or is equivalent to a first lien or encumbrance on the Property, subject only to the Permitted Encumbrances, and

(b)	will allow the Person secured, directly or by a trustee or other Person, to foreclose on the Property (by power of sale, judicially or otherwise) upon Default to acquire title to the Property, subject only to the Permitted Encumbrances.

(a)	the Insured or any officer, employee or agent of the Insured, including any independent contractor of the Insured, or

(b)

any of the following Persons: the Loan Originator, the Seller, mortgage loan brokers, correspondent lenders, escrow or closing agents, attorneys, appraisers, appraisal companies, providers of any automated valuation model or other Property valuation, title insurance companies, credit reporting agencies, other third-party vendors performing origination services, and officers, employees, agents or independent contractors of any of the foregoing.

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(a)	Means title to the Property, free and clear of all liens and encumbrances, covenants, conditions, restrictions, easements and rights of redemption except for

(i)	any lien established by public bond, assessment or tax, when no installment, call or payment of or under such bond, assessment or tax is delinquent, or

(ii)	any municipal or zoning ordinances, building restrictions or other restrictions, covenants, or regulations of use, provided that the Property is in compliance with and/or its use is permitted by, and its intended use and occupancy is not materially adversely affected by, such restrictions, covenants, regulations or ordinances, or

(iii)	easements, rights of way, sewer and utility rights, mineral, oil or timber rights, or any impediments which will not have a materially adverse effect on either the transferability of the Property or the sale of the Property to a bona fide purchaser.

(i)	adequate means of ingress and egress, and

(ii)	the right to use public or private water and sewer facilities appertaining to the Property, whether such rights be by virtue of public easement or private grant, and

(iii)	the Property must be free of any lien due to Environmental Impairment unless otherwise agreed to by the Company.

1.50

Insurance Benefit - means the liability of the Company with respect to a Covered Loan calculated in accordance with Section 8.5 (Insurance Benefit); it being understood that a right to receive an Insurance Benefit shall be deemed to have arisen when a Default that results in a Claim first occurs while coverage is in force for a Covered Loan, notwithstanding that the amount of the Insurance Benefit is not then either presently ascertainable or due and payable. The Insurance Benefit payable shall be subject to the Deductible Amount and/or the Aggregate Loss Limit, if such amount and/or limit apply.

1.51	Insurance Benefit File - means the file specified in Section 4.9 (Insurance Benefit File).

1.52	Insured - means, with respect to any Covered Loan, Fannie Mae, either for its own benefit or as trustee for the benefit of a third party. The Insured will be designated on the Declarations Page of this Policy and may contract with a Servicer or Servicers to perform some or all of the Insured's obligations under this Policy.

1.53

Lapse Date - means the date on which coverage for a particular Covered Loan under this Policy is terminated for non-payment of premium in accordance with Section 3.2 (Lapse of Coverage for Covered Loan for Failure to Pay Subsequent Premium), which date is the first day of the coverage period (for example, monthly or annually) immediately following the coverage period through which the premium has been paid.

1.54	Liquidation Date - means the date the Property securing a Covered Loan was transferred in connection with a Default (i.e., deed-in-lieu of foreclosure or Third-Party Sale), as such date is reported by the Insured to the Company in the Monthly Servicing Report.

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(a)

If the Declarations Page of this Policy indicates a Specified Exposure Percentage greater than zero, the Loan Coverage Percentage shall be calculated as follows: [1-(Specified Exposure Percentage/Coverage Effective Date LTV)], rounded up to the next highest whole number percentage point. For example, for a Covered Loan with a Specified Exposure Percentage of 60.50% and a Coverage Effective Date LTV of 77.83%, the Loan Coverage Percentage is calculated as follows: [1-(60.50/77.83)] = 22.27%, which when rounded up to the next highest whole number percentage point = 23%.

(a)	If the Declarations Page of this Policy indicates a Specified Coverage Percentage(s) greater than zero, the Loan Coverage Percentage shall equal the applicable Specified Coverage Percentage.

1.61	Mixed-Use Property - means a dwelling that features distinct functional use for both residential and commercial business purposes including, for example but not limited to, a two-story structure in which one floor serves as a commercial business (e.g., shop, office space, etc.) and the other floor serves as residential space for the owner of the dwelling and the commercial business.

(a)	any change to the amount of indebtedness (for example, capitalization of interest arrearages), interest rate, interest rate adjustment period, use of escrow funds or other funds, or the term or the amortization schedule of a Covered Loan, unless such change is prescribed in the loan documents, or

(b)	any change in the Property that adversely affects its market value as security for the Covered Loan, or

(c)	the release of any Borrower from liability on a Covered Loan, other than in connection with a Covered Loan that is paid in full.

1.65	Monthly Servicing Report- means the report specified in Section 4.2 (Monthly Servicing Report).

1.67	Operations Manual - means the Insured's manual describing the content, format, and manner of delivery of the various reports and files required to be exchanged between the Insured and Company for the administration of this Policy, as such manual currently exists or as it may be periodically amended by the Insured with ninety (90) days advance written notice

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(a)	any lien established by public bond, assessment or tax, when no installment, call or payment of or under such bond, assessment or tax is delinquent and

(b)	any municipal and zoning ordinances and exceptions to title waived by the regulations of mortgage guaranty insurers with respect to mortgages on one-to-four family residences in effect on the date on which the Covered Loan was closed and all documents were executed and

(c)	any impediments which will not have a materially adverse effect on either the transferability of the Property or the sale of the Property to a bona fide purchaser.

1.78	Premium Refund File - means the file specified in Section 4.11 (Premium Refund File).

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1.80	Property Acquisition Aggregate Loss Limit Adjustment Percentage - means the percentage so specified on the Declarations Page of this Policy.

1.81	Property Acquisition Calculation - means the method of calculating the Claim Amount pursuant to Section 8.4(b) (Calculation of Claim Amount).

1.82	Qualified - means the Company is approved as a mortgage guaranty insurer pursuant to the Insured's Qualified Mortgage Insurer Approval Requirements, as such requirements currently exist or as they may be periodically amended, and meets any other eligibility requirements that may be specified in the Commitment Letter.

1.83

Reconciliation Event - means: (i) the following events in the life of this Policy the occurrence of which causes either the Company or the Insured to require a reconciliation in accordance with Section 4.13 (Reconciliation): exhaustion of the Deductible Amount; the occurrence of an Aggregate Loss Limit Step Down; and termination of this Policy pursuant to either Section 5.2 (Termination of Policy Prior to Exhaustion of Aggregate Loss Limit) or Section 5.3 (Termination of Policy Upon Exhaustion of Aggregate Loss Limit); or (ii) any anniversary of this Policy or other occurrence where both parties agree in writing that a reconciliation should occur.

1.84	Reconciliation File - means the file specified in Section 4.12 (Reconciliation File).

1.85	Reject File - means the file specified in Section 2.1(d) (Disapproval of Coverage).

(a)	a type of building which is designed for occupancy by not more than four (4) families, or

(b)	a single condominium or planned unit development unit, or

(c)	a Cooperative Property, or

(d)	a Mixed-Use Property, provided that the mixed-use represents a legal, permissible use of the Property under local zoning requirements, the Borrower occupies the Property as a principal residence, the Borrower is both the owner and operator of the commercial business located in the building, and the Property is primarily intended for residential use, or

(e)	any other single residence unit as to which Good and Merchantable Title may be held or conveyed freely under law (including but not limited to manufactured housing).

(f)	units that do not contain full-sized kitchen appliances or

(g)	units that are marketed for sale based on the availability of short term rental rates or

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(h)	properties that are marketed as hotels including, but not limited to, projects with units that are available to be rented on a daily basis or projects with names that include the words “hotel,” “resort,” “motel,” “inn,” or “lodge” or

(i)	a significant level of hotel-type services such as, but not limited to, a registration service to support short-term rentals, daily unit cleaning services, food and beverage services, and central or integrated telephone service or

(j)	units subject to timeshare or segmented ownership or

(k)	mandatory rental pooling agreements that require the unit owners to either rent their units or to give a management firm control over the occupancy of the units or

(l)	restrictions on the owner's ability to occupy the unit or

(m)	projects with non-incidental business operations owned or operated by the owners' association such as, but not limited to, a restaurant.

1.92

Servicing File - means, with respect to a Covered Loan, copies (either physical or electronic images) of the following documents created or received in connection with the servicing of the Covered Loan, if applicable: pay history; primary servicing screen print display (including collection screens/notes, unpaid principal balance, last payment date, due date, interest rate, principal and interest payment amount, Borrower name(s), and Property address); rent or receiver account history; assumption or buy-down agreement; loss mitigation documents (e.g., forbearance agreement, repayment plan, modification agreement, pre-foreclosure sale, deed-in-lieu of foreclosure, etc.); foreclosure documents; bankruptcy documents; documents pertaining to preservation and/or establishment of a Deficiency Judgment; Property valuation since origination (e.g., Appraisal, AVM, BPO, etc.); and hazard insurance claim settlement.

(a)	a sale of a Property arranged by the Servicer and/or by the Borrower, and approved by the Insured or by the Servicer on behalf of the Insured pursuant to a delegation of authority from the Insured, prior to foreclosure, or

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(b)	a foreclosure or trustee's sale of a Property to a third party at a price equal to or greater than the minimum bid established and submitted by the Servicer as provided in Section 7.2(j) (Foreclosure Bidding).

(a)	Set-up File--All loans to be covered under this Policy, whether acquired before, on, or after the Policy Effective Date, shall be identified in a Set-up File delivered to the Company by the Insured in accordance with Section 4.1 (Set-up File Delivery).

(b)	Application for Insurance--The inclusion of a loan in a Set-up File shall constitute an Application for coverage under this Policy and the Company shall extend coverage under this Policy to each loan listed in a Set-up File unless it disapproves such coverage as provided in subsection (d) below.

(c)

Approval of Coverage--The Company will indicate its approval of coverage under this Policy for a loan on the Set-up File by assigning a certificate number to such loan and including the certificate number for each such loan so approved on the Covered Loan Schedule. The Company will issue the Declarations Page, along with the Eligibility Criteria Schedule and the Covered Loan Schedule, to the Insured within thirty (30) days of receipt of the Set-up File. Each Covered Loan will be listed on the Covered Loan Schedule, together with the applicable Coverage Effective Date, Loan Coverage Percentage, and certificate number for each Covered Loan, and any other information pertaining thereto exactly as such information was provided on the Set-up File.

(d)

Disapproval of Coverage-- If a loan on the Set-up File does not meet the Eligibility Criteria, the Company will indicate its disapproval of coverage under this Policy for such loan by including it on the Reject File. The Company will issue the Reject File to the Insured in the format and manner specified in the Operations Manual within thirty (30) days of receipt of the Set-up File. The Reject File must specify the reason each loan does not meet the Eligibility Criteria and the Company shall promptly refund to the Insured any premiums previously received in connection with loans on the Reject File.

2.2	Cooperative Property--For a Covered Loan that is secured by a Cooperative Property the following definitions apply:

(i)

the Residential real property and all improvements on the real property which is owned by the cooperative housing corporation, and which is leased to the Borrower who holds an ownership or membership interest in such cooperative housing corporation, which lease and interest secure the related Covered Loan, together with all easements and appurtenances, all rights of access, all rights to use common areas, recreational and other facilities, and all replacements or additions to any of the foregoing, and

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(ii)

wherever the term “Property” is used and instead refers to the stock or membership certificate, the lease, or any other asset or right related thereto, it shall be deemed to be changed to “Collateral,” including for purposes of provisions relating to foreclosure, valuation or redemption; acquisition of title or other status of title, lien or ownership; or purchase, acquisition, sale, disposition or other conveyance by any Person.

2.3	Representations of the Insured--The Insured represents as follows:

(a)	(i) all statements made and information provided to the Company in an Application (including the Set-up File and also as such is related to continuation of coverage upon assumption of a Covered Loan), whether by the Insured, the Borrower, a First Party, or any other Person, have been made and presented for and on behalf of the Insured, and

(i)	such statements and information with respect to any Covered Loan are not false or misleading in any Material respect and the information and data relied upon by the Loan Originator to underwrite the Covered Loan are consistent in all Material respects with the information and data included in the Origination File for the Covered Loan, and

(ii)	each Covered Loan meets the Eligibility Criteria, and

(iii)

if an automated underwriting recommendation concerning the Covered Loan (including a recommendation under an automated underwriting system of the Insured) in connection with origination of the Covered Loan is disclosed to the Company in insuring the Covered Loan, all statements and information submitted through the automated underwriting system to obtain such recommendation are not false or misleading in any Material respect as of the date provided, and

(b)	and agrees that

(i)	the Company has issued coverage on the Covered Loan or has continued coverage on the Covered Loan in reliance on the accuracy and completeness of such statements and information and without any obligation to independently verify the statements and information submitted to it, and

(ii)	the Company's reliance on the representations in subsection (a) above survive the issuance of coverage on a Covered Loan or continuation of coverage, and

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(a)

Rescission - Subject to Section 2.5 (Limitation on Claim Denial, Company Initiated Cancellation and Rescission), if any of the Insured's representations in Section 2.3 (Representations of the Insured) are Materially false or misleading with respect to a Covered Loan, the Company shall have the right, to the extent permitted by Applicable Law, to issue a Rescission on a Covered Loan retroactively to the Coverage Effective Date (or, if the Misrepresentation occurs with respect to continuation of coverage upon assumption of a Covered Loan, to issue a Rescission retroactively to the date of such continuation). In the case of such Rescission, the Company shall return at that time all premiums paid for coverage after such applicable date.

(a)	Reprice - Notwithstanding Section 2.4(a) (Rescission), the Company will not issue a Rescission on a Covered Loan if all of the following conditions are met:

(i)	The conditions of Section 2.5(a) (Limitation on Claim Denial, Company Initiated Cancellation and Rescission) have not been met;

(ii)	Based on the true facts, the Covered Loan would have been eligible for coverage under this Policy, according to the Eligibility Criteria and as of the Coverage Effective Date, but would have received a different premium rate; and

(iii)

The Insured, within sixty (60) days following written notice from the Company that the conditions of this Section 2.4(b) (Reprice) have been met, pays the Company the additional premium owed (i.e., the appropriate monthly, annual, or single premium as agreed to by the Insured that would have been charged but for the Material Misrepresentation, less the premium actually charged) as reasonably calculated by the Company. If the Insured does not timely pay such additional premium, the Company will promptly issue a Rescission on the Covered Loan.

2.5

Limitation on Claim Denial, Company Initiated Cancellation and Rescission - except for Exclusions determined to relate to Covered Loans described in: Section 6.1 (Assumptions); 6.2 (Balloon Payment); Section 6.3 (Breach of Conditions and Insured's Obligations); Section 6.5 (Effective Date and Cancellation); Section 6.8 (Monthly Servicing Report); Section 6.9 (No First Deed of Trust); Section 6.10 (Physical Damage); Section 6.11 (Pre-Existing Environmental Impairment); Section 6.12 (Release of Indebtedness); and Section 6.13 (Residential Property), no Claim will be adjusted or denied, nor will coverage be cancelled or rescinded, by the Company for any issue arising out of the origination or closing of a Covered Loan provided all of the following conditions are met:

(a)

the Borrower: (i) made the first consecutive thirty-six (36) monthly payments of principal, interest, and escrow impounds in the amount and timeliness required under the Covered Loan with the Borrower's Own Funds; or (ii) had no 60-day or greater delinquencies and no more than two 30-day delinquencies during the thirty-six (36) months following the date the Covered Loan closed and was current as of the sixtieth (60th) month following the date the Covered Loan closed. A payment will be considered to be “consecutive” only if it is made prior to the date the next scheduled payment becomes due;

(b)	there is no Credible Evidence of Material Misrepresentation in the origination or closing of the Covered Loan involving any First Party with respect to a single Covered Loan if the Misrepresentation was made intentionally and with knowledge and the Company relied upon such Misrepresentation;

(c)

there is no Credible Evidence of Material Misrepresentation in the origination or closing of the Covered Loan involving two or more parties (i.e., the Borrower and one or more Pattern Parties, or two or more Pattern Parties) and the Covered Loan together with one or more other Covered Loans, loans, or related real estate transactions. For purposes of this Section 2.5(c), “Pattern Party” means a First Party as well as a Property seller, a builder, and a real estate agent; and

(d)	the Insured must have satisfied all of the requirements of Sections 8.1 (Claim Filing).

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2.6	Policy Type--

(a)	If the Policy Type designated on the Declarations Page of this Policy is an Accumulation Policy, the following provisions apply during the Accumulation Period of this Policy in addition to or, if specified, in place of, the other terms and conditions of this Policy:

(i)	from the Policy Effective Date until the Policy Settlement Date, the Total Initial Principal Balance shall be as designated on the Declarations Page of this Policy, notwithstanding the actual total initial principal balance of the Covered Loans as set forth on the Covered Loan Schedule to this Policy, and

(ii)	notwithstanding any other provision of this Policy to the contrary,

(iii)

effective on the Policy Settlement Date at the end of the Accumulation Period, the Total Initial Principal Balance as specified on the Declarations Page of this Policy shall be adjusted to be equal to the total initial principal balances of all Covered Loans listed on all Covered Loan Schedules issued prior to the Policy Settlement Date, regardless of whether the Covered Loan is covered by this Policy on the Policy Settlement Date, and the Covered Loan Schedule which is provided by the Company to the Insured effective on the Policy Settlement Date shall list all such Covered Loans, with a notation of loans which were initially covered by this Policy but are no longer covered as of the Policy Settlement Date, and

(iv)	no loan may be covered under this Policy which is not included in a Covered Loan Schedule dated before the Policy Settlement Date, and

(v)	any provisions that may be so specified in the Commitment Letter.

(b)	If the Policy Type designated on the Declarations Page is a Bulk Policy, any provisions that may be so specified in the Commitment Letter will apply in addition to or in place of the other terms and conditions of this Policy.

(c)	If the Policy Type designated on the Declarations Page is a Flow Policy, any provisions that may be so specified in the Commitment Letter will apply in addition to or in place of the other terms and conditions of this Policy.

(a)	Premiums--The premiums due and payable under this Policy shall be calculated and paid monthly, annually or in a single premium, as specified on the Declarations Page of this Policy.

(i)

Monthly Premium--If the premium is a monthly premium, whether or not all the Covered Loans have a single Coverage Effective Date, the initial premium for each Covered Loan shall be calculated by multiplying the Monthly Premium Rate by the Initial Principal Balance of each Covered Loan. The Insured will make its best effort to pay the initial premium within five (5) days of delivery of the Set-up File, but in all cases the initial premium will be paid within ten (10) days of delivery of the Set-up File. After that payment, all regular subsequent premiums shall be calculated by multiplying the Monthly Premium Rate by the then-current unpaid principal balance of each Covered Loan as of the day immediately preceding the first (1st) day of the month for which the subsequent premium is due and as such balance is reported in the Monthly Servicing Report. The Insured will pay regular subsequent premiums within thirty (30) days of the end of each month. If the regular renewal premium is not paid within such period, the Company will promptly notify the Insured that it has not been paid pursuant to Section 3.2 (Lapse of Coverage for Covered Loan for Failure to Pay Subsequent Premium; Reinstatement3.2 Lapse of Coverage for Covered Loan for Failure to Pay Subsequent Premium).

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(iii)

Single Premium--If the premium is a single premium, it shall be calculated by multiplying the Single Premium Rate by the Initial Principal Balance of each Covered Loan. The Insured will make its best effort to pay the premium within five (5) days of delivery of the Set-up File, but in all cases it will be paid within ten (10) days of delivery of the Set-up File. In this case, there will be no subsequent premiums.

(iv)	Other Premium Structures - If the parties agree to a premium structure other than one identified in subsection (a)(i), (a)(ii), or (a)(iii) above, then the applicable premium rate, method of calculating the premium payment, timing of premium payment, etc. shall be detailed in the Commitment Letter. In addition, the applicable premium rate will be specified on the Declarations Page of this Policy.

(v)	Tender of First Premium--Tender of the first premium for a Covered Loan will constitute a representation by the Insured for the purposes of Section 2.3 (Representations of the Insured) that any special conditions included by the Company in the Commitment Letter have been satisfied.

(b)

Changes in Unpaid Principal Balance--In the event the unpaid principal balance of a Covered Loan is increased or decreased pursuant to the terms of the note, mortgage, deed of trust or other instrument relating to the Covered Loan or in accordance with Section 7.2(a) (Modification of Covered Loans Not in Default and Not at Risk of Imminent Default) or Section 7.2(c) (Modification of Covered Loans in Default or at Risk of Imminent Default), the Insured shall pay subsequent premium at the Monthly Premium Rate or Annual Premium Rate applicable to the Covered Loan, on the changed unpaid principal balance as such balance is reported in the Monthly Servicing Report. In the case of a Monthly Premium, the Monthly Premium on the changed unpaid principal balance will be payable beginning with the month in which such unpaid principal balance changed, but shall be paid beginning with the month in which such changed unpaid principal balance is initially reported to the Insured by the Servicer. In the case of an Annual Premium, the Annual Premium on the changed unpaid principal balance will be paid beginning with the first Annual Premium that is due after the month in which such changed unpaid principal balance is initially reported to the Insured by the Servicer. In the event of a Default prior to the payment of the required premium for any increase in unpaid principal balance, such increase in unpaid principal balance will not be covered. This Section will not apply if a Single Premium Rate is applicable. In no event will a change in the unpaid principal balance of a Covered Loan change the Initial Principal Balance of such loan.

(c)	Effective Date of Coverage--Provided that premiums are paid by the Insured in accordance with this Section, coverage for the relevant Covered Loans shall be effective as of the applicable Coverage Effective Date and shall remain effective until terminated or canceled in accordance with this Policy.

(d)	End of Obligation to Pay Premium--The Insured's obligation to pay premium on a Covered Loan ceases on the last day of the month in which the Liquidation Date occurs.

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(e)	Payment Method--All premiums will be paid by the Insured by Automated Clearing House (ACH) of the Federal Reserve System, to the account specified in writing by the Company, or as otherwise agreed in writing between the Company and the Insured, and the Insured will concurrently with payment provide to the Company the Premium Payable File.

(f)	Premiums Non-refundable--All premiums are non-refundable except as otherwise provided in this Policy or in the Commitment Letter.

(a)

Lapse, Grace Period, Notice - If premium is not paid for a Covered Loan identified as active on the most recent Monthly Servicing Report as provided in this Policy, coverage with respect to such Covered Loan shall terminate, effective as of 12:01 a.m. on the Lapse Date, except coverage shall continue uninterrupted if payment is received by the Company within ninety (90) days after the Lapse Date, or if a non-payment notice is required by Applicable Law, within whatever period is specified in such non-payment notice or may be required by Applicable Law. If the Company does not receive a premium payment within sixty (60) days after the Lapse Date for any Covered Loan identified as active on the most current Monthly Servicing Report, it will promptly provide written notice to the Insured (at the e-mail box specified in writing by the Insured) and allow the Insured until the ninetieth (90th) day after the Lapse Date to cure the lapse before issuing a Company Initiated Cancellation.

(b)

Lapse Due to Erroneous Liquidation - If coverage lapses due to the erroneous reporting of a liquidation of a Covered Loan and the Insured wishes to reinstate coverage on such loan if it is subsequently reported as active on the Monthly Servicing Report, the Insured shall forward to the Company the premium payment(s) necessary to reinstate coverage and the Company will reinstate coverage without requiring any additional information.

(c)

Reinstatement After Lapse - If the Insured fails to pay premium in accordance with subsection (a), coverage lapses, and the Insured wishes to reinstate coverage after the Lapse Date, the Insured shall forward to the Company its request for reinstatement together with the appropriate premium payment and any information reasonably required by the Company. The Company will not agree to reinstate coverage of a loan if a Default has occurred after the Lapse Date. If the Company agrees to reinstate coverage on the relevant Covered Loan(s), such agreement will be evidenced by its acceptance of the premium payment; provided, however, that the Insured acknowledges that the Company deposits all payments immediately on receipt and, accordingly, the Insured agrees that the receipt and deposit of premium by the Company does not constitute acceptance by the Company until final reconciliation by the Company of the Company's records with such premium, which reconciliation will occur no later than sixty (60) days after receipt of premium by the Company.

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4.4	Servicing --

(a)	The Insured shall identify the Servicer of a Covered Loan as part of the Set-up File. The Company shall be notified of any change in Servicer through the Monthly Servicing Report. The specific data and Servicer information required to be shown on the Monthly Servicing Report will be specified in the Operations Manual.

(b)

To the extent consistent with the terms and conditions of this Policy, (i) Covered Loans will be serviced by a Servicer or Servicers selected by the Insured consistent with the Insured's normal business practices and in accordance with Section 4.5 (Change of Servicing) of this Policy and in accordance with servicing guidelines that are at least as rigorous as the Insured's Servicing Guide for non-insured loans and (ii) the Insured may give the Servicer delegated authority to perform loss mitigation and enter into workouts with Borrowers without the Insured's prior approval, which otherwise would be required by the Servicing Guide or other applicable servicing guidelines.

4.5	Change of Servicing--

(a)	If the servicing of a Covered Loan is sold, assigned or transferred, coverage under this Policy will continue in accordance with the terms of this Policy, provided that the Covered Loan is serviced by a Servicer approved by the Insured to service other loans of a similar nature owned or guaranteed by the Insured.

(b)

The Company may require a change of Servicer, provided, however, that the Company must first have (i) identified in writing to the Insured the material performance deficiencies necessitating the change and (ii) allowed a period of at least sixty (60) days after notice to the Insured for the Insured to remedy those deficiencies to the Company's satisfaction. If the deficiencies are not so remedied, the Company may require that the servicing be transferred in order to continue coverage and if it does so, it must notify the Insured in writing that the servicing must be transferred in order to continue coverage of affected Covered Loans and allow the Insured a minimum of ninety (90) days to effect the transfer to another Servicer acceptable to the Company to service the Covered Loans.

4.6

Change of Insured--If one or more Covered Loans are sold, assigned or transferred by the Insured, coverage under this Policy will not continue on such loans unless the Company consents in writing to the continuation of coverage. If the Company does not consent, then termination of coverage on such loans under this Section shall be effective as of the date of sale, assignment or transfer and there shall be no refund of premium.

4.7	Examinations and Audits--

(a)

Set-up File Variances and Remedies--The Set-up File may contain some loans not included in the Bid File and may not contain some loans included in the Bid File. If, within thirty (30) days from its receipt of the initial premium payment under this Policy, the Company determines that the Set-up File information Materially differs from the information in the Bid File used by the Company for pricing the coverage provided under this Policy, the Company will provide written notice to the Insured of the alleged Material difference and cooperate in good faith with the Insured to address such difference. A variance of the Total Initial Principal Balance of the Covered Loans from the Bid File to the Set-up File, shall not, in and of itself, be considered a Material difference; however, variances in individual loan characteristics may be Material on a case-by-case basis.

(i)	In the event a cure is not agreed upon between the Insured and the Company within thirty (30) days after

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(A)	adjust its premium rate on all Covered Loans to reflect the risk of the actual Covered Loans insured using the same pricing methodology used to price the loans included in the Bid File, or

(B)	reject coverage on the loans with respect to which the Set-up File contains information Materially different from the information in the Bid File, and include such loans on the Reject File, or

(C)	request substitutions of loans consistent with the Bid File.

(ii)

If the Company chooses to adjust its premium rate pursuant to subsection (a)(i)(A) above, and if the Insured does not agree that the adjusted premium reflects the risk of the actual loans to be insured, then no later than fifteen (15) days after notice is given to the Insured, the Insured may cancel this Policy retroactive to the Policy Effective Date. Such cancellation will apply to all Covered Loans regardless of Default status. The Company shall have no liability for any Claim under this Policy, including any Claim arising out of a Default in existence at cancellation. The Company shall promptly refund to the Insured all premiums paid in connection with this Policy. If the Company has paid a Claim with respect to any Covered Loan, the Insured shall promptly refund to the Company the amount of the Insurance Benefit paid.

(iii)	If the Company chooses to reject coverage on loans having Materially different information, or if the Company chooses to request substitution and the Insured has not substituted loans consistent with the Bid File to the Company's satisfaction within thirty (30) days after notice from the Company,

(A)	the Company shall promptly refund to the Insured all premiums paid on the rejected loans or Covered Loans, as applicable, and

(B)	the Insured shall promptly refund to the Company the amount of any Insurance Benefit paid, and

(C)	the Company shall have no liability under this Policy for any Claims, including any Claim arising out of a Default then in existence on the rejected loan or Covered Loan, as applicable.

(b)	Due Diligence Review and Remedies--

(i)

The Company will have the right to perform a due diligence review of Origination Files on a reasonable sample of Covered Loans at any time prior to the twelve (12) month anniversary of the Effective Date of this Policy with respect to a Bulk Policy or the Policy Settlement Date of an Accumulation Policy, provided that the Company notifies the Insured in writing of its intent to perform such a review. This Section 4.7(b) shall not apply to a Flow Policy. Notice of a due diligence review shall be directed as specified in the Commitment Letter. Due diligence reviews shall be conducted in the Company's offices utilizing physical or electronic images of the Origination Files. The purpose of any such due diligence review shall be limited to confirming that the Covered Loans comply with the Insured's representations as set forth in Section 2.3 (Representations of Insured) of this Policy. The Insured is required to provide the identified Origination Files to the Company within sixty (60) days of the Company's written notice. If the Insured fails to provide one or more Origination Files within such sixty (60) day period, the Company will promptly provide a second notice to the Insured, allowing the Insured to provide the missing Origination Files within an additional thirty (30) day period. If the Insured fails to provide the identified Origination Files to the Company within such additional thirty (30) day period, the Company and the Insured agree to meet within ten (10) Business Days to reach a mutually agreeable resolution. If no mutually agreed upon resolution can be reached, the Company may issue a Company Initiated Cancellation with respect to any Covered Loans for which Origination Files were not provided and there shall be no refund of premium. The Company's failure to use this right to perform due diligence shall in no way reduce, preclude or eliminate any of its other rights under this Policy.

(ii)	If the Company determines, based on a due diligence review, that a Covered Loan does not Materially

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(A)	adjust its premium rate on all Covered Loans to reflect the risk of the actual Covered Loans insured using the same pricing methodology used to price the loans included in the Bid File, or

(B)	issue a Rescission on the non-complying Covered Loans, or

(C)	request substitutions of loans consistent with the Insured's representations.

(iii)

If the Company chooses to adjust its premium rate pursuant to subsection (b)(ii)(A) above, and if the Insured does not agree that the adjusted premium reflects the risk of the actual Covered Loans insured, then no later than forty-five (45) days after such notice is given to the Insured, the Insured may cancel the Policy retroactive to the Policy Effective Date. Such cancellation will apply to all Covered Loans regardless of Default status. After such cancellation, the Company shall have no liability for any Claim under this Policy. The Company shall promptly refund to the Insured all premiums paid in connection with the Covered Loans. If the Company has already paid an Insurance Benefit with respect to any Covered Loan, the Insured shall promptly refund to the Company the amount of the Insurance Benefit paid.

(iv)	If the Company chooses to issue a Rescission on the non-complying Covered Loans pursuant to subsection (b)(ii)(B), or if the Company chooses to request substitution pursuant to subsection (b)(ii)(C) and the Insured has not substituted loans consistent with its representations to the Company's satisfaction within thirty (30) days after notice from the Company, with respect to such Covered Loans

(A)	the Company shall promptly refund to the Insured all premiums paid, and

(B)	the Insured shall promptly refund to the Company the amount of any Insurance Benefit paid, and

(C)	the Company shall have no liability under this Policy for any Claim, including any Claim arising out of a Default then in existence on the applicable Covered Loan.

(c)

Examinations and Requests for Origination Files and Servicing Files - At any time prior to the Insured filing a Claim pursuant to Section 8.1 (Claim Filing), the Company will have the right to request from the Insured copies of individual Origination Files and/or Servicing Files as specifically needed by the Company to perform quality control reviews or investigations. The Insured is required to provide such Origination Files and/or Servicing Files within sixty (60) days of the date of the Company's written request, provided, however, that if the Company requests in any one month files for more than three percent (3%) of the number of Covered Loans currently insured under this Policy, the Insured and the Company shall agree on the timing for production of such files. If the Insured fails to provide a copy of an Origination File and/or Servicing File within such sixty (60) day period, the Company will promptly provide a second notice to the Insured, allowing the Insured to provide the Origination File and/or Servicing File within an additional thirty (30) day period. If the Insured fails to make the identified Origination File and/or Servicing File available to the Company within such additional thirty (30) day period, the Company may cancel coverage on the related Covered Loan and there shall be no refund of premium.

(d)

Examinations of Servicing and Loss Mitigation--The Company shall have the right to perform periodic examinations of the Insured and its Servicer to confirm that servicing and loss mitigation actions are being performed by the Servicer consistent with this Policy. The Insured and the Servicer shall actively cooperate with and assist the Company in performing periodic examinations. In the event such reviews identify Material noncompliance, upon written notice by the Company to the Insured, the Insured will exercise its best efforts to remedy such noncompliance and cause the identified servicing deficiencies to be corrected. In the event the deficiencies are not corrected to the Company's satisfaction, the Company shall have the right to (i) withdraw its approval of the Servicer pursuant to Section 4.5(b) (Change of Servicing), or (ii) adjust any Claim as provided in Section 6.3 (Breach of Conditions and Insured's Obligations).

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4.8	Co-ordination and Duplication of Insurance Benefits--The coverage under this Policy shall be excess over any other mortgage guaranty insurance that may apply to a Covered Loan, regardless of the type of or the effective date of such other coverage.

4.9

Insurance Benefit File-- The Insurance Benefit File will be delivered by the Company to the Insured by the fifth (5th) Business Day of the month following the month to which it relates and in the format and manner specified in the Operations Manual. This file is used to provide the Insured with loan level Insurance Benefit payment information, including, but not limited to, the amount and date of Insurance Benefits paid by the Company under this Policy.

4.10

Premium Payable File-- If the applicable premium is a monthly premium, the Premium Payable File will be delivered by the Insured to the Company by the last Business Day of the month following the month to which it relates and in the format and manner specified in the Operations Manual. If the applicable premium is an annual premium, the Premium Payable File will be delivered by the Insured to the Company by the last Business Day of the month following the anniversary of the applicable Coverage Effective Date. If the applicable premium is a single premium, the Premium Payable File will be delivered by the Insured to the Company within ten (10) days of the Insured's delivery to the Company of the Set-up File. The Premium Payable File is used to provide the Company with loan level information regarding premium payments being made by the Insured in connection with Covered Loans.

4.12

Reconciliation File - The Reconciliation File will be delivered by the Company to the Insured by the fifth (5th) Business Day following a Reconciliation Event and in the format and manner specified in the Operations Manual. This file is used to provide the Insured with loan level information necessary to periodically reconcile with the Company the Covered Loans insured under this Policy at a point in time, including, but not limited to if applicable, the remaining Covered Loan population, the remaining Deductible Amount, the remaining Aggregate Loss Limit, and the Aggregate Loss Limit Step Down.

4.13

Reconciliation - At least ninety (90) days prior to the expected occurrence of a Reconciliation Event, the Company will deliver to the Insured a Reconciliation File. Within thirty (30) days of its receipt of a Reconciliation File, the Insured will identify any variances from the data in its systems and notify the Company in writing of any such variances. Within thirty (30) days of its receipt of the Insured's written notice of any variances, the Company and the Insured must reconcile the variances and agree to such reconciliation in writing (“Reconciliation Agreement”). The Reconciliation Agreement will be definitive and form the binding basis of any subsequent reconciliation. If a reconciliation is still in process and the Company reasonably determines that the Maturity Date has been reached or the Aggregate Loss Limit has been exhausted, the Company shall suspend paying Insurance Benefits until the reconciliation is complete and any such suspension shall toll the application of Section 8.7 (Failure to Timely Pay Insurance Benefit).

5	Termination and Cancellation--

(a)	Provided that all applicable premiums have been paid with respect to a Covered Loan, coverage shall continue until, and shall automatically terminate upon, the first to occur of the following events:

(i)	the Covered Loan is paid in full;

(ii)	the Company pays the Insured the Insurance Benefit with respect to the Covered Loan, or, if applicable per

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(iii)	the Covered Loan is required to be and is repurchased from the Insured by a Person pursuant to a written agreement as that agreement is in effect between the Insured and such Person at the time of acquisition of the Covered Loan by the Insured;

(iv)	the Insured sells, assigns or transfers the Covered Loan without obtaining consent of the Company to continue coverage under this Policy pursuant to Section 4.6 (Change of Insured); or

(v)	the Company issues a Rescission or Company Initiated Cancellation with respect to the Covered Loan pursuant to its rights under this Policy.

5.2

Termination of Policy Prior to Exhaustion of Aggregate Loss Limit - If a Maturity Date is applicable per the Declarations Page and any applicable Aggregate Loss Limit has not been reached, this Policy will automatically terminate on the Maturity Date. If the Company believes that the Maturity Date has occurred, it will provide the Insured with the Reconciliation File and cease paying Insurance Benefits until the reconciliation specified in Section 4.13 (Reconciliation) is complete. Upon termination:

(a)	No additional premiums under this Policy shall be due or payable, except in the case of a monthly premium, any premium due for the month in which termination occurs shall be paid;

(b)

Subject to subsections (a) and (e) of this Section 5.2, the Insured is relieved of any and all obligations and waives any and all rights it has under this Policy with respect to any Covered Loan, except that any Covered Loan in Default on the Maturity Date shall remain covered under this Policy until it cures, in which case the Company shall have no liability for any Claim arising out of any subsequent Default;

(c)	In the case of an annual premium, the Company shall refund to the Insured the pro-rated portion of such premium related to the months following termination;

(d)

Subject to subsection (c) and (e) of this Section 5.2, the Company is relieved of any and all obligations and waives any and all rights it has under this Policy with respect to any Covered Loan, except that any Covered Loan in Default on the Maturity Date shall remain covered under this Policy until it cures, in which case the Company shall have no liability for any Claim arising out of any subsequent Default; and

(e)

With respect to any Covered Loan in Default on the Maturity Date where the Company issues a Claim Denial or Rescission, or adjusts the Claim Amount or curtails the Insurance Benefit, before or after the Maturity Date, the Insured may still appeal the adverse action pursuant to Section 8.9 (Appeals of Adverse Actions) and, if the Insured's appeal is successful, the Company will pay the applicable amount within the remaining Claim Settlement Period.

5.3

Termination of Policy Upon Exhaustion of Aggregate Loss Limit - If an Aggregate Loss Limit is applicable per the Declarations Page, this Policy will automatically terminate on the last day of the month in which the Aggregate Loss Limit is reached. If the Company believes that the Aggregate Loss Limit has been reached, it will provide the Insured with the Reconciliation File and cease paying Insurance Benefits until the reconciliation specified in Section 4.13 (Reconciliation) is complete. Upon termination:

(a)	No additional premiums under this Policy shall be due or payable, except in the case of a monthly premium, any premium due for the month in which termination occurs shall be paid;

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(b)	Subject to subsection (a) of this Section 5.3, the Insured is relieved of any and all obligations and waives any and all rights it has under this Policy with respect to any Covered Loan, whether in Default or not, whether a Claim has been filed or not, and whether an Insurance Benefit has been paid or not;

(c)	In the case of an annual premium, the Company shall refund to the Insured the pro-rated portion of such premium related to the months following termination;

(d)	Subject to subsection (c) of this Section 5.3, the Company is relieved of any and all obligations and waives any and all rights it has under this Policy with respect to any Covered Loan, whether in Default or not, whether a Claim has been filed or not, and whether an Insurance Benefit has been paid or not;

(e)	The Insured withdraws any Claims filed on or prior to the date of termination that are still pending as of the date of termination, and will file no Claims after the date of termination; and

(f)	With respect to any Covered Loan where the Company issued a Rescission pursuant to Section 2.4 (Company's Remedies for Misrepresentation) prior to the date of termination, neither the Insured nor any of the Insured's predecessors or successors in interest may rebut the Rescission and coverage will not be reinstated.

5.4	Cancellation of Coverage on a Covered Loan by the Insured--Except as provided in Section 5.1 (Termination of Coverage on a Covered Loan), the Insured may not cancel coverage on a Covered Loan unless permitted in writing by the Company. Cancellation of coverage on a Covered Loan will not cancel this Policy.

5.5	Cancellation of Policy by the Company--

(a)	With respect to an Accumulation Policy or a Bulk Policy, the Company may not cancel this Policy so long as premiums have been paid in accordance with this Policy and coverage on any Covered Loan remains in force.

(b)

With respect to a Flow Policy, the Company may cancel this Policy on ninety (90) days prior written notice to the Insured; provided, however, that Covered Loans with a Coverage Effective Date prior to the cancellation date of this Policy shall continue to have coverage so long as all premiums are paid pursuant to, and subject to all other terms and conditions of, this Policy, and further provided that loans on which an initial loan application has been received by a Loan Originator prior to such cancellation date will be eligible to become a Covered Loan, but loans for which such application is received after such date will not be so eligible. After receipt of the notice, the Insured shall not enter into any new contracts to purchase loans that will be insured under this Policy.

5.6

Cancellation of Policy by the Insured5.3 Cancellation of Policy-- With respect to an Accumulation Policy, a Bulk Policy, or a Flow Policy, the Insured may cancel this Policy if the Company ceases to be Qualified and provides thirty (30) days prior written notice to the Company. In the event of such cancellation, the effective date of the cancellation will be deemed to be the Maturity Date and the Policy will terminate in accordance with Section 5.2 (Termination of Policy Prior to Exhaustion of Aggregate Loss Limit), provided, however, that if a single premium was paid and there is no actual Maturity Date, the unearned portion of the single premium, calculated in accordance with the Company's published refund schedule in effect on the Policy Effective Date, will be refunded to the Insured.

6.1

Assumptions - Any Claim if a Covered Loan is assumed and the Borrower is released from liability under the Covered Loan unless (i) the Insured approved such assumption and release in advance; or (ii) the Insured, under the Covered Loan or Applicable Law, cannot exercise a "due‑on‑sale" clause; or (iii) the Insured is obligated to consent to such assumption under the terms of the Covered Loan or Applicable Law; or (iv) the Servicing Guide provides for such assumption.

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(a)	materially contributed to the Default resulting in such Claim, or,

(b)	increased the Company's loss, provided that if the Company can reasonably determine the amount of such increase, the Company will not issue a Claim Denial, but the Claim Amount will be reduced to the extent of such amount.

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(a)	existed on or prior to the date on which the related Covered Loan was closed (whether or not known to the Borrower, Insured, or Servicer) if the existence of the Environmental Impairment was not disclosed in the Application and

(b)	was the principal cause of the Default and has made the principal Residential structure on the Property not Habitable.

(a)	this Exclusion shall only apply to the extent and amount of such release, and

(b)	this Exclusion shall not apply where the release of the Borrower is the result of the Covered Loan having been divided into secured and unsecured portions pursuant to proceedings under the federal bankruptcy laws (a so-called Chapter 13 “cram-down”) so long as all other conditions of this Policy have been met, and

(c)	in the event the Borrower failed to assert a defense, the Company has the burden of proof to show that the Borrower would have been reasonably likely to prevail if it had asserted a defense against the Insured.

7	Loss Mitigation--Except as provided in Section 7.2(a) (Modification of Covered Loans Not in Default and Not at Risk of Imminent Default) and unless otherwise provided for in the Commitment Letter, this section shall apply to all Covered Loans in Default and at risk of imminent Default.

(a)	The Insured shall not administer or apply its Servicing Guide guidelines for loss mitigation to Covered Loans in a manner that is inconsistent with or different from such administration or application of such guidelines to any non-insured loan, if such inconsistency or difference may (i) materially contribute to a Default and result in a Claim or (ii) increase the Claim Amount.

(b)

The Insured shall actively cooperate with and assist the Company to prevent and mitigate a loss, including good faith efforts by the Insured to, as appropriate: obtain a cure of the Default; collect monies due under the Covered Loan; pursue one or more of the loss mitigation actions specified in Section 7.2 (Specific Loss Mitigation Actions); inspect and appraise the Property; and effectuate the early disposition of the Property.

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(a)	Modification of Covered Loans Not in Default and Not at Risk of Imminent Default-The terms of a Covered Loan not in Default and not at risk of imminent Default may be changed by agreement between the Insured and a Borrower and without the prior approval of the Company, and the Borrower may retain possession of the Property, if all of the following conditions are met:

(i)	no broker's price opinion or Appraisal of the Property shall be required, and

(ii)	any extension of the loan term may not result in a total loan term in excess of four hundred eighty (480) months from the origination date (that is, including the months the Covered Loan has already been in existence), and

(iii)	fixed-rate Covered Loans must remain fixed-rate, except for step-rate Covered Loans, and

(iv)	the Borrower's financial position must be improved, and

(v)	the unpaid principal balance of the Covered Loan after Modification may not exceed the unpaid principal balance prior to Modification.

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(h)	Forbearance - The Insured may consent to a temporary reduction or suspension of Covered Loan payments from the Borrower for a specified period.

(i)

Low-Balance Covered Loans - The Insured may choose not to foreclose on Covered Loans where the market value of the Property is less than or equal to thirty thousand dollars ($30,000). In such cases: (i) the Insured is not required to refer the Covered Loan to an attorney for the commencement of Appropriate Proceedings pursuant to subsection (a) of this Section; (ii) the accrual of accumulated delinquent interest includable in any subsequent Claim related to the Covered Loan, otherwise calculable in accordance with Section 8.5 (Calculation of Claim Amount), will be suspended as of the Date of Default; and (iii) no Claim with respect to such Covered Loan may be filed with the Company unless a Third-Party Sale by the Borrower is completed within four (4) years from the Date of Default.

(j)	Foreclosure Bidding-At foreclosure, the Insured will bid in accordance with the Insured's Servicing Guide.

(k)	Advances - The Insured must advance, each as due and payable, unless otherwise prohibited by Applicable Law, the following:

(i)	normal and customary hazard and/or homeowner's insurance premiums as required by the Servicing Guide;

(ii)	taxes, assessments and other public charges imposed on the Property;

(iii)	solely in instances of Default, commercially reasonable and necessary expenses for protection and preservation of the Property;

(iv)	condominium fees, homeowner association dues and other pro-rated portions of shared fees related to the common areas attendant to the Property, to the extent ascertainable and necessary to maintain the priority of the first lien;

(v)	if the Covered Loan is secured by a Cooperative Property, maintenance fees, cooperative association dues and other pro-rated portions of shared fees related to the common areas attendant to the Cooperative Property, to the extent ascertainable; and

(vi)	commercially reasonable and necessary expenses to complete Appropriate Proceedings, including court costs, actual attorney's fees, and the cost to evict occupants (including moving expenses where required by Applicable Law to be paid by the evicting party).

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(a)	Claim Submission. A Claim must be submitted by the Insured to the Company within sixty (60) days of the date a Third-Party Sale or REO Sale is closed.

(b)	Required Documentation. Claims may either be submitted electronically or the Company may be required to retrieve Claims directly from the Insured's systems. Claims may reference one or more Covered Loans and must include the following with respect to each Covered Loan:

(i)	Covered Loan/Insured loan number;

(ii)	mortgage guaranty insurance certificate number;

(iii)	Property address;

(iv)	Claim Amount and Insurance Benefit calculations;

(v)	date the Third-Party Sale or REO Sale closed;

(a)

Claim Perfection. The Claim shall be considered perfected when the Company receives the items listed in subsection (b), unless within twenty (20) days thereafter the Company requests from the Insured those required items in subsection (b) that were not received, in which case the Claim Settlement Period shall be suspended until the Company receives all such missing items. The Claim shall be considered perfected on the date the Company receives all such missing items. If the Company does not receive any missing items within thirty (30) days of its request, the Company will promptly send a courtesy reminder notice to the Insured. No Claim Denial may be issued by the Company for failure of the Insured to produce all items listed in subsection (b) in less than one hundred twenty (120) days following the Claim filing date.

(b)

Failure to Perfect Claim. If the Insured files a Claim within the time required by subsection (a) but such Claim is not perfected within one hundred twenty (120) days of its filing, irrespective of any request by the Company for items under subsection (b) and irrespective of any interim suspension of the Claim Settlement Period, then the Company will issue a Claim Denial and explain the reason for such denial on the explanation of benefits.

(c)

Waiver of Insurance Benefits. If the Insured fails to file a perfected Claim within the time required by subsection (c), but does file a perfected Claim within one (1) year after the applicable event described in subsection (a), the Company shall re-open and process such perfected Claim under this Policy; however, there shall be no further interest or Advances included in the Claim Amount for periods following the subsection (a) deadline to file the Claim. If the Insured fails to file a perfected Claim within the one (1) year period specified, such failure shall be deemed an election by the Insured to waive its right to any Insurance Benefit under this Policy with respect to such Covered Loan.

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(a)

Third-Party Sales by the Borrower-If the Covered Loan is in Default or Default is imminent and the Borrower receives any third-party offer to purchase the Property prior to a trustee's sale or foreclosure sale, the Insured may, but does not have to, approve a Third-Party Sale pursuant to Section 7.2(d) (Third-Party Sales by the Borrower). If the Insured approves such sale, the Insurance Benefit shall be paid pursuant Section 8.5(a) (Third-Party Sales and Approved REO Sales).

(b)	Third-Party Sales at Foreclosure-In the event of a Third-Party Sale at a trustee's sale or foreclosure sale, the Insurance Benefit shall be paid pursuant to Section 8.5(a) (Third-Party Sales and Approved REO Sales).

(c)

REO Sales--In the event the Insured receives any third-party offer to purchase the Property after the Insured has acquired Borrower's Title and the Insured desires to accept such offer, the Insured shall promptly notify the Company in writing of the terms of such offer. The Company shall either approve or disapprove the offer within five (5) Business Days of receipt of notice of such offer by the Company and such approval or disapproval shall be final. In the event the Company fails to respond within five (5) Business Days, the Company shall be deemed to have approved the offer. Approval by the Company may not unreasonably be withheld.

(d)	Lease of Property - The Company acknowledges that the Insured may lease the Property to the Borrower or to a third-party following a foreclosure sale or a voluntary conveyance by the Borrower, in which case the marketing and sale of the Property will be delayed until the lease is terminated.

(e)

Marketing Information and Access to the Property--Following acquisition of Borrower's Title by the Insured and extending until the last day of the Claim Settlement Period, the Insured shall authorize its agent, when requested by the Company, to release marketing information for the Property to the Company, and the Insured shall grant the Company reasonable access to the Property in order to inspect and/or value the Property.

(f)

Claims with Primary Coverage - If a Covered Loan has primary mortgage guaranty insurance coverage, the Insured or the Servicer, as applicable, must first submit any claim for loss due under such coverage. This Section 8.2(e) shall not apply if the Covered Loan had primary mortgage guaranty insurance coverage, but such coverage was properly terminated or cancelled as required by Applicable Law or as permitted by the Servicing Guide.

(a)	The Loss-on-Sale Calculation (in the event of a Third-Party Sale or an approved REO Sale as described in Section 8.5(a) (Third-Party Sales and Approved REO Sales) shall be the sum of:

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(i)	the Default Amount, and

(ii)

the amount equal to the sum of (a) interest at the contract rate stated in the Covered Loan computed on the Default Amount from the Date of Default until the date of the Third-Party Sale or REO Sale, and (b) thereafter through the date the Insurance Benefit is paid, interest at the contract rate stated in the Covered Loan computed on the Default Amount as such amount is reduced by the net proceeds of the Third-Party Sale or REO Sale, but excluding late charges or other penalties or changes to the contract rate by reason of Default, provided, however, that in no event will the time for which accumulated delinquent interest is included in the Claim Amount exceed forty five (45) months, and

(iii)

the amount of Advances paid by the Insured pursuant to Section 7.2(k) (Advances) prorated through the date the Claim is submitted, provided, however, that attorney fees shall not exceed: (a) the lesser of five percent (5%) of the Default Amount and the accumulated delinquent interest calculated in (i) and (ii) above, or six thousand dollars ($6,000), for Covered Loans having Default Amounts less than two hundred thousand dollars ($200,000); and (b) three percent (3%) of the Default Amount and the accumulated delinquent interest calculated in (i) and (ii) above for Covered Loans having Default Amounts equal to or greater than two hundred thousand dollars ($200,000),

(iv)	the amount of all rents and other payments (excluding proceeds of hazard and/or homeowner's insurance) collected or received by the Insured, prior to the earlier of the date the Claim is submitted or required to be submitted, and that the Insured is entitled to retain, which are derived from or in any way related to the Property, and

(v)	the amount of cash remaining in any escrow account as of the last payment date, if such cash secures the debt, and

(vi)	the amount of cash to which the Insured has retained the right of possession as security for the Covered Loan and all sums as to which the Insured has the right of set-off, and

(vii)	the amount paid under applicable hazard and/or homeowner's coverage policies which has not been applied to the cost of restoring and repairing the Property or which has not been applied to the payment of the Covered Loan, and

(viii)	the net proceeds of the Third-Party Sale or REO Sale, consisting of the gross sales price less all reasonable and necessary costs incurred in obtaining and closing the sale, and

(ix)	any amounts claimed by the Insured to the extent they are excluded from the Claim Amount by reason of Section 6 (Exclusions from Coverage) and

(x)	the amount due to the Insured under the terms of any primary mortgage guaranty insurance coverage on the Covered Loan, based on full compliance with the terms of such coverage and irrespective of whether the Insured has actually received such amount.

(b)	The Property Acquisition Calculation (in the event of a disapproved REO Sale as described in Section 8.5(b) (Disapproved REO Sales) shall be the sum of:

(i)	the Default Amount, and

(ii)

the amount equal to interest at the contract rate stated in the Covered Loan computed on the Default Amount from the Date of Default through the date the Insurance Benefit is paid in connection with the Company's acquisition of the Property, but excluding late charges or other penalties or changes to the contract rate by reason of Default, provided, however, that in no event will the time for which accumulated delinquent interest is included in the Claim Amount exceed forty five (45) months, and

(iii)	the amount of Advances paid by the Insured pursuant to Section 7.2(k) (Advances), provided, however, that

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(iv)	the amount of all rents and other payments (excluding proceeds of hazard and/or homeowner's insurance) collected or received by the Insured, prior to the earlier of the date the Claim is submitted or required to be submitted, and that the Insured is entitled to retain, which are derived from or in any way related to the Property, and

(v)	the amount of cash remaining in any escrow account as of the last payment date, if the Insured has a right to such cash, and

(vi)	the amount of cash to which the Insured has retained the right of possession as security for the Covered Loan and all sums as to which the Insured has the right of set-off, and

(vii)	the amount paid under applicable hazard and/or homeowner's coverage policies which has not been applied to the cost of restoring and repairing the Property or to the payment of the Covered Loan, and

(viii)	any amounts claimed by the Insured to the extent they are excluded from the Claim Amount by reason of Section 6 (Exclusions from Coverage), and

(ix)	the amount due to the Insured under the terms of any primary mortgage guaranty insurance coverage on the Covered Loan, based on full compliance with the terms of such coverage and irrespective of whether the Insured has actually received such amount.

(a)

Third-Party Sales and Approved REO Sales-If the Property is sold pursuant to Section 8.2(a) (Third-Party Sales by Borrower), 8.2(b) (Third-Party Sales at Foreclosure), or 8.2(c) (REO Sales) where the Company approved or is deemed to have approved such REO Sale, the Company will pay the Insured, as the Insurance Benefit, the lesser of: (i) the Loan Coverage Percentage multiplied by the Initial Principal Balance; and (ii) the Loss-on-Sale Calculation.

(b)

Disapproved REO Sales - If the Company disapproves an REO Sale pursuant to Section 8.2(c) (REO Sales), the Company must acquire the Property. The Company will pay the Insured, as the Insurance Benefit, the Property Acquisition Calculation and receive in exchange therefore: (i) a duly and properly-executed and recordable deed, in customary form and containing customary warranties and covenants, conveying to the Company or its designee Good and Merchantable Title to the Property; (ii) a title insurance policy or attorney's opinion of title reasonably acceptable to the Company, confirming that the Insured has and can convey to the Company or its designee Good and Merchantable Title to the Property; and (iii) possession of the Property, which is full and undisputed occupancy and control of the Property by the Company. The Company must ensure that such deed is sent to the appropriate local recording office for recordation within sixty (60) days of receipt.

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(a)	if the Insurance Benefit is paid on or before the sixtieth (60th) day following the last day of the Claim Settlement Period, the rate due upon the Covered Loan, commencing on and including the day immediately following the last day of the Claim Settlement Period up to but excluding the date on which the Insurance Benefit is paid; or

(b)

if the Insurance Benefit is paid after the sixtieth (60th) day following the last day of the Claim Settlement Period, the rate due upon the Covered Loan, commencing on and including the day immediately following the last day of the Claim Settlement Period up to and including the sixtieth (60th) day following the Claim Settlement Period, plus the rate due upon the Covered Loan plus ten (10) percentage points (“Penalty Interest”), commencing on and including the day immediately following the sixtieth (60th) day following last day of the Claim Settlement Period up to but excluding the date on which the Insurance Benefit is paid. Penalty Interest shall not be payable on the Insurance Benefit if the Company's failure to pay within sixty (60) days following the last day of the Claim Settlement Period is the result of (i) the failure of payment systems beyond the control of the Company or (ii) a Rescission of coverage with respect to a Covered Loan that the Company later determines to reinstate after receiving additional information from the Insured.

(a)	Insured must submit a reasonably detailed written appeal to the Company within one hundred twenty (120) days of its receipt of the Company's adverse action notice. The appeal must include documentation that supports the Insured's belief that the Company's action was improper.

(b)

The Company must review the documentation and notify the Insured of its decision within sixty (60) days of its receipt of the appeal. If the Company will not reverse the adverse action, its notification to the Insured must include a reasonably detailed explanation. The Company's decision will be final with respect to the stated reason for the adverse action, subject to any arbitration or suit that the Insured may pursue in accordance with Section 9.4 (Arbitration) or Section 9.5 (Suit).

(c)

If a Claim has been filed and the Company reinstates coverage (in the case of Company Initiated Cancellation or a Rescission) or reverses the action (in the case of a Claim Amount adjustment, an Insurance Benefit curtailment, or a Claim Denial), the Claim will be deemed perfected as of the date of the reinstatement or reversal notice and the Company must pay the appropriate Insurance Benefit within the remaining Claim Settlement Period.

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(a)

Pursuit of Deficiency Judgment - If either the Insured or the Company desires to pursue a Deficiency Judgment against a Borrower in connection with a Covered Loan, the party seeking to pursue such Deficiency Judgment shall contact the other party to determine whether the Deficiency Judgment should be sought for the account of both parties or only for its own account; provided, however, that if under Applicable Law pursuit of a Deficiency Judgment will substantially increase the expenses associated with foreclosure, the Insured shall contact the Company prior to the initiation of a form of foreclosure proceedings that would increase the costs of foreclosure to determine whether a Deficiency Judgment is to be sought and, if so, whether such Deficiency Judgment is to be sought for the account of both parties or only for the account of the Company or the Insured. In connection with the determination regarding pursuit of a Deficiency Judgment, each of the Insured and the Company must provide the other with all information it may have concerning the assets of the Borrower, possible defenses, and other information material to the decision.

(b)

Parties Determination - If the parties determine that the Deficiency Judgment shall be pursued solely for the account of the Company, the Company shall be subrogated to all of the Insured's rights of recovery against the Borrower and any other Person relating to the Covered Loan or the Property with respect to which the Company has paid an Insurance Benefit and shall be responsible for all costs associated with pursuing such Deficiency Judgment. If the parties determine that the Deficiency Judgment shall be pursued solely for the account of the Insured, or if the Company is prohibited by law from pursuing the Deficiency Judgment, the Company shall not be subrogated to any of the Insured's rights of recovery against the Borrower and any other Person relating to the Covered Loan or the Property with respect to which the Company has paid an Insurance Benefit and the Insured shall be responsible for all costs associated with pursuing the Deficiency Judgment. If the parties determine that the Deficiency Judgment shall be pursued for the account of both parties, the Company shall be subrogated pro rata to such rights of recovery and shall be responsible for a pro rata portion of the associated costs. The Company's pro rata portion of recovery rights and associated costs shall be a fraction, the numerator of which shall be the amount of the Insurance Benefit paid, and the denominator of which shall be the amount of the Total Loss.

(c)

Cooperation - The Insured shall cooperate with the Company in any action or proceeding to enforce any rights of recovery or other remedies that the Company may have or may have acquired pursuant to this Section 9.1 (Subrogation) against the Borrower or any other Person and shall refrain from any action, either before or after payment of an Insurance Benefit hereunder, that shall in any manner prejudice such rights.

(b)

If the Insured so directs the Company in writing in the manner provided for in this Section, the Company shall provide notice to the Servicer or any other Person in lieu of or in addition to providing notice to the Insured. All notices to the Servicer or any other Person designated by the Insured to receive notices shall be sent to the last known address or facsimile number for the Servicer or such other Persons, as the case may be, as reflected in the records of the Company (provided that the Company shall use its best efforts to confirm telephonically or otherwise with the Servicer of other Person designated by the Insured the accuracy of the facsimile number used).

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(a)

Each of the parties to this Policy consents to the sole and exclusive jurisdiction of the courts of the District of Columbia and/or the federal courts sitting in the District of Columbia, in the case of any dispute or other matter arising under this Policy which is not disposed of with finality under Section 9.4 (Arbitration). No suit or action for recovery of any Insurance Benefit under this Policy shall be sustained in any court of law or equity unless the Insured has materially complied with the terms and conditions of this Policy, except a suit or action where the issue is whether the Insured materially complied with the terms and conditions of the Policy or what was required to do so, and unless the suit or action in equity is commenced within three (3) years, or such longer period of time as may be permitted by Applicable Law, after (i) the Claim has been presented to the Company or (ii) the date on which the cause of action accrued, whichever is earlier. No suit or action on the Company's disposition of a Claim or Insurance Benefit may be brought against the Company until sixty (60) days have elapsed from the last day of the Claim Settlement Period. The parties to this Policy expressly waive the right to a jury trial.

(b)

If a dispute arises concerning a Covered Loan and involves either the Property or the Insured, the Company has the right to protect its interest by defending any action arising from such dispute, even if the allegations involved are groundless, false or fraudulent. The Company is not required to defend any lawsuit involving the Insured, the Property, or a Covered Loan. The Company and the Insured shall each bear its own costs and expenses for any litigation under this Section.

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A.	The following events must take place in order for NMI to commence writing Mortgage Guaranty Insurance as an Approved Insurer:

1.	NMI must have obtained initial capital funding of $220 million, inclusive of the funding of its Affiliated

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2.

NMI must seek approvals and licenses from insurance regulatory departments and other State authorities necessary in order to write first lien Mortgage Guaranty Insurance business, including any applicable Reinsurance requirements imposed for higher coverage percentages, as necessary, in those jurisdictions to carry out its business plan as set forth in the Application. All Reinsurance obtained by NMI, must be provided by a Qualified Reinsurer. On or before the Effective Date, NMI must have obtained approvals and licenses to write first lien Mortgage Guaranty Insurance business in either (a) the ten (10) most populous States of the United States or (b) States that account for at least fifty percent (50%) of the population of the United States.

3.

NMI must complete a form of master policy that reflects the Safety and Soundness Principles, including without limitation, those relating to certainty of coverage, and obtain Freddie Mac's approval of that form prior to the Effective Date. NMI acknowledges that notwithstanding Freddie Mac approval of its master policy form at this time, NMI must comply with any master policy changes subsequently imposed on all Approved Insurers within the same timeframe for compliance required of other Approved Insurers, if in Freddie Mac's sole discretion, its approved form does not satisfy such imposed requirements.

4.

NMI must have in place a technology system and platform (the "Platform") that has capabilities and functionality, and qualified and sufficient staffing that, at a minimum, can support the provision of Mortgage Guaranty Insurance in accordance with the business plan provided in the Application, and satisfies Freddie Mac's expectations. NMI must receive a written communication from Freddie Mac stating that Freddie Mac's systems, as integrated or otherwise interoperable with the Platform, are ready to accept and support loans insured by NMI. Freddie Mac shall have the right to inspect the Platform, or to have a representative do so, prior to and after issuance of any mortgage insurance policy and/or certificate of insurance coverage issued thereunder.

5.	As of the Effective Date, NMI must have in place all NMI initial personnel, policies, and procedures necessary to conduct the business of Mortgage Guaranty Insurance in accordance with the business plan set forth in the Application.

B.	NMI must comply with the following Safety and Soundness Principles and supplemental conditions going forward in order to retain the status of Approved Insurer.

1.	Capital Adequacy

a)	NMI must maintain a Risk-to-Capital Ratio of no greater than fifteen to one (15: 1) for such period as Freddie Mac may require in its sole discretion, not to exceed three (3) years from the Effective Date.

b)	NMI must at all times maintain total statutory capital (i.e. as regards policyholders' surplus plus statutory Contingency Reserves of at least $150 million.

c)	For the three (3) year period commencing on the Effective Date, NMI may not make any dividends, capital withdrawals, or changes to capital deployments other than as listed in the Application without Freddie Mac's prior written approval.

d)	NMI may not purchase or otherwise invest in the debt of Affiliates.

e)	NMI must receive a comparable risk-adjusted economic rate of return on all primary insurance programs. NMI must not discount premiums to the extent that such premiums do not, after taking

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2.	Diversification

a)	NMI must use its best efforts to ensure that future capital raises allow access to a broad investor base.

b)	NMI must use its best efforts to ensure that future capital or Reinsurance may be available to diversify risk if needed.

c)	NMI must monitor and have adequate diversity across customer base, geography and other risk characteristics such that concentration of anyone risk factor does not cause undue harm to NMI's insurance risk portfolio.

3.	Certainty of Coverage

a)	NMI must be clear and consistent in applying and enforcing the terms of its master policy to promote the certainty of coverage, such that coverage will be honored absent fraud, material misrepresentation and/or a failure to satisfy the clear and objective requirements established by the master policy to obtain coverage.

b)	NMI must align its timeframe for exercising its right to rescind coverage under its approved master policy with the 36 months of timely borrower payment timeframe adopted by the GSEs in the representation and warranty framework effective January 1, 2013.

c)	NMI must maintain quality control practices that include a full re-underwrite for an loans insured under its delegated master policy within 6 months of the coverage date, in addition to the quality assurance review completed within 270 days of the date of coverage.

d)	NMI shall use its best efforts to reduce the level of issuance of insurance under its delegated underwriting master policies and work towards increasing non delegated underwriting policies.

e)	NMI must maintain claim documentation standards with a finite set of documents for facilitating claim perfection standards.

4.	Performance Metrics

5.	Other Conditions

a)	NMI shall only provide insurance coverage on eligible first-lien mortgage products as provided by NMI's Underwriting Guidelines dated December 12, 2012, as amended from time to time by NMI, which amendments shall take effect not less than thirty (30) days following notice to Freddie Mac.

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b)	NMI may not enter into any Risk Sharing Transactions1, without Freddie Mac's prior written approval.

c)	NMI must receive approval from Freddie Mac to enter into any transaction involving the issuance of insurance on other than an .individual loan "flow" basis, e.g., pool insurance, bulk primary transactions, "structured" or "negotiated" transactions. Additionally, NMI will provide Freddie Mac at least forty-five (45) days to review any such transaction.

d)

As of the Effective Date, NMI must comply with all requirements of the PMIERs. For the avoidance of doubt, NMI must comply with all requirements of the currently published and effective version of the PMIERs dated January 2008, new Section 103 made applicable to all Approved Insurers and provided to NMI by email dated August 2, 2012 and the latest, proposed draft of the PMIERs with a date of February 2011 attached hereto as Exhibit A. Approval of the Application and status as an Approved Insurer is expressly conditioned on NMI taking all actions necessary to comply with the requirements of the PMIERs, as they may be amended from time to time in addition to adhering to the Safety and Soundness Principles and the specific requirements related thereto set forth in Section B hereof.

e)	Freddie Mac may at any time direct NMI to initiate a change in domicile from Wisconsin to another state. Upon its receipt of such written direction from Freddie Mac, NMI shall immediately use its best efforts to change its domiciliary jurisdiction in accordance with Freddie Mac's instructions.

f)	NMI's conditional approval as an Approved Insurer at this time does not require NMI's receipt of a financial strength rating from any rating agency. However, NMI must pursue the process to obtain a rating from one of the rating agencies and obtain a rating no later than July 31, 2015.

g)

NMI must incorporate and implement any changes or requirements imposed by law or regulation and adopted by the Government-Sponsored-Enterprises ("GSEs") regarding the purchase and servicing of mortgages or the enforcement by the GSEs of their rights against or obligations to mortgagors, in the operation and conduct of their businesses so as not to diminish the availability of or amount of claim payment with respect to Mortgage Guaranty Insurance on an insured loan to which such law or regulation is applicable. By way of example and not limitation of the foregoing requirement, NMJ must cooperate with Freddie Mac in implementing government programs such as the Home Affordable Modification Program, the Home Affordable Refinance Program, foreclosure moratoria, disaster relief, etc. in such a way as to assure minimal impact on Freddie Mac's ability to recover any potential claim to mortgage insurance coverage to the same extent as if such law or regulation had not been imposed on the GSEs.

h)	Once NMI identifies Freddie Mac as the beneficiary of the insurance coverage for any loan or group of loans, NMI will thereafter notify Freddie Mac of any issues or concerns regarding the loan or group of loans within 30 days as they may exist or arise. The notification includes any issues and concerns identified or communicated to NMI.

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A.	Within fourteen (14) calendar days, unless otherwise noted, of the occurrence of any and each of the following events, NMI shall notify Freddie Mac of its occurrence, regardless of whether any such event occurs prior to or after the Effective Date:

1.

A material change in NMI's business plan as described in the Application, including but not limited to, any change in contributions to capital or the capital structure, changes in stock ownership greater than 5% of total NMI ownership, ownership by anyone shareholder of 15% or more of NMI stock, revision of the underwriting policy, corporate governance structure, board positions, or management positions;

2.	A material downward change in Mortgage Guaranty Insurance premium pricing.

3.	Receipt of authority to do business in each jurisdiction where such authority is obtained. Such notice must include a copy of any document evidencing such authority, including any conditions, restrictions, or other provisions related to the grant of authority;

4.	In the event that NMI contemplates a change of ownership involving a public issuance of stock, Freddie Mac must be provided sufficient notice and opportunity to comment prior to any such issuance, but in no event less than thirty (30) days prior to the date on which such issuance is set to occur;

5.

Updates on the PMI (Arizona DOI) lawsuit including but not limited to: evidence submitted by NMI or PMI in the litigation, legal motions filed or requested by any party, settlement proposals, Arizona regulatory approval of NMI, and overall progress on the case, but in no event shall NMI be obligated to provide information that is attorney/client privileged or subject to confidentiality under the attorney work product doctrine;

6.

Execution or amendment of any agreement necessary to implementation of the business plan described in the Application, including but not limited to, articles of incorporation, subscription agreements, private placement memoranda or any documents required to be issued pursuant thereto, shareholder agreements and Reinsurance agreements whether Reinsurance is required by law or regulation or as part of a Risk-Sharing Transaction;

7.	Receipt of the initial contribution(s) of capital by NMI and each of the subsidiary and Affiliated Reinsurance entities required by A.2 hereof.

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cc:	Bob Izzo

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•	Attachment A - Conditions of National Mortgage Insurance Corporation Approval

•	Attachment B - New Mortgage Insurer Review Report

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1.	NMI's demonstration that it has total initial capital funding of $200 million, which includes certain contributions already made and certain provision for start-up and formation expenses. The total initial capital shall be contributed to NMI on or before January 31, 2013, or such other date as is mutually agreed upon between Fannie Mae and NMI.

2.

NMI will maintain a risk-to-capital ratio not to exceed 15:1 through December 31, 2015. After December 31, 2015 NMI will maintain capital levels as required by Fannie Mae's then applicable Requirements. However, without regard to the December 31, 2015 risk-to-capital date, NMI must at all times maintain total statutory capital (i.e., policyholder surplus plus statutory contingency reserves) of at least $150 million.

3.	A resolution regarding these capital commitments will be adopted by the Board of Directors of NMI Holdings, Inc. at its next scheduled meeting and NMI will provide Fannie Mae with a copy of such adopted resolution.

4.	NMI will not pay any dividends to affiliates or its holding company until December 31, 2015. After December 31, 2015, NMI may pay such dividends to the extent such payments are in conformity with Fannie Mae's Requirements.

5.	NMI will obtain Fannie Mae's prior written approval before entering into any reinsurance agreement or structure until December 31, 2015. After December 31, 2015, NMI may enter into reinsurance agreements or structures to the extent that such action is in conformity with Fannie Mae's Requirements.

•	Fannie Mae will give consideration to approving transactions on a template basis such that once a "template" transaction is approved then materially similar transactions would not require individual prior approval.

6.	NMI shall abide by annual limits on outgoing payments under intercompany expense sharing, lease or tax sharing agreements. The annual limits will be agreed to by Fannie Mae and NMI upon finalization of each of NMI's annual budgets.

7.	NMI must obtain Fannie Mae's prior written approval of any risk novation or commutation until December 31, 2015. After December 31, 2015, NMI may enter into risk novation or commutation to the extent such action is in conformity with Fannie Mae's Requirements.

8.	NMI will not provide any capital support, assumption of liabilities, or guarantees of indebtedness to any company without the prior written approval of Fannie Mae until December 31, 2015. After December 31, 2015, NMI may take such actions to the extent that they are in conformity with Fannie Mae's Requirements.

•	Nothing in this provision shall be deemed to preclude NMI from providing credit enhancement in the form of primary or pool mortgage insurance.

•	Notwithstanding the above, NMI may provide capital support to an affiliated reinsurance entity to be formed for the sole purpose of reinsuring NMI for the portion of the risk on loans in excess of 25% of the indebtedness to the Insured, subject to Fannie Mae's prior written approval of the capital support agreement.

9.	NMI will not make any investment, contribution or loan to any subsidiary, parent or affiliate until December 31, 2015. After December 31, 2015, NMI may make such investment, contribution or loan to the extent that it is in conformity with Fannie Mae's Requirements.

10.	Without Fannie Mae's prior written approval, NMI will not issue or repurchase any of its equity securities that would result in any change of voting or equitable ownership of more than 25%.

11.	NMI will obtain Fannie Mae's prior written approval for any shifts of its underwriting of new mortgage insurance

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12.

Until the earlier of (A) December 31, 2015, or (B) the date on which new Fannie Mae eligibility requirements applicable to NMI are promulgated and made effective, NMI shall insure only (1) loans that are eligible for sale to Fannie Mae, Freddie Mac or any of the Federal Home Loan Banks (collectively, "GSE loans") or (2) loans that meet GSE guidelines except those related to loan amount (collectively, "Eligible Loans"). NMI may insure non- Eligible Loans if at the time the insurance is written, those loans have an expected default rate not materially higher than the average expected default rate for the new insurance written by NMI in its most recent quarter, and the RIF of such non-Eligible loans constitutes not more than 2% of NMI's total outstanding RIF. NMI shall provide Fannie Mae quarterly updates on its methodology for determining its expected default rate, and at Fannie Mae's request, NMI shall demonstrate compliance with the 2% limitation. For purposes hereof, "GSE loans" include loans that have actually been purchased by one of these entities as well as those that meet the published standards of one of these entities.

13.	NMI will not provide any service not directly required for the provision of mortgage insurance if such service creates a direct or contingent liability for NMI, including without limitation, provision of underwriting services on a contract basis. Moreover, NMI will not be liable, or cause itself to be liable, to pay or reimburse another entity for any such ancillary service.

14.

NMI shall have and must maintain a fully operational business and technology platform. In addition, NMI will satisfy all outstanding items from Fannie Mae's Mortgage Origination Risk Assessment (MORA) team's New Mortgage Insurer Review Report, which is attached hereto and incorporated herein, by the time of MORA's first post-approval review. Fannie Mae will consider Operational Contingency number 8, "Settlement of lawsuit with Arizona to the acceptance of Fannie Mae," satisfied for now, however, we will reassess if significant new information becomes available or if any decision or settlement is reached on the lawsuit.

15.	NMI must adhere to the Requirements at all times.

16.

NMI shall not insure any loan owned by or serviced for Fannie Mae except under the terms and conditions of a master policy and related forms that have received Fannie Mae's prior written approval. Any proposed changes to an existing primary or pool mortgage insurance policy covering any loan that Fannie Mae owns or guarantees, or that will cover a loan intended for sale to Fannie Mae, must be approved in advance and in writing by Fannie Mae. This includes any policy change, whether by endorsement, customer bulletin, letter agreement, or any other form of agreement or commitment, with or without consideration, that alters the terms of, or the rights of the parties under, the policy.

17.

NMI represents and warrants that, aside from the litigation involving the Arizona Department of Insurance as Receiver for PMI Mortgage Insurance, NMI is not aware of any other litigation involving NMI or NMI Holdings. Additionally, all costs related to the pending complaint by the Arizona Department of Insurance as Receiver for PMI Mortgage Insurance Co. against NMI Holdings, Inc. et al., including but not limited to attorney's fees, court costs, penalties, settlement amounts, etc., will be borne by NMI Holdings, Inc. and not by NMI.

18.	Fannie Mae may require that NMI redomicile to another state, and NMI agrees to redomicile to a state approved by Fannie Mae if and when Fannie Mae requires it to do so, provided that Fannie Mae allows sufficient time to accomplish such move.

19.	NMI will diligently work with Fannie Mae to establish their business and technical integration to Fannie Mae's Mortgage Insurance Data Exchange (MIDX) application and processes.