## Legislation and regulatory changes and interpretations could harm our mortgage insurance business. 

Our mortgage insurance business may be af fected by the application of federal and state lending and insurance laws and regulations and by changes in these laws and regulations. 

In particular, our mortgage insurance business may be significantly impacted by the following: 

• The Dodd-Frank Act and the rules and regulations adopted thereunder , including in particular the definition of QRM that is ultimately adopted. See “ The Dodd-Frank Act may have a material effect on our mortgage insurance and financial guaranty businesses ”; 

• Legislation impacting the charters or business practices of the GSEs. See “ Because most of the mortgage loans that we insure are sold to Freddie Mac and Fannie Mae, changes in their charters or business practices could significantly impact our mortgage insurance business ”; 

• Legislative reform of the U.S. housing finance system; 

• Legislation and regulation impacting the FHA  and its competitive position versus private mortgage insurers. See “ Our mortgage insurance business faces intense competition ”; 

• Legislation impacting the availability of the private mortgage insurance tax deduction; 

• State insurance laws and regulations that address, among other items, licensing of companies to transact business, claims handling, reinsurance requirements, premium rates, policy forms of fered to customers and requirements for risk-to-capital ratios, minimum policyholder positions, reserves, surplus, reinsurance and payment of dividends. See “ Losses in our mortgage insurance and financial guaranty businesses have reduced Radian Guaranty’s statutory surplus and increased Radian Guaranty’s risk-to-capital ratio; additional losses in these businesses, without a corresponding increase in new capital or capital relief, would further negatively impact this ratio, which could limit Radian Guaranty’s ability to write new insurance and increase restrictions and requirements placed on Radian Guaranty ”; 

• The application of federal programs, such as HAMP  and HARP, developed under the U.S. Department of the Treasury’s Homeownership Affordability and Stability Plan and other state, federal or private sector programs aimed at supporting borrowers and the housing market; 

• The application of RESPA, the FCRA and other laws to mortgage insurers, including with respect to captive reinsurance arrangements. See “ We are subject to the risk of private litigation and regulatory proceedings ”; and 

• The implementation in the U.S. of the Basel II capital adequacy requirements and the Basel III guidelines. See “ The implementation of the Basel II capital adequacy requirements and the Basel III guidelines may discourage the use of mortgage insurance .” 

Any of the items discussed above could harm our operating results, financial condition and business prospects. In addition, our mortgage insurance business could be impacted by new legislation or regulations, as well as changes to existing legislation or regulations, that are not currently contemplated and which could occur at any time. 

## The implementation of the Basel II capital adequacy requirements and the Basel III guidelines may discourage the use of mortgage insurance. 

In 1988, the BCBS developed the Basel Capital Accord (“Basel I”), which established international benchmarks for assessing banks’ capital adequacy requirements. In June 2005, the BCBS issued an update to Basel I (Basel II). Basel II has been implemented by many banks in the U.S. and many other countries in 2009 and 2010. Basel II af fects the capital treatment provided to mortgage insurance by domestic and international banks in both their origination and securitization activities. The Basel II provisions related to residential mortgages and mortgage insurance may provide incentives to certain of our bank customers not to insure mortgages having a lower risk of claim and to insure mortgages having a higher risk of claim. 

