RDN Radian Group Inc

On July 15, 2022, Radian Group Inc. (the “Company”) entered into a Guaranty Agreement (the “Parent Guaranty”) in favor of Goldman Sachs Bank USA (“Goldman”) to guaranty the obligations of the Company’s subsidiaries Radian Mortgage Capital LLC ( “RMC”) and Radian Liberty Funding LLC (“Liberty”) in connection with a $300 million mortgage loan repurchase facility that RMC and Liberty have entered into with Goldman pursuant to a Master Repurchase Agreement, as more fully described below (the “Mortgage Financing Facility”). The Company expects that this financing facility will be used to finance RMC’s acquisition of residential mortgage loans that are purchased from correspondent lenders and held by RMC for later securitization and/or direct sale to mortgage investors.

RMC’s and Liberty’s obligations under the Master Repurchase Agreement and the Guaranty and Security Agreement

On July 15, 2022, RMC and its wholly-owned subsidiary Liberty entered into a Master Repurchase Agreement (the “Master Repurchase Agreement”) among Liberty, Goldman and RMC, pursuant to which Liberty may from time to time sell to Goldman, and later repurchase, certain Participation Interests (as defined in the Master Repurchase Agreement) in residential mortgage loan assets. The obligations of Liberty under the Master Repurchase Agreement are guaranteed by RMC pursuant to a Guaranty and Security Agreement (the “Guaranty and Security Agreement”) executed contemporaneously with the Master Repurchase Agreement. The Master Repurchase Agreement will expire on July 14, 2023, unless the agreement is extended or terminated earlier.

The Mortgage Financing Facility is uncommitted, and Goldman is under no obligation to fund the purchase of any residential mortgage loan assets under this facility. In the event Goldman advances funds under the Mortgage Financing Facility, the amount of such advances generally will be calculated as a percentage of the unpaid principal balance or market value of the residential mortgage loan assets, depending on the credit characteristics of the loans being purchased. The interest rate on any outstanding balance under the Master Repurchase Agreement that Liberty would be required to pay to Goldman is customary for this type of transaction, where the interest rate is equal to the sum of (1) a pricing spread and (2) compounded SOFR for each business day the whole loan asset is held by Goldman until the day that the whole loan asset is repurchased by Liberty.

The Master Repurchase Agreement contains provisions that provide Goldman with certain rights in the event of a decline in the market value of the purchased residential mortgage loan assets. Under these provisions, Goldman may require Liberty to transfer cash or additional eligible residential mortgage loan assets with an aggregate market value that is equal to the difference between the value of the residential mortgage loan assets then subject to the Master Repurchase Agreement and a minimum threshold amount.

In addition, the Master Repurchase Agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross-defaults, insolvency and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include (in some cases after grace and cure periods) the acceleration of the amounts outstanding under the Master Repurchase Agreement and Goldman’s right to liquidate the Participation Interests and/or residential mortgage loan assets then subject to the Master Repurchase Agreement.

In connection with this facility, Liberty is also required to pay certain customary fees to Goldman to reimburse Goldman for certain costs and expenses incurred in connection with Goldman’s management and ongoing administration of the Master Repurchase Agreement and its review of the residential mortgage loan assets subject to the Master Repurchase Agreement.

The Company’s obligations under the Parent Guaranty

The obligations of RMC and Liberty under the Master Repurchase Agreement and the Guaranty and Security Agreement are fully guaranteed by the Company pursuant to the Parent Guaranty executed contemporaneously with the Master Repurchase Agreement. Pursuant to the Parent Guaranty, the Company is subject to negative and affirmative covenants customary for this type of financing transaction, including, among others: (a) limitations on the incurrence of debt; (b) restrictions on certain transactions with affiliates, payments and investments; and (c) a requirement that Radian Guaranty Inc. maintain its eligibility as a private mortgage insurer with Freddie Mac and Fannie Mae. The Parent Guaranty also contains various financial covenants that the Company must remain in compliance with, including those related to (a) the total adjusted capital of the Company’s primary mortgage insurance subsidiaries, Radian Guaranty Inc. and Radian Reinsurance Inc., (b) the Company’s minimum consolidated net worth, and (c) the Company’s maximum Debt-to-Total Capitalization Ratio. The covenants and financial covenants in the Parent Guaranty are generally consistent with the comparable covenants in the Company’s previously disclosed revolving credit facility, dated as of December 7, 2021, with Royal Bank of Canada, as Administrative Agent (the “Agent”) and certain other lenders.

The foregoing summary is not a complete description of the Master Repurchase Agreement, the Guaranty and Security Agreement, or the Parent Guaranty. The descriptions of these agreements are qualified in their entirety by reference to the full text of the agreements which are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference.

The Master Repurchase Agreement is attached hereto as Exhibit 10.1, the Guaranty and Security Agreement is attached hereto as Exhibit 10.2, and the Parent Guaranty is attached hereto as Exhibit 10.3.