Fannie Mae Approval. On February 27, 2012, Radian Group, Radian Guaranty and RMAI entered into an agreement with  Fannie Mae (the “Fannie Mae Approval”) that provides for the approval of RMAI as a direct issuer of mortgage guaranty  insurance in certain RBC States. The Fannie Mae Approval includes, among others, the following terms and conditions: 1.  The approval of RMAI is limited to only those RBC States in which Radian Guaranty has not been granted relief from  the Statutory RBC Requirement. If Radian Guaranty is prohibited from writing new business in any state for a reason  other than a failure to meet applicable Statutory RBC Requirements, Fannie Mae’ s approval will not apply for such  state. 2.  Radian Group was required to contribute $100 million in cash or cash equivalents to Radian Guaranty within 30 days  of the effective date of the approval, which was completed in February 2012. 3.  Radian Group shall contribute an additional $50 million to Radian Guaranty (which would then be contributed to  RMAI) after the end of the quarter in which it is determined that Radian Guaranty’ s risk-to-capital ratio exceeded  applicable Statutory RBC Requirements. In addition, Radian Group shall contribute to Radian Guaranty the amount of  any future interest expense payment made by Radian Guaranty or RMAI to Radian Group pursuant to the terms of the  interest expense sharing arrangements among these entities. 4.  Following this contribution, Fannie Mae and Radian Guaranty may review the risk-to-capital ratios of Radian  Guaranty and RMAI to determine if additional capital contributions to RMAI are required. Once Radian Guaranty has  contributed cash or cash equivalent assets to RMAI, then neither Radian Guaranty nor RMAI may take any of the  following actions without obtaining the prior written consent of Fannie Mae: •  Except as specifically provided for in the Fannie Mae  Approval, declare, pay or make any provision for the  payment of any dividend, return of capital, capital or other distribution, including without limitation,  repayment of any outstanding principal, interest or other amounts on any surplus notes, debentures or similar  securities; provided, however, that Radian Guaranty and RMAI are permitted to make interest expense  payments to Radian Group in accordance with the terms of the expense sharing arrangements among these  entities, subject to Radian Group’s reimbursing Radian Guaranty for such amounts as discussed above; •  Alter, amend or modify any reinsurance, capital support or similar agreement with any af filiate; •  Except as specifically provided for in the Fannie Mae  Approval, sell or make any other arrangement to  transfer or distribute any securities of Radian Guaranty or RMAI to another person or entity; •  Alter, amend or modify the underwriting guidelines for Radian Guaranty or RMAI beyond what is eligible  under Fannie Mae’s guidelines;  •  Transfer or shift Radian Guaranty’ s or RMAI’s issuance of new mortgage insurance to another af filiate; and •  Enter into any risk novation or commutation transaction by RMAI. 5.  The approval of RMAI will be automatically revoked for any RBC State 30 days after Radian Guaranty is permitted to  resume writing new business in that state. 6.  After Radian Guaranty has, for a period of 12 consecutive months, met or exceeded the Statutory RBC Requirement of  a state in which Radian Guaranty had not obtained a waiver or other relief, then, within 90 days, RMAI shall transfer  to Radian Guaranty any and all mortgage guaranty insurance written by RMAI in that state, together with the capital  supporting that risk, on terms and conditions approved by Fannie Mae and as permitted by applicable regulatory  authorities. 7.  The conditional approval of RMAI terminates on December 31, 2013. Fannie Mae may revoke the approval at any  time prior to its termination.  See  “ Risk Factors— 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.” 48