Radian Group Inc. Notes to Consolidated Financial Statements - (Continued) •  Potential adverse effects if Radian Guaranty’ s regulatory risk-based capital position fails to comply with applicable  state statutory or regulatory risk-based capital requirements, including if waivers or similar relief from the states that  impose such statutory or regulatory risk-based capital requirements are not obtained or renewed or are revoked.  These  risks include the possibility that: (i) insurance regulators or the GSEs may limit or cause Radian Guaranty to cease  writing new mortgage insurance; (ii) the GSEs may terminate or otherwise restrict Radian Guaranty’ s or RMAI’s  eligibility to insure loans purchased by the GSEs; (iii) Radian Guaranty’ s customers may decide not to insure loans  with Radian Guaranty or may otherwise limit the type or amount of business done with Radian Guaranty; and (iv)  state or federal regulators could pursue regulatory actions or proceedings, including possible supervision or  receivership actions, against us in the future. (See Note 16 for additional information regarding our statutory capital). •  Potential adverse effects if we fail to comply with applicable debt covenants, which could result in a default under our  long-term debt and accelerate our obligation to repay our outstanding debt. Regulatory action that results in the  appointment of a receiver for one or more of our significant insurance subsidiaries could constitute an event of default  under our long-term debt.  •  Factors adversely affecting Radian Group’s capital and liquidity that could cause Radian Group to have insuf ficient  sources of capital and liquidity to meet all of its expected obligations in the near -term, including our failure to estimate  accurately the likelihood and potential ef fects of the various risks and uncertainties described in this report and our  other filings with the Securities and Exchange Commission (“SEC”), as well as potential regulatory , legal or other  changes to our tax- or expense-allocation agreements among Radian Group and its subsidiaries. •  Potential adverse effects resulting from the final determination or settlement of tax audits and examinations and any  potential related litigation, as well as changes in tax laws, rates, regulations and policies or interpretations of any of the  foregoing that could have a material impact on our tax liabilities, tax assets and our results of operations or financial  condition. •  Potential adverse effects from legislative ef forts to reform the housing finance market, including the possibility that  new federal legislation could reduce or eliminate the requirement for private mortgage insurance or place additional  significant obligations or restrictions on mortgage insurers and the possibility that loans insured by the Federal  Housing Administration (“FHA”) will receive more favorable regulatory treatment than loans with private mortgage  insurance.  •  Potential adverse impact on the mortgage origination market and on private mortgage insurers due to increased capital  requirements for mortgage loans under proposed interagency rules to implement the third Basel Capital  Accord  (“Basel III”), including in particular, the possibility that loans insured by the FHA will receive a more favorable  regulatory capital treatment than loans with private mortgage insurance; •  Potential adverse impact on our businesses as a result of the implementation of regulations under the Dodd-Frank  Wall  Street Reform and Consumer Protection  Act (the “Dodd-Frank Act”), including whether and to what extent loans with  mortgage insurance are considered “qualified residential mortgages” for purposes of the securitization provisions of  the Dodd-Frank Act.  •  Our businesses have been significantly af fected by, and our future success may depend upon, legislative and  regulatory developments impacting the housing finance industry . The GSEs are the primary beneficiaries of the  majority of our mortgage insurance policies and the FHA  remains our primary competitor outside of the private  mortgage insurance industry. The GSE federal charters generally prohibit them from purchasing any mortgage with a  loan amount that exceeds 80% of a home’s value, unless that mortgage is insured by a qualified insurer or the  mortgage seller retains at least a 10% participation in the loan or agrees to repurchase the loan in the event of a  default. As a result, high-loan-to-value (“LTV”) mortgages purchased by the GSEs generally are insured with private  mortgage insurance. Changes in the charters or business practices of the GSEs, including pursuing new products for  purchasing high-LTV loans that are not insured by private mortgage insurance, could reduce the number of mortgages  they purchase that are insured by us and consequently diminish our franchise value. In September 2008, the Federal  Housing Finance Agency was appointed as the conservator of the GSEs to control and direct the operations of the  GSEs. The continued role of the conservator may increase the likelihood that the business practices of the GSEs will  be changed in ways that may have a material adverse ef fect on us. In particular, if the private mortgage insurance  industry does not have the ability, due to capital constraints, to continue to write suf ficient business to meet the needs  of the GSEs, the GSEs may seek alternatives other than private mortgage insurance to conduct their business. 177