6.1 Minimum Verification Requirements

• Genworth relies on the Lender to have conducted a complete and thorough credit assessment for all loan proposals. This includes complying with this Policy, for the purposes of Genworth providing LMI under the Master Policy of insurance between Genworth and the insured Lender
• The definitions and information outlined in this document are not exhaustive and represent the minimum acceptable verification requirements for submission of a proposal to Genworth
• Genworth's LMI Proposal Form contains the following question:
  Has genuine savings, income, employment details and security been verified as acceptable?
• Set out below is Genworth's definition of 'acceptable' for the purpose of the above question
• If you have a proposal that does not meet these definitions, and you wish to submit to Genworth for acceptance, then please answer 'no' to the question on the LMI Proposal Form and submit with the relevant supporting documentation.

6.1.1 Sighting Original Copies of Documents

• All documents used for the purpose of verification must be originals, or copies of the originals that have been certified as true copies. Once the Lender or its agent* has sighted the originals and certified the copies, they must be retained in the loan file
• Where it is not possible to sight the original documents, the following Validation Steps should be undertaken in addition to the Minimum Verification Requirements:

* Includes any mortgage manager, loan originator, mortgage broker, loan broker and their agents and all sub-agents involved in the establishment of the insured loan.

6.1.2 Verifying Genuine Savings

Where genuine savings is comprised of deposit funds held in accounts with a financial institution, obtaining the following documents in the name/s of the borrower/s dated not older than three months prior to the date of the loan application:

• Savings or account statements on a financial institution's stationery;
• Passbooks;
• If savings are held with the Lender, a diary note stating the amount of the genuine savings held; or
• Loan statements on the Lender's stationery showing accelerated payments
• Internet statements are only acceptable if all of the following are present:
  • The borrowers name;
  • Account number;
  • Individual transactions are itemised and there is a running account balance; and
  • The logo of the bank or financial institution is displayed
  • If the borrower's name or the logo is not displayed on the Internet statements, a separate bank-issued statement must be provided to verify these details.

Once obtained, the documents must be reviewed in order to ensure:

• Savings are genuine and evident over a three-month period, with no lump sum or unusual deposits (large deposits may be acceptable if investigated and explained satisfactorily)
• The statements are genuine.

If other acceptable alternatives are being relied upon in lieu of genuine savings (eg shares, managed funds or equity in other real estate etc.), then documents evidencing ownership for a period of at least 3 months must be obtained. For example, a certificate or statement if shares, managed funds or other investments are being utilised, or a rates notice and loan statement (if applicable) if equity in other real estate is being utilised.

6.1.3 Verifying Income

For PAYG Borrowers

Where the income being assessed is for a PAYG Borrower, the following documents must be obtained:

• Two of the three most recent computer generated/paper payslips for the borrower/s. These payslips should contain (as a minimum) borrower name, employer's name and ABN, and year-to-date income; or
• Three months statements from a financial institution showing regular salary credits, with the name of the employer evident.

If these documents are unavailable, at least two of the following must be obtained for each borrower:

• The employment contract;
• The PAYG Payment Summary or Tax Assessment Notice;
• A letter from the employer that is on company letterhead and contains details of gross annual income (identifying any base income separately), role or position, length of employment, the basis of employment (full or part-time, or casual) and breakdown of the salary package (if applicable);
• One computer generated payslip.

If income is unable to be confirmed through the above-mentioned sources, or if the Lender is relying on a letter from the employer solely, then the borrower/s employment must be verified as set out in section 6.1.4 Verifying Employment Means, of this document.

If there are any concerns with the income documentation, particularly in cases where the borrower and employer are related, the borrower's most recent Tax Assessment Notice should also be requested.

• Once obtained, the documents must be reviewed in order to ensure:
• The income is consistent with the year-to-date figure appearing on the payslip;
• The employer's full details (business name, ABN and contact details) are clearly stated;
• The letter of employment (if obtained) is signed and dated;
• The Lender must be satisfied that the employer is a legitimate business or company, for example by checking that the employer's stated ABN is correct and current.  These details are publicly available from the Australian Business Register website (http://www.abr.gov.au/).

Additionally, the following requirements apply to overtime income:

• Overtime income must be confirmed by the employer in writing as a permanent condition of employment; or
• Continuity and consistency of this income must be verified by referencing the borrower's two most recent taxation returns.

For Self-Employed Borrowers

Where the income being assessed is for a Self-Employed Borrower, two full years of personal and business tax returns must be obtained. Interim financials are unacceptable.

NOTE: Where a borrower only has 12 months trading in the current business and 2 years in previous employment within similar occupation/field, the application may be considered by Genworth as an exception, based on the borrower's self employment circumstances and the overall strength of the proposal.

Once obtained, the documents must be reviewed in order to ensure:

• The Accountant's details are clearly stated on the documents; and
• The borrower has a registered ABN for a minimum of 2 years;
• The borrower is registered for GST for a minimum of 12 months.

Information about ABN's and GST are publicly available from:

• The Australian Business Register website (http://www.abr.gov.au/); and
• The Australian Taxation Office website (http://www.ato.gov.au/) by accessing the For Businesses section.

For Trustees of Self Managed Superannuation Funds

The following documents will be required as satisfactory evidence of income and expenses for servicing of SMSF loans:

• Pay slips for PAYG SMSF beneficiaries showing mandatory superannuation contributions at 9%
• Statement from SMSF Trustee/s verifying mandatory super contributions by Self-Employed beneficiaries for the past 2 years
• Letter from Government employers that have higher than 9% mandatory super - this can apply if employment term exceeds 2 years
• Proof of SMSF’s investments that are interest/dividend earning. Ownership by the SMSF must be verified via referencing actual share certificates, holding statements or financial statements. Note: In order to rely on fixed interest rates higher than 3% deeming rate, such higher rate must be demonstrated to have been received for a minimum period of 2 years
• Proof of expenses for SMSF – if new, letter estimating costs from accountant; or if established, previous years invoices/receipts.

For Rental Income

Where rental income from investment properties is being used in serviceability assessment, it must be verified through one of the following sources:

• Valuation report
• Rental Income Statements
• Rental appraisal from real estate agent
• The borrowers' tax returns.

If multiple sources of evidence are available, the lower rental amount must be used in all cases.

Additional Verification Requirements for Low Doc Product

The following additional information will also be required for all Low Doc proposals:

• Signed and dated Low Doc Income Declaration
• Past 12 months BAS Statements lodged with the ATO including evidence of lodgement
• BAS Statements will be required for each trading entity, should the borrower declare income from more than one trading entity on the LMI application
• Past 6 months personal transaction account statements (primary account only).

6.1.4 Verifying Employment Means

• Obtaining the employer's telephone number from an independent source, for example from Telstra's White/Yellow pages, or from an ABN website or reference source
• Calling the employer to confirm:
  • That the borrower is currently employed, and
  • The amount of income.
• If possible, also confirm:
  • The length of employment, and
  • The borrower's occupation or role.
• Checking such information against the information that has been provided in the loan application and other supporting documentation for consistency
• Documenting all material aspects of the telephone discussion and retaining such record on the loan file
• If the employer refuses to confirm any details, then a diary note to this effect should be retained on file.