Interested party contributions (IPCs) are costs that are normally the responsibility of the property purchaser that are paid directly or indirectly by someone else who has a financial interest in, or can influence the terms and the sale or transfer of, the subject property.
Interested parties to a transaction include, but are not limited to, the property seller, the builder/developer, the real estate agent or broker, or an affiliate who may benefit from the sale of the property and/or the sale of the property at the highest price possible. A lender or employer is not considered an interested party to a sales transaction unless it is the property seller or is affiliated with the property seller or another interested party to the transaction. (For Fannie Mae's purposes, an affiliation exists when there is direct common ownership or control by the lender over the interested party or vice versa, or when there is direct common ownership or control by a third party over both the lender and the interested party. A typical ongoing business relationship — for example, the relationship between a builder and a lender that serves as its financial institution — does not constitute an affiliation.)
IPCs are either financing concessions or sales concessions. Fannie Mae considers the following to be IPCs:
funds that are paid directly from the interested party to the borrower;
funds that flow from an interested party through a third-party organization, including nonprofit entities, to the borrower;
funds that flow to the transaction on the borrower’s behalf from an interested party, including a third-party organization or nonprofit agency; and
funds that are donated to a third party, which then provides the money to pay some or all of the closing costs for a specific transaction.
A lender credit derived from premium pricing is not considered an IPC even if the lender is an interested party to the transaction.
SeeB3-4.1-03, Types of Interested Party Contributions (IPCs)B3-4.1-03, Types of Interested Party Contributions (IPCs), for more information.
Fannie Mae does not permit IPCs to be used to make the borrower’s down payment, meet financial reserve requirements, or meet minimum borrower contribution requirements.
Note: SeeB3-4.3-04, Personal GiftsB3-4.3-04, Personal Giftsfor an exception when the seller of the subject property is also an acceptable donor.
