![]() If you’re not familiar with these products, you might want to start with the overview. We also have a consumer-friendly overview that explains how ARM loans work, their pros and cons, etc. ![]() It is intended for lenders and borrowers alike. The table below provides references to recently issued Announcements that are related to this topic.Editor’s note: This article outlines the basic requirements for FHA adjustable-rate mortgages. See New Loan Requirements in B5-7-01, High LTV Refinance Loan and Borrower Eligibility for additional requirements related to this policy for high LTV refinance loans. Furthermore, this incentive is not considered cash out to the borrower and it does not have to be included in the cash back to borrower at closing calculation. Pay Down of Existing Mortgage Balance for Eligible Refinance Transactions: For high LTV refinance transactions, incentives to the borrower in the form of a payment to pay off a portion of the mortgage loan being refinanced is not considered an IPC and, as a result, is not included in the IPC limit calculation. However, the lender must establish policies and/or procedures to ensure that the loans with these types of incentives that it delivers to Fannie Mae, whether or not the loans were originated by the lender, are in compliance with this policy. Note: Documentation of compliance with this policy will not be required at the loan level. Analyze any differences and review any discrepancies. Scrutinize all loan and sales contract documents, including but not limited to the sales contract, the loan estimate, the loan application, the appraisal report, and the settlement statement.Įnsure that all elements of the settlement statement were taken into consideration during the underwriting process.Įnsure that fees and expenses are consistent between all documents. Provide the appraiser with all appropriate financing data and IPCs for the subject property granted by anyone associated with the transaction.Įnsure that the property value is adequately supported.Įnsure that the LTV and CLTV ratios, after any IPCs are taken into consideration, remain within Fannie Mae’s eligibility limits for the particular product.Įnsure that mortgage insurance coverage, if applicable, has been obtained, based on the LTV ratio after any IPC adjustments have been made. See B3-4.1-03, Types of Interested Party Contributions (IPCs), for more information.įannie 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.Įnsure that any and all IPCs have been identified and taken into consideration. Fannie Mae considers the following to be IPCs:įunds that are paid directly from the interested party to the borrower įunds that flow from an interested party through a third-party organization, including nonprofit entities, to the borrower įunds that flow to the transaction on the borrower’s behalf from an interested party, including a third-party organization or nonprofit agency andįunds 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.Ī lender credit derived from premium pricing is not considered an IPC even if the lender is an interested party to the transaction. ![]() IPCs are either financing concessions or sales concessions. 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.) (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 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. 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. 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.
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