Interested party contributions (IPCs) are payments made toward the buyer's closing costs, prepaid items, or other financing costs by parties who have a financial interest in the transaction. The term is broader than seller concessions because it includes real estate agents, builders, and lenders on the seller's side.
Who Qualifies as an Interested Party
- ✦The seller.
- ✦Real estate agents or brokers representing the seller.
- ✦The builder in new construction.
- ✦A developer.
- ✦Any affiliate of the above parties.
What IPCs Can and Cannot Cover
- ✦IPCs can cover origination fees, discount points, title charges, prepaids, and escrow deposits.
- ✦IPCs cannot be applied to the down payment.
- ✦IPCs cannot be used to circumvent LTV calculations.
- ✦Hidden or undisclosed IPCs are a fraud risk and can result in a Suspicious Activity Report filing.
How IPC Limits Map to Concession Limits
Fannie Mae applies the same LTV-based caps to total IPCs as to seller concessions. If a seller's agent offers to pay closing costs, that contribution counts against the IPC cap. Builder incentives in new construction are common IPC triggers. Cash-equivalent credits toward upgrades and options are counted, but noncash incentives like appliances or design choices are typically excluded. MLOs should review builder contracts carefully to identify all IPC sources before submission.
Aria can walk through any IPC scenario and clarify whether a specific credit is counted toward the limit or excluded under the applicable guidelines. Ask at vicariointel.com.
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