Written By: Leslie Petersen, www.MortgageCurrentcy.com. Leslie is a nationally acclaimed trainer and author for the mortgage industry, having owned a mortgage training company since 1992. She is known for her research and accuracy, and the ability to show loan officers and processors everywhere how to make their loans work. She has been able to draw upon her more than 30 years of mortgage experience to provide the most thorough mortgage training to more than 13,000 students around the nation.
One of the major changes addressed in FannieMae Announcement Letter 7-23 is how Fannie Mae (and Freddie Mac) will now treat ANY incentive or contribution by interested parties in the transactions—including real estate commissions paid back to the buyer. While the percentages remain the same, FannieMae has defined some of the incentives more clearly than ever before.
Any time that a party with an interest in a purchase transaction contributes something to the borrower as an incentive to purchase, it is considered an Interested Party Contribution (IPC). IPCs are either financing concessions or sales concessions. Financing concessions are allowable up to certain (unchanged) pre-determined percentages based on the CLTV of the transaction. Sales concessions must always be deducted from the sales price before calculating the LTV and CLTV ratios for underwriting and eligibility purposes. Changes and clarifications to Fannie Mae’s IPCs rules are:
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