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Question: Has Fannie Mae changed the requirements regarding Interested Party Contributions and Lender Incentives requirements?

Answer:

Yes. On May 7, 2025, Fannie Mae issued Selling Guide Announcement (SEL-2025-03), which, among other items, updated interested party contributions definitions, identified items excluded from maximum financing concessions, clarified treatment of realtor rebates, and revised a requirement for when a lender affiliated with an interested party provides a lender incentive.

Fannie Mae also updated its Single-Family Selling Guide to include the below described changes.

IPCs are contributions made by third parties with a vested interest in the transaction that cover costs typically required to be paid by the buyer. Examples of interested parties include the seller, builder, real estate agent, an affiliate of the foregoing, or any party who can benefit from the sale at the highest price and influence the sales price.

• Fannie Mae clarified that the following are IPCs:
  • funds paid directly by an interested party to the borrower;
  • funds that flow through a third-party organization, including nonprofit entities, from the interested party to the borrower;
  • funds provided to the transaction on the borrower's behalf by an interested party, including a third-party organization or nonprofit agency; and
  • funds donated by an interested party to a third party, which then pays some or all of the closing costs for a specific transaction.

• Fannie Mae set forth a new list of items that are not considered IPCs:
  • A lender credit derived from premium pricing, even if the lender is an interested party to the transaction;
  • Gift funds or gift of equity from a seller who is also an acceptable donor provided that:
    • The donor is not a builder, or another interested party, and has no affiliation with any other interested party to the transaction, and
    • All requirements pertaining to gift funds and gift of equity from an acceptable donor as stated in the Selling Guide; and
  • A legitimate pro-rated real estate tax credit in places where real estate taxes are paid in arrears; and

• Fannie Mae clarified that a realtor rebate, not applied to the transaction (for example, not used towards closing costs), must be treated as a sales concession, regardless of when the rebate is provided.

Lender incentives are credits such as cash or a cash like options (i.e. gift card) or another item of value that is not a lender credit. Fannie Mae increased the $500 limit on lender incentives to $2,500 and indicated they are permitted provided:

• the incentive is not sourced from the transaction (for example, premium pricing);
• the borrower qualifies without consideration of the incentive (for example, the incentive cannot be considered borrower assets, used to reduce the payment on an outstanding credit card account, or included in maximum cash back to borrower at closing calculation);
• the amount of the incentive does not exceed $2,500; and
• there is no repayment is required.

Note: Fannie Mae reiterated that when the lender is, or is affiliated with, an interested party to the transaction, the incentive must be treated as a sales concession.

Effective: Lenders are encouraged to implement these changes immediately, but must do so for all loans with Note dates on and after September 3, 2025.