2. Identify of Interest Transactions

Introduction

This topic contains information on identity-of-interest transactions, including

•	the definition of the term identity-of-interest transaction

•	maximum LTV ratio on identity-of-interest transactions, and

•	exceptions to the maximum LTV ratio for identity-of-interest transactions.

Change Date

May 10, 2009

4155.1 2.B.2.a Definition: Identity of Interest Transaction

An identity of interest transaction is a sales transaction between parties with family or business relationships.

Reference: For a more detailed definition of identity of interest transaction, see HUD 4155.1 9.

4155.1 2.B.2.b Maximum LTV Ratio on Identity of Interest Transactions

The maximum LTV ratio for identity of interest transactions on principal residences is restricted to 85 percent.

4155.1 2.B.2.c Exceptions to the Maximum LTV Ratio for Identity of Interest LTV Transactions

Maximum financing above the 85 percent is permitted under certain circumstances. The table below describes circumstances in which financing above the 85 percent is permitted.

Exception	Description
Family Member Purchase	A family member purchases another family member's primary residence as its primary residence. If the property is not the family member seller's primary residence, the maximum mortgage is the lesser of
	•	85 percent of the appraised value, or
	•	the appropriate LTV ratio percentage applied to the sales price, plus or minus required adjustments.
	Reference: For a definition of the term "family member," see HUD 4155.1 9.
Builder's Employee Purchase	An employee of a builder purchases one of the builder's new homes or models as a principal residence.
Tenant Purchase	A current tenant, including a family member tenant, purchases the property where he/she has rented for at least six months immediately predating the sales contract. Note: A lease or other written evidence to verify occupancy is required. The maximum mortgage calculation is not affected by a sales transaction between a tenant and a landlord with no identity of interest relationship.
Corporate Transfer	A corporation
	•	transfers an employee to another location
	•	purchases the employee's home, and
	•	sells the home to another employee.