Bulletin: FL000083

Dear Associates:

We continue to see Flip Transactions take place notwithstanding prior bulletins. This is to reiterate and expand upon all prior bulletins issued by this office on this subject.

No agent in the state of Florida is to perform a flip transaction without the written approval of one of our state designated underwriting counsel, meaning myself, Mark Johnson, Barry Scholnik, or Suzanne Zimmerman. That approval shall be in writing and the agent shall fax to underwriting counsel a brief description of the transaction including a copy of the commitment to be issued prior to its release and shall obtain a written acknowledgment and a written approval in response.

There are some transactions that are permissible and for which approval may be given. On those transactions, the following standards will be applied:

1. The commitment must show on Schedule A the name of the current titleholder. This means the current titleholder of record, not someone who is on the contract nor holding a non-recorded instrument.

2. Schedule B must show clearly that two separate deeds are required to complete the transaction, those deeds being the deed from the present owner to the intermediary owner, the second deed being from the intermediary to the ultimate owner.

3. There must be a separate HUD-1 on each transaction and each HUD-1 and related disbursement must accurately reflect the transaction. The funds from the second transaction may not be used to fund the first transaction unless there is a written escrow agreement signed by all parties, including the lender.

4. All disbursements made must be accurately reflected in the HUD-1

5. Many lender closing instructions today prohibit closing a transaction if there is an additional pending transaction at the time of the closing or if there has been a transaction closed within the prior six months. The lender closing instructions must be received in advance and must be attached to the request for permission to conduct the flip transaction.

6. See other lender closing instructions. They are to be followed explicitly.

7. Any transaction in which the difference in the purchase price between the first transaction and the second transaction is significant will be considered suspect. The larger the differential, the more suspect the transaction appears.

Please govern yourselves accordingly.