Fannie Mae Anti-Flip Restriction on REO Conveyances

It has come to the attention of the Company that Fannie Mae has begun requiring agents
who market its REO to include provisions in sales contracts providing that certain antiflip
language will be included in deeds. The language may vary, but is generally along
the following lines:

Grantee herein shall be prohibited from conveying captioned property to a bona fide
purchaser for value for a sales price of greater than ($_______=120% of sales price) for
a period of one hundred and eighty (180) days from the date of this deed. Grantee shall
also be prohibited from encumbering subject property with a security interest in the
amount greater than ($_______=120% of sales price) for a period of one hundred and
eighty (180) days from the date of this deed. These restrictions shall run with the land
and are not personal to grantee.

Title Examiners should examine any deed conveying Fannie Mae REO and, if it contains such
a restriction, raise an appropriate exception on the commitment and policy. Title Closers
should be aware that closing transactions within the specified time periods will be a
violation of that restriction and must consider the consequences of that violation to the
escrow. Title Closers handling the first sale of the REO from Fannie Mae should also be
aware that the contract for sale may require that the deed contain an anti-flip restriction
such as this. If the contract states that the deed shall contain the restriction, but the deed
received from Fannie Mae inadvertently omits the restriction, the closer should see to it
that the restriction is raised on Schedule B of the commitment and policy nonetheless.

UNDERWRITING BULLETIN from Fidelity National Title