Fannie Mae, Flagstar Reach $121.5M Settlement

Posted by Patrick Barnard on November 08, 2013 No Comments
Categories : Residential Mortgage

Flagstar Bancorp Inc., the holding company for Flagstar Bank, has reached a settlement with government-sponsored enterprise Fannie Mae to resolve mortgage repurchase requests and obligations.

According to Flagstar, the total resolution amount is $121.5 million; after paid claim credits and other adjustments, the bank will pay $93.5 million to Fannie Mae.

As of Sept. 30, Flagstar's total representation and warranty reserve was $174 million. The amount of the reserve specific to the loans covered by the agreement was sufficient to cover the payment amount, says Flagstar.

The bank says the agreement covers the bulk of the loans originated between Jan. 1, 2000, and Dec. 31, 2008, and sold to Fannie Mae, regardless of whether Fannie Mae has made a repurchase demand on any particular loan to date.

Earlier this year, Flagstar settled a similar suit with MBIA Insurance Corp., in which Flagstar paid MBIA $110 million after allegations that Flagstar had made misrepresentations related to the sale of mortgage-backed securities that later defaulted.

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