Flagstar Bancorp Inc., the holding company for Flagstar Bank FSB, has settled the lawsuit that MBIA Insurance Corp. filed against the company in January, which alleged that Flagstar had made misrepresentations related to the sale of mortgage-backed securities that later defaulted.
In question was $1.1 billion of non-agency securitization transactions from 2006 and 2007 that were backed by MBIA-insured fixed- and adjustable-rate second mortgage loans.
Under the terms of the settlement, MBIA will terminate its pending lawsuit against Flagstar, and Flagstar will pay MBIA $110 million (in addition to other considerations and transaction provisions).
Flagstar says it does not anticipate ‘any significant financial impact’ resulting from the agreement.
‘We can now focus more time and attention on our national mortgage business and our community banking operations in Michigan,’ says Michael Tierney, Flagstar's president and CEO.