Flagstar Bancorp Inc. plans to shift the focus of its mortgage servicing business to performing servicing assets and outsource its noncore default servicing business in a move it said will allow it to recognize significant cost savings and affect about 300 positions within the company.
“Flagstar has made the decision to outsource its noncore default servicing business, which represents less than 4% of its overall servicing book, to a recognized servicer that specializes in this area,” the company said in a press release Wednesday. “This is part of Flagstar's ongoing strategy to deliver improving performance while maintaining its commitment to its national mortgage business and community banking in Michigan. Part of this strategy is to diversify earnings through the growth of Flagstar's performing mortgage servicing franchise.”
The transition is expected to occur by the end of the third quarter.
“While Flagstar will work to redeploy as many employees as possible to other parts of the company, this outsourcing arrangement is expected to affect approximately 300 positions in the nonperforming mortgage servicing business,” according to the company, which said it is “committed to providing transition support to all employees impacted by this arrangement.”