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Flagstar to Pay Freddie Mac $8.9 Million

DEC 30, 2013 11:28am ET
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Flagstar Bancorp in Troy, Mich., has agreed to pay Freddie Mac $8.9 million in order to settle mortgage repurchase claims.

The settlement covers loans originated and sold to the government-sponsored entity between Jan. 1, 2000 and Dec. 31, 2008, according to Flagstar's Monday press release. The $11.8-billion-asset Flagstar said that it has enough money in its representation and warranty reserve to cover the payment.

"This agreement is another positive step for Flagstar in further reducing the company's risk profile while supporting improved performance," Alessandro DiNello, Flagstar's president and chief executive, said in the release. "We believe that our accomplishments in 2013 have positioned Flagstar for sustainable long-term growth in 2014 and beyond."

Flagstar has reached a number of settlements this year. It agreed in November to pay Fannie Mae $93.5 million to cover mortgage repurchase obligations on loans that later went bad. Earlier this year, the company agreed to pay $105 million to Assured Guaranty and $110 million to MBIA Insurance Corp. in order to settle charges that it misled the insurers about the quality of mortgage-backed securities.

Flagstar announced earlier this month that it will sell the majority of its mortgage servicing rights to Matrix Financial Services, a unit of Two Harbors Investment Corp.

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