Flagstar Bank Recognized by Freddie Mac
Flagstar Bancorp Inc. was named among 84 Freddie Mac servicing companies recognized with its 2005 tier-one performance ranking. The ranking is given when a high level of customer service in investor reporting and default management is achieved for more than one quarter each year.
Each month Freddie ranks the performance of its 1,500 national lenders that service its single-family mortgage loans, by measuring investor reporting and loss minimizing by working with delinquent borrowers.
Among the perks Flagstar and other tier-one lenders receive with the award are workout incentives, fee waivers and financial rewards.
The lenders are ranked on a scale of four tiers with tier one as the highest and tier four as the lowest with a need for the most improvement. This year Freddie named servicers in the platinum and gold levels of service. Flagstar was among the platinum lenders.
The award could help Flagstar, which has been in a fight with aggressive lenders in the Detroit area to grab the attention of borrowers.
Competitors doing business here were also given recognition for excellence in customer service by Freddie. Among lenders doing business in Detroit given a tier one ranking were Fifth Third Bank, National City Mortgage Co., Wells Fargo and Washington Mutual Bank.
The larger banks have managed to grab a portion of the well-sliced Detroit market share pie. The lenders have all beefed up operations in order to remain profitable in the struggling economy.
Flagstar has remained competitive by holding a spot among the top five lenders in the Detroit area and continuing to involve itself with affordable housing programs. As the economy in Detroit struggles, Flagstar has more to lose than the larger lenders based outside of the Detroit area. About 11.5% of Flagstar's loans come from home lending and half of all residential loans are originated in the Detroit area.
For the fourth quarter of 2005, total loan production for Troy, Mich.-based Flagstar totaled $6.1 billion. Among the loan production totals, $5.4 billion of the loans closed were residential mortgage loans.
Nonperforming loans also increased. Flagstar, which operates 125 retail banking centers across the Midwest, credited the rise in nonperforming loans to the surge in bankruptcy filings late last year prior to the new laws that went into effect last fall. Nonperforming loans totaled $64.5 million for the year-end period, up from $57 million at the end of 2004. Currently the bank has a market share of 5.87% in the Detroit area and nearly $5.5 billion in annual origination volume.
Freddie has upgraded its systems for servicers allowing them to use an enhanced version of data management and default serving tools. The upgrades to the Internet-based systems are designed to help servicers trim costs while providing a faster processing service. In an effort to help servicers and the mortgage industry understand delinquent borrowers, last year Freddie teamed up with market research giant Roper Public Affairs and Media to expose the myths and misconceptions that borrowers have when their mortgage accounts become delinquent.
Among the results of the questions asked to the estimated 2,000 borrowers, 60% were unaware of the options available to bring payments current, but 75% surveyed were contacted by their loan servicers to develop a plan to help work things out.
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