Flagstar discloses exposure to $69M commercial loan

Flagstar Bancorp in Troy, Mich., has disclosed exposure to a commercial borrower.

The $18.4 billion-asset company said in its quarterly filing with the Securities and Exchange Commission that it has a $69 million outstanding loan to an unnamed borrower that is shutting down its reverse mortgage business.

Flagstar said the underlying collateral has a fair value of $35 million to $40 million. Flagstar said the borrower has other potential sources of repayment, including other assets, a personal guarantee and other legal remedies.

The filing disclosed that there is another $5 million outstanding on a related warehouse loan, though it is collateralized by agency mortgage loans and Flagstar said it expects to be fully repaid.

Bose George, an analyst at Keefe, Bruyette & Woods, wrote in a note to clients that the high-end exposure could equal 50 cents a share, taking into account the size of the loan and the value of the collateral.

“We would note that the loss is happening in the reverse mortgage business, which is a relatively small niche in the mortgage market,” George added.

For reprint and licensing requests for this article, click here.
Community banking Reverse mortgages Credit quality Michigan
MORE FROM NATIONAL MORTGAGE NEWS