Flagstar Bancorp Inc. has announced its plan to shift the focus of its mortgage servicing business to performing servicing assets. Flagstar has made the decision to outsource its non-core default servicing business, which represents less than four percent of its overall servicing book, to a recognized servicer that specializes in this area. 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. This transition to a recognized specialty servicer is expected to occur by the end of the third quarter.
"Improving company-wide efficiency and carefully managing expenses is consistent with our plan to build long-term shareholder value," said Sandro DiNello, president and CEO of Flagstar. "By focusing our mortgage servicing business on core, performing mortgages, we seek to enhance Flagstar's profitability and be even better positioned to serve our clients and capitalize on value-enhancing opportunities. Further, this action will better position our servicing department for long-term growth. We remain deeply committed to our community banking in Michigan and our mortgage origination and servicing, and look forward to continuing to meet and exceed the needs of our clients and communities."
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 non-performing mortgage servicing business. Flagstar is committed to providing transition support to all employees impacted by this arrangement.
By outsourcing the default servicing business, Flagstar expects to realize significant cost savings.