Flagstar Bancorp Inc. announced that the bank has entered into an agreement with Fannie Mae to resolve repurchase requests and obligations associated with loans originated between Jan. 1, 2000 and Dec. 31, 2008, for a total resolution amount of $121.5 million. After paid claim credits and other adjustments, the bank will pay $93.5 million to Fannie Mae. On Sept. 30, Flagstar's total representation and warranty reserve was $174 million and the amount of the reserve specific to the loans covered by the agreement was sufficient to cover the payment amount.
The agreement covers the bulk of the loans originated between Jan. 1, 2000 and Dec. 31, 2008 and sold to Fannie Mae, regardless of whether Fannie Mae has made a repurchase demand on any particular loan to date.
"This agreement represents another significant milestone in Flagstar's resolution of legacy issues," said Alessandro DiNello, Flagstar's president and chief executive officer. "We remain dedicated to providing high quality products and services to our customers while further reducing risk and improving performance. We are confident that we are taking the right steps to deliver improved financial results and shareholder returns."