Bank reaches $10.8M settlement with Freddie Mac
A statewide bank has reached a settlement with Freddie Mac over mortgage repurchase obligations regarding mortgages it had sold, but did not live up to expectations — similar to a settlement of “legacy issues” the bank reached with Fannie Mae in November.
The announcement by Troy-based Flagstar Bancorp on Monday states that Flagstar will pay Freddie Mac — the Federal Home Loan Mortgage Corporation — $8.9 million to resolve substantially all of the repurchase requests and obligations associated with loans originated by Flagstar from 2000 through 2008 and later sold to Freddie Mac.
The total resolution amount is $10.8 million, but it has been reduced by previously paid claim credits and other adjustments.
Flagstar, the largest Michigan-based bank, said its current representation and warranty reserve specific to the loans covered by the agreement is sufficient to cover the payment.
In early November, Flagstar announced it had reached an agreement with Fannie Mae to resolve the same problems from the same period, for $121.5 million.
"This agreement is another positive step for Flagstar in further reducing the company's risk profile, while supporting improved performance," said Alessandro DiNello, Flagstar president/CEO. "We believe that our accomplishments in 2013 have positioned Flagstar for sustainable long-term growth in 2014 and beyond."
Flagstar was chartered in 1987 as a federal savings bank and today has assets of $11.8 billion, according to its website.
It describes itself as a “top-tier mortgage originator in the country, and one of the nation’s top 10 largest savings banks.” The organization says it is also “one of the leading FHA lenders in the country.”