TROY, Mich., June 21, 2013 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) ("Flagstar" or the "Company"), the holding company for Flagstar Bank, FSB (the "Bank"), announced today that the Bank has entered into an agreement (the "Settlement Agreement") to settle the previously disclosed lawsuit filed by Assured Guaranty Municipal Corp., formerly known as Financial Security Assurance Inc. ("Assured"). The litigation, which was filed in the U.S. District Court for the Southern District of New York, relates to $902.2 million of non-agency securitization transactions in 2005 and 2006 involving home equity line of credit ("HELOC") loans that Assured insures.
Under the terms of the Settlement Agreement, Assured will terminate its pending lawsuit against Flagstar and will not pursue any related claims at any time in the future. In exchange, Flagstar will pay Assured $105.0 million and will assume responsibility for future claims associated with the two HELOC securitization trusts, including the right to receive from Assured all future reimbursements for claims paid to which Assured would have been entitled. As a result, Flagstar will recognize $48.3 million of income, arising from its deemed receipt of the net fair value of the assets in the two HELOC securitizations and the reversal of its related reserves for pending and threatened litigation.
Alessandro (Sandro) DiNello, Flagstar's President and Chief Executive Officer, said, "This agreement with Assured represents a favorable resolution of Flagstar's last remaining significant legacy legal matter. Flagstar is a leading
Michigan-based community bank with a strong national mortgage business, and we are continuing to focus on our business as we put legacy issues behind us. As we begin the next phase of our growth and development, we are confident that the Company is well positioned for long-term success and shareholder value creation."
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