With the goal of accelerating the disposition of nonperforming assets, Troy, Mich.-based Flagstar Bancorp Inc., the holding company for Flagstar Bank FSB and the largest publicly held savings bank headquartered in the Midwest, has agreed to sell approximately $474 million of non-insured, nonperforming residential first mortgage loans.
The company, which also completed its previously announced $400 million public equity offerings this week, says it will reclassify up to an additional $86 million in residential nonperforming loans as available for sale.Â
As a result of the nonperforming loan sale and the reclassification of loans, Flagstar will experience an 84% reduction in its total level of nonperforming residential first mortgages. The remaining $106 million in nonperforming residential first mortgage loans are insured by either the Federal Housing Administration or the U.S. Department of Veterans' Affairs.
The company expects to receive approximately $209 million, or 44% of book value before reserves, for the $474 million of nonperforming loans. Approximately $133 million of reserves are already applied to the $474 million of nonperforming loans. In aggregate, Flagstar expects a loss of approximately $132 million on the transaction, which is expected to close this quarter.
SOURCE: Flagstar Bancorp Inc.