Flagstar Announces Layoffs of Approximately 600

By Antonio Olivero January 16, 2014, 11:17 a.m. EST 1 Min Read

Consumer banking

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Michael Tierney's challenge next year at Flagstar Bancorp is twofold: find ways to go on the offensive while continuing to resolve lingering issues at the Michigan company.

By Robert Barba

December 18
Consumer banking

Flagstar to Pay Freddie Mac $8.9 Million

Flagstar Bancorp (FBC) in Troy, Mich., has agreed to pay Freddie Mac $8.9 million in order to settle mortgage repurchase claims.

By Sarah Todd

December 30
Consumer banking

Flagstar Settles Fannie Mae Claims for $94 Million

Flagstar Bancorp (FBC) in Troy, Mich., has agreed to pay Fannie Mae $93.5 million to resolve repurchase claims on mortgages it sold to Fannie that later soured.

By Sarah Todd

November 6
Consumer banking

Flagstar Settles RMBS Lawsuit for $105 Million

Flagstar Bancorp (FBC) will pay $105 million to settle allegations it misrepresented the quality of loans backing securities insured by Assured Guaranty (AGO).

By Brian Browdie

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Consumer banking

Flagstar Settles Mortgage Suit for $110M

Flagstar Bancorp (FBC) in Troy, Mich., will pay $110 million to settle allegations that it misrepresented the quality of more than $1 billion of private label mortgage-backed securities it sold to investors.

By Chris Cumming

May 3

Flagstar Bancorp (FBC) in Troy, Mich., announced Thursday it is laying off approximately 600 employees as part of a cost cutting measure.

The $11.8 billion-asset company said in a press release that the changes will aid Flagstar in aligning its infrastructure with the current business environment, specifically the status of the mortgage origination market. The cuts represent about 17.5% of the company's workforce. At the end of the third quarter, the company reported 3,428 full-time salaried employees.

Flagstar hopes the cuts will generate annualized cost savings of approximately $40 million when fully effective by the end of the first quarter. However, the company is also expecting to book a $5.2 million charge related to the employee cuts.

"The decision to downsize our workforce was not made lightly," Flagstar president and chief executive Alessandro DiNello said in the release. "But is a necessary step on the path to achieving the Company's long-term goals."

In recent years, Flagstar has worked diligently to rid itself of past litigation and nonperforming loans tied to the financial crisis.

The decision comes after a 2013 where, among other loan-related settlements, Flagstar began by making somewhat unexpected changes at the chief executive level and ended with a settlement with Freddie Mac. In an attempt to reduce the company's risk profile, in December Flagstar reached an agreement with Freddie Mac to pay $8.9 million to settle loans originated and sold to the government-sponsored entity from 2000 to 2008.

Flagstar agreed with Fannie Mae in November to pay $93.5 million to cover mortgage repurchase obligations on loans that went bad. Also in 2013, Flagstar agreed to pay $105 million to Assured Guaranty (AG), and $110 million to MBIA Insurance Corp.

In May, former Flagstar chief executive Michael Tierney stepped down after a mere eight months, as DiNello was immediately promoted.

Antonio Olivero