Flagstar Bancorp Inc. Friday agreed to pay up to $132.8 million to settle civil-fraud charges that accused the bank of improperly approving loans for government insurance.
Shares dropped 6.7% to 70 cents after hours as the Justice Department simultaneously unveiled its complaint and settlement with the bank.
Flagstar agreed to pay $15 million within the next 30 business days after it sent false certification documents to the Department of Housing and Urban Development that made the agency insure some mortgages that later defaulted, according to the Justice Department.
The mortgage originator said it will pay about $117.8 million more if its generates enough income for a sustained period to position itself to realize its deferred-tax assets, among other requirements.
Flagstar said the deal will force it to revise its fourth-quarter and full-year results from last year, though the company affirmed its 2012 guidance.
"As our recent results demonstrate, our mortgage origination, commercial and retail banking operations continue to perform well, positioning us to achieve profitability in 2012," Chairman and Chief Executive Joseph P. Campanelli said.
The bank also agreed to undergo monitoring from an independent third party chosen by the bank and approved by the federal housing agency.
