NEW YORK, March 20, 2012 /PRNewswire/ -- Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential securities fraud at Flagstar Bancorp, Inc. ("Flagstar" or the "Company") (NYSE: FBC).
The investigation is focused on allegations made in a complaint filed February 24, 2012 by the U.S. Department of Justice (DOJ) in the United States District Court for the Southern District of New York. DOJ alleges that for more than a decade, Flagstar had been improperly approving thousands of residential home mortgage loans for government insurance.
The same day that the DOJ complaint was filed, Flagstar agreed to a settlement whereby the Company would pay $15 million within 30 days after court approval of the settlement, and would make additional payments totaling an additional $117.8 million as soon as Flagstar meets certain financial benchmarks. The Company also agreed that it would repay $266.7 million that Flagstar received as part of the Troubled Asset Relief Program.
The investigation focuses on whether the Company and its executives violated federal securities laws by failing to disclose that: (1) since January 2002 Flagstar routinely delegated key underwriting functions to staff employees who were not experienced underwriters; (2) Company underwriters falsely certified that they had themselves reviewed all of the loan documents and had exercised due diligence; (3) Flagstar's underwriters repeatedly endorsed ineligible loans for FHA insurance but falsely certified to the Department of Housing and Urban Development that the loans were eligible for such insurance; and (4) Flagstar set daily quotas for its underwriters and paid these employees substantial incentive awards for exceeding their daily quotas.
Take Action If you purchased Flagstar securities and would like to discuss your legal rights, visit www.faruqilaw.com/FBC. You can also contact us by calling Richard Gonnello or Francis McConville toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to [email protected] or [email protected]. Faruqi & Faruqi, LLP also encourages anyone with information regarding Flagstar's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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FARUQI & FARUQI, LLP 369 Lexington Avenue, 10th Floor New York, NY 10017 Attn: Richard Gonnello, Esq. [email protected] Francis McConville, Esq. [email protected] Telephone: (877) 247-4292 or (212) 983-9330