NEW YORK, March 14, 2012 /PRNewswire/ -- B Harwood Feffer LLP (www.hfesq.com) is investigating potential claims against the board of directors of Flagstar Bancorp, Inc. ("Flagstar" or the "Company") (NYSE: FBC), concerning whether the board has breached its fiduciary duties to shareholders.
On February 24, 2012, the U.S. Department of Justice ("DOJ") filed a complaint in the United States District Court for the Southern District of New York, Case No. 12-cv-01392, against the Company alleging that for over a decade Flagstar had been improperly approving thousands of residential home mortgage loans for government insurance. Specifically, the DOJ alleges that the Company: (i) used unauthorized staff employees in the loan approval process; (ii) paid substantial incentive awards to these unauthorized employees for exceeding certain quotas; (iii) permitted underwriters to submit false certifications to the Federal Housing Administration ("FHA") and the U.S. Department of Housing and Urban Development ("HUD"); and (iv) misled FHA and HUD by certifying that the loans had been fully underwritten by properly registered and sufficiently experienced underwriters when they had not. The DOJ further alleges that as a result of the foregoing, thousands of loans were approved for government insurance that did not qualify for insurance and when the loans defaulted, HUD was forced to cover the losses.
As a result, Flagstar has become the focus of costly public and legal scrutiny. The Company reached a settlement with the DOJ on February 24, 2012, the same day the complaint was filed, under which Flagstar must pay $15 million in thirty days and up to an additional $117.8 million if it meets certain criteria. In addition, Flagstar is required to repay $266.7 million that it received as part of the Troubled Asset Relief Program.
Our investigation concerns whether the Flagstar board of directors has breached its fiduciary duties to shareholders, grossly mismanaged the Company, and/or committed abuses of control in connection with the foregoing.
If you own Flagstar shares and wish to discuss this matter with us, or have any questions concerning your rights and interests with regard to this matter, please contact:
Harwood Feffer has been representing individual and institutional investors for many years, serving as lead counsel in numerous cases in federal and state courts. Please visit the Harwood Feffer LLP website (http://www.hfesq.com) for more information about the firm.