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64 LENDER/SERVICER PROFILE Flagstar REGIONAL Sources: flagstar.com (1/24/2014) STAT INSIGHT Like most lenders, Flagstar felt the sting from waning demand for mortgages. The company reported a 16.8 percent quarterly decrease in origination volume to $6.4 billion in Q4 2013 as mortgage rates rose and refinances fell. KNOW THIS Flagstar's net servicing revenue was $28.9 million in Q4 2013, down from $30.4 million the prior quarter. Transaction costs rose to $9.0 million as a result of MSR sales. VERBOSITY "During 2013, we achieved important strategic and operational progress: improved the Company's risk profile, strengthened the balance sheet, built capital, eliminated valuation overhangs and optimized our cost structure. I am pleased with all that we accomplished in 2013, and I believe the company has turned a corner and is poised for growth and success in 2014 and beyond." - Alessandro DiNello, president and CEO COMPANY VITALS Headquarters: Troy, Michigan Phone: 800.968.7700 Online: Flagstar.com Headquartered in Michigan, Flagstar is a full-service bank with more than 100 branches across the state and 39 home loan centers in 19 states around the country. Chartered in 1987 at a federal savings bank, the institution now has assets estimated at $9.4 billion, making it the largest banking company headquartered in the Great Lakes State. In July 2013, Flagstar announced plans to shift the focus of its mortgage servicing business to performing assets, outsourcing its non-core default servicing, which represents less than 4 percent of its book. COMPANY'S LATEST December 19, 2013 Flagstar to Sell $40.7B in Servicing Rights to REIT The holding company for Flagstar Bank announced the bank is unloading a large portion of its mortgage servicing rights (MSRs) to a real estate investment trust in a $500 million deal. Flagstar Bancorp, Inc., announced a deal with Matrix Financial Services Corporation, a subsidiary of Two Harbors, an REIT. According to Flagstar's announcement, the agreement covers the sale of $40.7 billion in unpaid principal balance on residential MSRs, an amount making up about 55 percent of Flagstar's mortgage loans "serviced-for-others" portfolio. The pool of loans covered in the deal is made up of loans originated mostly after 2010 and serviced for Fannie Mae and Ginnie Mae, the announcement says. - TheMReport.com November 6, 2013 Flagstar Reaches Settlement with Fannie Mae over Mortgage Repurchase Obligations Flagstar Bancorp, Inc., the holding company for Flagstar Bank, FSB, today announced that the Bank has entered into an agreement with Fannie Mae to resolve repurchase requests and obligations associated with loans originated between January 1, 2000 and December 31, 2008, for a total resolution amount of $121.5 million. After paid claim credits and other adjustments, the Bank will pay $93.5 million to Fannie Mae. "This agreement represents another significant milestone in Flagstar's resolution of legacy issues," said Alessandro (Sandro) DiNello, Flagstar's President and Chief Executive Officer. "We remain dedicated to providing high quality products and services to our customers while further reducing risk and improving performance. We are confident that we are taking the right steps to deliver improved financial results and shareholder returns." - Reuters SERVICER RATINGS Residential Servicing Statistics At or for the three months ended December 31, 2013 September 30, 2013* June 30, 2013 March 31, 2013 December 31, 2012 Mortgage servicing rights $284.678 million* $797.029 million $729.019 million $727.207 million $710.791 million *Unaudited KEY PERSONNEL John D. Lewis Chairman Alessandro P. DiNello President and CEO Lee M. Smith COO Paul D. Borja EVP and CFO MSRs ยป Flagstar entered into an agreement in December 2013 to sell $40.7B in UPB of residential MSRs to Matrix Financial Services Corporation. The loans in the transaction previously made up about 55 percent of Flagstar's mortgage loans serviced-for- others portfolio. Per the terms of the agreement, Flagstar will act as sub-servicer on all of the mortgage loans underlying the MSRs sold. Headquarters: Troy, Michigan HEADQUARTERS