US Bank In $105M Settlement With Assured
Flagstar Bancorp Inc. of Troy, New York agreed to pay Bermuda-based Assured Guaranty Ltd. $105 million to settle a lawsuit filed by the bond insurer, which accused the bank of misrepresenting the quality of loans within $902 million worth of home mortgage-backed securities issued in 2005 and 2006.
In February, the US District Court in the Southern District of New York ruled in favour of Assured, ordering Flagstar to pay $106.5 million.
The $105 million settlement means Flagstar will not appeal the February decision, and will repay Assured for any future claims on the insurance it had provided to Flagstar.
The bank will receive from Assured all future reimbursements for claims paid to which Assured would have been entitled.
Flagstar said it was now able to recognize $48.3 million in income arising from its deemed receipt of the net fair value of the assets in the securities backed by mortgages, and the reversal of its related reserves for pending and threatened litigation.
“This agreement with Assured represents a favorable resolution of Flagstar’s last remaining significant legacy legal matter,” said Sandro DiNello, Flagstar’s president and CEO, adding that the bank is “continuing to focus on our business as we put legacy issues behind us.”
Assured Guaranty Ltd. is a publicly traded Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the US and international public finance, infrastructure and structured finance markets.
