Flagstar Bancorp (FBC) in Troy, Mich., will pay $110 million to settle allegations that it misrepresented the quality of more than $1 billion of private label mortgage-backed securities it sold to investors.

The settlement ends a suit that MBIA Insurance Corporation brought in January, alleging that Flagstar lied about the quality of loans backing $1.1 billion of securities that MBIA insured in 2006 and 2007. MBIA said that it had to pay $165 million to cover losses the two securities trusts suffered.

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