Flagstar Bancorp was sued Friday by MBIA over $165 million in losses related to two securitizations that Flagstar sponsored and MBIA insured in 2006 and 2007.
The 2006 securitization allegedly held 8,300 loans with a total balance of roughly $400 million. The securitization in 2007 involved 12,500 loans with a combined balance of roughly $625 million. MBIA charges Flagstar with misleading the company about the condition of loans that backed the $1.02 billion in securities that MBIA insured. In both cases, the bank aggregated mortgage loans that it sold to trusts, which issued securities backed by payments on the loans and insurance issued by MBIA.