The top management of Flagstar Bancorp Inc. have been sued in a shareholder derivative action in Michigan Federal Court in which it is alleged that they breached fiduciary duties and were unjustly enriched all following the $133 million False Claims Act settlement with the Department of Justice.
The $133 million settlement related to allegations that the bank improperly endorsed federally insured mortgage loans that eventually defaulted and also falsely certified its loan underwriting practices to federal housing authorities.
That lawsuit also alleged that the bank used unqualified employees to approve mortgage loans backed by HUD, approved loans that did not comply with HUD and Federal Housing Administration underwriting requirements.
Flagstar is one of the largest residential mortgage lenders in the country, originating $26.6 Billion in mortgages in 2010 and is the largest publicly traded savings banks in the Midwest.
Jeffrey Newman represents whistleblowers.