Approach Flagstar Mortgage Rates’ New Strategy and Senior Management Changes
With the recent acquisition by NYCB, Flagstar is looking to serve a new niche market, low-to-moderate income borrowers. It is also making some changes to its senior management. Let’s take a closer look. We’ll explore the changes in the company’s strategy and its new focus on low-to-moderate income borrowers.
Flagstar’s new focus on low-to-moderate-income borrowers
Flagstar Bank has expanded its non-agency product lineup to serve a wider range of borrowers. The bank’s new specialty loan products include non-qualified mortgages, home equity lines of credit, and residential construction loans. These products are geared towards the needs of lower and moderate-income borrowers.
To qualify, borrowers must earn between $35,000 and $62,000 a year and have a low-to-moderate-income census tract. Depending on the credit score of the borrower, the bank may offer zero-down mortgages or closing cost assistance.
Besides assisting low-to-moderate-income millennials and people in their mid to-upper-income brackets, Flagstar will also support community and nonprofit organizations. The bank plans to establish a foundation in which employees can give back to their community and become board members. It also plans to support arts and culture, financial literacy, and workforce readiness.
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Flagstar has partnered with FirstTime Homebuyer Centers and other groups to promote affordable housing products to first-time homebuyers. It also participates in homebuyer education events, such as the annual Homebuyer Fair at the University of Detroit. The bank also views every prospective borrower as a future customer, providing counseling and education to help them find the best mortgage product for their needs.
Its acquisition by NYCB
The New York Community Bank has been adding layers to its business model with acquisitions such as Flagstar Mortgage Rates. The bank is currently focused on multifamily mortgages, but the Flagstar businesses add another layer. It is unclear how the deal will affect NYCB’s risk profile.
NYCB has a low-risk loan portfolio focused on New York City multifamily buildings, and that portfolio has demonstrated low through-cycle credit costs. As a result, NYCB has been able to keep its asset quality indicators in excellent shape. Flagstar, on the other hand, has a large non-interest escrow deposit balance.
NYCB’s acquisition of Flagstar may also benefit the company’s balance sheet. Flagstar has high profitability metrics and a lower cost base than NYCB, which should make its NIM rise. And the New York Community Bank will have more branch locations, which should help improve its financial health.
While NYCB has made a lot of changes to their business model, Flagstar’s mortgage operation will remain unchanged. Flagstar’s mortgage operation will continue to use the Flagstar brand, and will continue to be headquartered in Troy, MI. The company will also add more branches to serve all 50 states. Further, the company plans to expand its mortgage services and private label servicing to better serve the needs of its customers.
The new owners of Flagstar will have an even larger share of New York Community Bank stock. Flagstar shareholders will receive 4.01 common shares of New York Community Bank for every Flagstar share that they own. This means that the combined company’s shareholders will have 68% of the combined company.
The acquisition of Flagstar by NYCB comes amid a period of consolidation in the mortgage banking industry. Caliber Home Loans is currently being acquired by New Residential Investment Corp. for $1 billion, while Guaranteed Rate purchased Stearns Lending in January. Additionally, AmeriHome failed to go public and was acquired by Western Alliance for $1 billion.
The acquisition has made Flagstar Mortgage Rates more competitive. Its recent performance is encouraging. Its earnings per share have increased by 27%. The company has lower through-cycle credit costs. Its efficiency ratio is at an industry-leading 39%. This enables it to pass on lower interest rates to homeowners.
The combined entity will have assets of $85 billion and retail lending offices in 28 states. The combined entity will have over 400 branches and retail lending offices. Flagstar Bancorp, Inc. has experienced a decline in non-interest income over the past five years, but has been exiting unprofitable mortgage banking and wealth management businesses. It has also eliminated non-sufficient fee fees on all consumer checking products.
Its senior management changes
Flagstar Mortgage Rates’ recent senior management changes are indicative of a major transition in the company’s business. The bank has reduced the size of its mortgage operations by 20%, citing declining mortgage volume. Other mortgage companies have been cutting staff in recent weeks as well. The bank did not elaborate on the layoffs or the number of employees who will be affected. The company does not offer severance benefits or extended health insurance to its employees.
Flagstar’s senior management changes also reflect a change in the company’s leadership. Flagstar’s CEO, Joseph P. Campanelli, will step down as CEO on October 31, 2012. However, he will remain a director and will continue to support Flagstar during its transition period.
Flagstar Bank, a national savings and loan holding company, also announced changes to its executive leadership. The bank’s new CEO, Michael J. Tierney, has over 30 years of experience in the financial services industry. He has a background in customer service and employee development and is a champion of change management.
Flagstar Mortgage Rates’ senior management team includes Lee Smith, an executive vice president of Flagstar Bank Mortgage. Smith oversees mortgage sales, fulfillment operations, and servicing. In addition, a new executive vice president and chief human resources officer, David W. Hollis, will join the bank in 2020. He will oversee recruitment, business partnerships, HR information systems, and internal communications. He will also oversee diversity and inclusion initiatives.
Flagstar Mortgage Rates – Final Thoughts
There are several ways to get a better mortgage rate. One way is to shop around. Flagstar Bank offers mortgage rates that are competitive with those of its competitors. This can increase your purchasing power by reducing your overall loan costs. In addition to its competitive mortgage rates, Flagstar has a mortgage information center where you can get tips for qualifying for and servicing a loan. You can also find calculators to help you determine which lender is the best fit for you.
While Flagstar Ban doesn’t have the same risk as Impac, they do carry a significant mortgage origination portfolio. They also provide correspondent and wholesale back end lending services to other lenders. Flagstar Ban is a real savings and loan with $27.5 billion in assets and 160 branches across five states. Flagstar also offers small business and commercial banking services.