What are Flagstar Bancorp's Business Segments?
Residential first mortgage loans. We originate conforming and non-conforming residential
first mortgage loans that are generally made to consumers for the purchase or
refinance of a residence. These loans are generally financed over a 15-year to
30-year term and, in most cases, are extended to borrowers to finance their primary
residence. Applications are underwritten centrally using consistent credit policies
and processes.
Second mortgage loans. The majority of second mortgages we originate are closed
in conjunction with the closing of the residential first mortgages originated
by us. We generally require the same levels of documentation and ratios as with
our residential first mortgages. Second mortgage loans require full documentation
and are underwritten and priced to ensure high credit quality and loan profitability.
Home Equity Line of Credit ("HELOC") loans. HELOC guidelines and
pricing parameters have been established to attract high credit quality loans
with long term profitability. HELOCs, which are secured by a first-lien or junior-lien
on the borrower’s residence, allow customers to borrow against the equity
in their homes or refinance existing mortgage debt. Applications are underwritten
centrally in conjunction with an automated underwriting system. The HELOC underwriting
criteria are based on minimum credit scores, debt-to-income ratios, and LTV
ratios, with current collateral valuations.
Commercial loans. Commercial loans include commercial and industrial, commercial
real estate and warehouse loans. Commercial and industrial loans are made to
commercial customers involved in a broad range of industries for use in normal
business operations to finance working capital needs, equipment purchases and
other capital investments. Our commercial and industrial customers are involved
in financial, insurance, service, manufacturing, and distribution. Commercial
borrowers are made of up primarily of Michigan relationships, as well as national
finance companies. Commercial real estate loans consist of loans to developers
and support income producing commercial real estate properties. These loans
are made to finance properties such as owner-occupied, retail, office, multi-family
apartment buildings, industrial buildings, and residential developments. They
are repaid through cash flows related to the operation, sale, or refinance of
the property. Warehouse loans are lines of credit to other mortgage lenders.
In 2016, we launched a national home builder finance program to grow our balance
sheet, increase commercial deposits and develop incremental revenue through
our retail purchase mortgage channel.
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