Flagstar Accused Of Reinsurance Kickback Scheme

Law360, New York (May 21, 2012, 8:54 PM EDT) -- Flagstar Bank FSB and several mortgage insurers were hit Friday with a putative class action claiming they took part in a long-running, multimillion-dollar kickback scheme, the latest in a string of similar suits.

A complaint in Pennsylvania federal court accuses Flagstar and its affiliate Flagstar Reinsurance, along with Genworth Mortgage Insurance Corp., Republic Mortgage Insurance Co., Mortgage Guaranty Insurance Corp. and Radian Guaranty Inc., of setting up a sham captive reinsurance arrangement to allow kickbacks and unearned fees to flow to Flagstar.

According to the suit,...
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