If you live outside of the north-central U.S., you may never have heard of Flagstar Mortgage before. But the Troy, Michigan-based savings bank originates home loans in all 50 states and has retail locations in nearly half that, while deploying a substantial network of more than 1,000 brokers and agents across the nation.
Perhaps more homeowners are familiar with Flagstar in another way: as the payment address for their loans. Most lenders sell their loan-servicing rights — the collection and processing of payments — to providers like Flagstar Bank, which handles the recordkeeping for nearly 370,000 borrowers.
Whether you’re interested in a new mortgage or in refinancing your current home loan, here’s how Flagstar Mortgage works, and how it compares with other lenders.
AT A GLANCE
- Offers a full menu of fixed and adjustable home loans and mortgage refinancing.
- Based in Troy, Michigan, but serves all 50 states.
- Embraces FHA-backed home loans.
Compare Flagstar Mortgage with other lenders.
Flagstar home loan products
Flagstar Mortgage has about every mortgage product there is, except one — and it claims expertise in one specific loan offering.
“I believe we’re one of the best in the country at renovation loans,” Don Bleuenstein, Flagstar national sales director of retail home lending, tells NerdWallet.
“Right now, we don’t have construction loans,” he adds, “but by next spring we’ll have a full suite of construction [loan] products.”
With community-based loan officers in so many parts of the country, Bleuenstein says, Flagstar lenders are familiar with low-down-payment state bond programs for first-time homebuyers and income-limited households, as well as the areas that qualify for rural development mortgages backed by the Department of Agriculture.
Bleuenstein says most borrowers looking to qualify with rental payments, utility bills and other nontraditional credit sources will turn to a Federal Housing Administration loan product, and Flagstar embraces FHA-backed mortgages. Many of the nation’s largest banks have been backing away from such loans.
FHA loans and some entry-level conventional loans use a benchmark 620 FICO score or better. Overall, typical Flagstar customers in 2016 have had an average credit score of just over 720. Average loan-to-value ratios are just over 80% among Flagstar customers, according to Bleuenstein.
» MORE:Calculate your monthly mortgage payment
Flagstar Mortgage fees
With such a complicated loan process, lenders — as well as all the other providers woven within the mortgage system — can find a lot of ways to charge fees. These costs can come with any number of labels. When asked if Flagstar charges an origination fee, Bleuenstein says no, but then adds: “We have standard processing and underwriting fees, which in most cases is $1,000.”
“Most lenders are going to have ‘base bank costs,’ as they would call them,” Bleuenstein says. “And some banks do call them origination fees.”
The Flagstar Mortgage loan process
Clicking on the “Apply Now” button on Flagstar’s Home Loans page will bring you to what is essentially a contact request page. You enter in some basic information: purchase/refinance, type of loan, amount, down payment, and so on, along with your contact information, and a mortgage loan officer will contact you.
“If you’re a client that wants to fill out a quick-hit, 14-item field to get a quote,” Bleuenstein says, this is where that happens. Then, you can decide whether to proceed on to the complete application process. However, Flagstar does not currently offer a prequalification or full application process online.
“That’s on our road map for 2017,” he says. For now, you’ll work with a Flagstar mortgage expert to complete the loan application.
What Flagstar Mortgage does best
- All government-backed loan products are available, such as FHA, VA and USDA rural housing loans.
- It helps borrowers find applicable state bond programs for first-time homebuyers and income-limited households.
- The bank claims expertise in renovation loans, wrapped within purchases or refis.
Where Flagstar Mortgage falls short
- Customer satisfaction is rising but still falls below the industry average, according to J.D. Power.
- Online capabilities are in their infancy.
J.D. Power, the customer satisfaction research firm, scored Flagstar with 813 on a 1,000-point satisfaction index. While that’s up from Flagstar’s 2015 score of 773, it is still below the industry average satisfaction score of 834. Out of a best-possible five “Power Circle Rating,” Flagstar garnered two circles (a rating that put the bank in “the rest” of lenders category) and placed in the bottom quartile of the 20 lenders included in the survey.
“Last year, we were the most improved. We’ve improved again,” Bleuenstein says. “There’s a strong correlation [in the J.D. Power ratings] to the development of technology. Our technology can come further, which will further improve our score.”
Flagstar is a larger mortgage lender than it may seem at first glance. Like an iceberg, its biggest mass lies below the surface, with a network of brokers and associated lenders from California to Connecticut, many of which aren’t branded by the Flagstar name.
It’s a community-based lender that may well be hidden in your very own hometown.
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Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick
Flagstar Bank Mortgage Loans Review 2016 - NerdWallet - NerdWallet (blog)
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