Flagstar Bancorp, Inc.

Approximate date of commencement of proposed sale of securities to the public: As soon as practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities being offered only in connection with dividend or interest reinvestment plans, please check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o


(1)	Estimated solely for the purpose of computing the registration fee based upon the average of the high and low prices of the common stock, par value $0.01 per share, of the registrant as reported on the New York Stock Exchange on May 21, 2002, in accordance with Rule 457(c) of the General Rules and Regulations under the Securities Act of 1933, as amended.

(2)	Includes 150,000 shares which are being registered in connection with an over-allotment option granted to the underwriters. The shares being registered hereby do not reflect the 3-for-2 stock split payable on May 31, 2002. Following such split, the 1,500,000 shares offered for sale in the offering would increase by 750,000 shares to 2,250,000 shares, and the 150,000 shares offered for sale in connection with the over-allotment option granted to the underwriters would increase by 75,000 shares to 225,000 shares.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

This is an offering for 2,250,000 shares of common stock by certain members of the Hammond family, including Thomas J. Hammond, our Chairman of the Board, and Mark T. Hammond, our Vice Chairman of the Board, President and Chief Executive Officer. We refer to those certain members of the Hammond family who are selling shares of common stock under this prospectus as the Selling Stockholders.

Our common stock is traded on the New York Stock Exchange under the symbol “FBC.” On , 2002, the last reported sale price of our common stock as reported on the New York Stock Exchange was $ per share.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 8.

The underwriters have been granted a 30-day option to purchase up to an additional 225,000 shares of common stock to cover over-allotments, if any.

The common shares being offered are not savings accounts, deposits or obligations of any bank and are not insured by any insurance fund of the Federal Deposit Insurance Corporation or any other governmental organization.

Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

KEEFE, BRUYETTE & WOODS, INC.


	FRIEDMAN BILLINGS RAMSEY


	FAHNESTOCK & CO. INC.

This summary highlights selected information contained elsewhere in this prospectus. The summary is not complete and does not contain all of the information that you should consider before investing in the common stock. You should read the entire prospectus carefully.

We use the term “we” to refer to Flagstar Bancorp, Inc., a business corporation organized under Michigan law. We use the term “Flagstar Bank” to refer to Flagstar Bank, FSB, a federal savings bank, organized under federal laws of the United States. In some cases, a reference to “we” will include Flagstar Bank, since Flagstar Bank is our wholly owned subsidiary.

All per share amounts give effect to the 3-for-2 stock split paid as of July 12, 2001 and the 3-for-2 stock split payable as of May 31, 2002.

Summary Consolidated Financial Data. The following table presents our summary consolidated financial data as of and for the three months ended March 31, 2001 and 2002, and as of and for each of the two years in the period ended December 31, 2001. The information has been derived from our consolidated financial statements, including our unaudited consolidated financial statements incorporated in this prospectus by reference to our March 31, 2002 Form 10-Q, and our audited consolidated financial statements incorporated in this prospectus by reference to our 2001 Form 10-K, and should be read in conjunction therewith and with the notes thereto. See “Where You Can Find More Information; Incorporation by Reference.”

Historical results are not necessarily indicative of results to be expected for any future period. Results for the three-month period ended March 31, 2002 are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole.

We are the third largest banking institution and largest savings institution headquartered in Michigan based on asset size, and through our wholly owned subsidiary, Flagstar Bank, we are in the business of attracting retail deposits and originating or acquiring loans. During 2001, we were among the top 15 mortgage loan originators in the United States based on Inside Mortgage Finance. Our retail banking centers and online distribution channels provide vehicles through which we attract deposits from the general public and local governmental units. We use these deposits, advances from the Federal Home Loan Bank, or FHLB, and other funds garnered from the secondary market to originate or acquire loans in our retail markets and on a nationwide basis. Additionally, we provide warehousing lines of credit on a nationwide basis, and originate commercial real estate loans, consumer loans, and non-real estate commercial loans within our retail market area. We also service a significant volume of mortgage loans secured by properties located throughout the United States.

At March 31, 2002, we had consolidated total assets of $6.4 billion, net loans of $5.7 billion, total deposits of $3.4 billion and total stockholders’ equity of $317 million. For the year ended December 31, 2001, our net earnings were $82.9 million, or $2.78 per diluted share, our return on average assets was 1.31% and our return on average equity was 34.98%. For the three months ended March 31, 2002, our net earnings were $25.5 million, or $0.83 per diluted share, our annualized return on average assets was 1.55% and our annualized return on average equity was 33.58%. Net earnings for the first quarter ended March 31, 2002 exceeded net earnings for any prior first quarter in our history, and net earnings for the year ended December 31, 2001 exceeded net earnings for any prior year in our history.

categorized as two distinct operations, they are complementary business lines. The mortgage banking operation increases assets available to our retail banking operation, and our retail banking operation provides a cross selling opportunity for the local mortgage banking operation.

After ten years in business, our asset base reached $1.3 billion and we were operating from fifteen retail banking centers at December 31, 1996. In May of 1997, we initiated an initial public offering of our common stock. Prior to this public offering, our common stock was held solely by the five members of the Thomas Hammond family. Currently, the Hammond family controls over 51.6% of our common stock.

Our primary business objective over our first five years as a public company was to generate stockholder value by providing high returns on equity and through the growth and enhancement of our franchise. To this end, over the past five years, we have averaged a 24% return on average equity and a return on average assets greater than 1%. During this same time, we have grown our asset base 39% per year, our retail deposits 42% per year, and our retail organization offices and retail banking centers by 20% per year. Our goal over the next five years is to double the size of our banking center and origination office network and to continue to increase our market share penetration in the markets we currently serve.

We have continued to expand the banking center network and the amount of retail origination offices during 2002. Twenty-five new banking centers and twenty-four new retail origination offices have or are slated to be opened during the year. We expect that this expansion will allow us to continue to grow our retail deposit base and our retail loan originations.

Also continuing into 2002, management has strived to stabilize the volatility of net income and to diversify our revenue stream. To achieve these objectives, management implemented certain business strategies in 2001 and 2002 to achieve the following goals: (1) an increase in net interest income achieved by increasing the amount of loans held for investment; (2) an increase in spread income by diversifying the product mix of the deposit liability portfolio; and (3) an increase in the fee income received from loan servicing and retail banking.

Retail Banking. We provide a comprehensive line of consumer and business financial products and services to individuals and small and middle market businesses. We currently provide service to approximately 500,000 households through our 76 banking centers (both free-standing and in-store) and 111 automated teller machines located in Michigan and Indiana. Our strategy is to expand our base of consumer and business relationships by combining a high level of customer service with our broad-based product line.

One of our primary business objectives in 2002 is to expand our consumer lending activities, as they generally offer higher yields than our mortgage lending products. Our consumer loan portfolio at March 31, 2002 contained $223.1 million of second mortgage loans, $56.9 million of equity line loans, and $13.3 million of various other consumer loans such as personal lines of credit, and automobile loans and comprised 5.2% of our total loan portfolio. We originated a total of $244.3 million in consumer loans during 2001, and we originated $60.3 million of such loans during the three months ended March 31, 2002.

In addition to consumer services and lending, we offer a full line of business loan products and banking services especially developed for our business customers. We concentrate on developing and maintaining strong client relationships with companies that have $5 million to $100 million in sales. Our commercial business loans are made on a secured or unsecured basis. Our commercial real estate loan portfolio totaled $350.3 million, or 6.2% of our total loan portfolio, and our non-real estate commercial loan portfolio was $10.8 million, or 0.2% of our total loan portfolio at March 31, 2002. We originated $195.6 million in commercial loans in 2001 versus $94.2 million in 2000.

Mortgage Banking. Our mortgage banking operation originates residential mortgages through 76 retail banking centers and 73 loan origination centers located in eighteen states. Our

largest concentration of offices is in southern Michigan, where 61 of our retail banking centers and 41 of our loan centers are located. We also maintain 15 wholesale lending offices that conduct business with correspondent mortgage lenders nationwide. The origination or acquisition of residential mortgage loans constitutes our most significant lending activity.

For the three months ended March 31, 2002, we produced $9.3 billion in mortgage loans. These included $8.5 billion in mortgage loans produced through the wholesale and correspondent network and $724.2 million originated through the retail network. We produced a total of $33.0 billion in mortgage loans during 2001, which included $30.0 billion produced through our wholesale and correspondent network and $3.0 billion originated through our retail network. This was a significant increase as compared to the year ended December 31, 2000, during which our wholesale and correspondent network produced $8.9 billion in mortgage loans and our retail network originated $1.0 billion in mortgage loans, for a total production of $9.9 billion.

We sell a substantial portion of our loan production into the secondary market. These sales are principally completed by securitizing pools of loans through programs offered by government-sponsored enterprises, such as Fannie Mae, Freddie Mac and Ginnie Mae and through sales to private investors. In addition, we originate and sell loans conforming to the underwriting criteria of the Federal Housing Administration, or FHA, and the Department of Veterans Affairs, or VA. We retain the servicing rights to many of the loans that we sell. We also realize additional income by selling servicing rights on a bulk basis and on an as-originated (i.e., “flow”) basis to other mortgage servicers. Our loan servicing portfolio totaled $15.2 billion at March 31, 2002, $14.2 billion at December 31, 2001 and $6.6 billion at December 31, 2000, net of loans subserviced for others. Substantially all of our servicing portfolio is comprised of conventional loans.


	(a) continue to expand our banking center network into demographically desirable communities in Michigan and Indiana in order to gain access to additional retail funding sources;

	(b) as market conditions permit, retain a portion of our mortgage loan production volume or mortgage servicing rights or both (thereby benefiting from economies of scale); and

	(c) continue to utilize advanced technology and automated processes throughout our business to improve customer service, reduce costs and increase efficiencies.

We are a separate and distinct legal entity from our banking and other subsidiaries. Our principal source of funds to pay dividends on our common and preferred stock and to service our debt is dividends from our subsidiaries. Various federal and state statutes and regulations limit the amount of dividends that our banking and other subsidiaries may pay to us without regulatory approval.

Our principal executive offices are located at 5151 Corporate Drive, Troy, Michigan 48098-2639 and our telephone number is (248) 312-2000.

This offering is pursuant to a demand made by the Selling Stockholders as permitted by their registration rights agreement with us.

We will not receive any proceeds from the sale in the offering of shares of our common stock by the Selling Stockholders. We expect to incur approximately $ of expenses in connection with the offering.

In addition to the other information in this prospectus, you should carefully consider the following factors before investing in our common stock.

Any changes in interest rates may adversely affect our earnings and financial condition.

We intend to try to minimize our exposure to interest rate risk, but we will be unable to eliminate it. Changes in interest rates affect our operating performance and financial condition in diverse ways. Our profitability depends in substantial part on our “net interest spread,” which is the difference between the rates we receive on loans and investments and the rates we pay for deposits and other sources of funds. Our profitability also depends in substantial part on the volume of loan originations in our mortgage banking operations. Our net interest spread and our volume of mortgage originations will depend on many factors that are partly or entirely outside our control, including competition, federal economic, monetary and fiscal policies, and economic conditions generally. Historically, net interest spreads and the mortgage origination volumes for Flagstar Bank and for other financial institutions have widened and narrowed in response to these and other factors, which are often collectively referred to as “interest rate risk.”

In our retail banking operations, we are subject to interest rate risk on loans held in our portfolio arising from mismatches (i.e., the interest rate sensitivity gap) between the dollar amount of repricing or maturing assets and liabilities, which is measured in terms of the ratio of the interest rate sensitivity gap to total assets. A higher level of assets repricing or maturing than liabilities over a given time frame is considered asset-sensitive and is reflected as a positive gap. In contrast, a higher level of liabilities repricing or maturing than assets over a given time frame is considered liability-sensitive and is reflected as a negative gap. An asset-sensitive position (i.e., a positive gap) will generally enhance earnings in a rising interest rate environment and will negatively impact earnings in a falling interest rate environment. A liability-sensitive position (i.e., a negative gap) will generally enhance earnings in a falling interest rate environment and will negatively impact earnings in a rising interest rate environment. Fluctuations in interest rates are not predictable or controllable. At March 31, 2002, we were in a liability-sensitive position. Although we have attempted to structure our asset and liability management strategies to mitigate the impact on net interest income of changes in market interest rates, we can not give any assurance that a sudden or significant change in prevailing interest rates will not have a material adverse effect on our operating results.

Generally, the volume of mortgage loan originations is inversely correlated with the level of long-term interest rates. During periods of low interest rates, a significant number of our customers may elect to refinance their mortgages (i.e., pay off their existing higher rate mortgage loans with a new mortgage loan obtained at a lower interest rate). Our profitability levels and those of others in the mortgage banking industry have been generally strongest during periods of low and/or declining interest rates, as we have been able to sell loans into the secondary market at a gain. Our profitability levels may be adversely affected in a rising interest rate environment.

In our mortgage banking operations, we are also exposed to interest rate risk from the time the interest rate on a mortgage loan application is committed to by us through the time we sell or commit to sell the mortgage loan. On a daily basis, we analyze various economic and market factors and, based upon these analyses, project the amount of mortgage loans we expect to sell for delivery at a future date. The actual amount of loans we sell will be a percentage computed as (i) the number of mortgage loans on which we have issued binding commitments (and thereby locked in the interest rate) but have not yet closed (“pipeline loans”) divided by (ii) actual closings. If interest rates change in an unanticipated fashion, the actual percentage of pipeline loans that close may differ from the projected percentage. The resulting mismatch of commitments to fund mortgage loans and commitments to sell mortgage loans may have an adverse effect on the results of operations in any such period. For instance, a sudden increase in interest rates can cause a higher percentage of pipeline loans to close than projected. To the degree that

this is not anticipated, we may not have made commitments to sell these additional pipeline loans and may incur significant losses upon their sale as the market rate of interest will be higher than the mortgage interest rate we committed to on such additional pipeline loans. At March 31, 2002, we had $2.9 billion of loans with binding commitments to buy such loans and $3.3 billion in binding commitments to sell such types of loans, resulting in an over commitment of $400 million. Our profitability may be adversely affected to the extent our hedging strategy is not successful.

The market value of, and earnings from, our mortgage loan servicing portfolio may be adversely affected by declines in interest rates. When mortgage interest rates decline, mortgage loan prepayments usually increase as customers refinance their loans. When this happens, the income stream from our current mortgage loan servicing portfolio may decline. In that case, we may be required to amortize the portfolio over a shorter period of time or reduce the carrying value of our mortgage loan servicing portfolio. This would adversely affect our operating results and financial condition.

The loss of or increased cost of our operating funds may reduce our earnings.

The principal sources of funding for our operations have been bank deposits and, to a lesser extent, borrowings from the FHLB and funds held in escrow for mortgage loan servicing purposes. Historically, our cost of funds associated with deposits has generally been lower than our cost to borrow from the FHLB. If we are unable to fund our asset growth through the maintenance and growth of our deposit base, we may have to rely to a greater extent on borrowings from the FHLB or other sources. If this causes our net cost of funds to increase, our net interest margin would be adversely affected. At March 31, 2002, we had a $3.0 billion line of credit with the FHLB, of which $2.0 billion had been drawn and was outstanding.

We may have to curtail our origination of single-family mortgage loans if we cannot maintain our low cost of funds. We cannot assume that we will be successful in retaining our access to funds at the level or cost necessary to continue originations of single-family mortgage loans at their current volume and level of profitability. If we have to reduce our single-family mortgage loan originations, we may suffer a material adverse effect on our operating results and financial condition.

Our mortgage banking profitability will be significantly reduced if we are not able to resell mortgages.

Currently, we sell a substantial portion of the mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to originate or purchase a high volume of loans and to quickly sell them in the secondary market. Thus, we are dependent upon (i) the existence of an active secondary market and (ii) our ability to sell loans into that market.

Our ability to sell mortgage loans readily is dependent upon the availability of an active secondary market for single-family mortgage loans, which in turn depends in part upon the continuation of programs currently offered by Fannie Mae, Freddie Mac, Ginnie Mae and other institutional and non-institutional investors. These entities account for a substantial portion of the secondary market in residential mortgage loans. Some of the largest participants in the secondary market, including Fannie Mae, Freddie Mac and Ginnie Mae, are government-sponsored enterprises whose activities are governed by federal law. Any future changes in laws that significantly affect the activity of such government-sponsored enterprises could, in turn, adversely affect our operations.

In addition, our ability to sell mortgage loans readily is dependent upon our ability to remain eligible for the programs offered by Fannie Mae, Freddie Mac, Ginnie Mae and other institutional and non-institutional investors. We expect to remain eligible to participate in such programs but any significant impairment of such eligibility could materially and adversely affect our opera-

tions. Further, the criteria for loans to be accepted under such programs may be changed from time to time by the sponsoring entity. The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans.

The loss of our relationships with government-sponsored enterprises and government agencies would have an adverse effect on our business.

Our agreements with Fannie Mae, Freddie Mac, Ginnie Mae, the FHA and the VA afford us a number of advantages and may be canceled by any of them for cause. Cancellation of one or more of these agreements would have a material adverse impact on our operating results and could result in further disqualification with the other entities and other materially adverse consequences.

We are generally at risk for any loan defaults from the time we fund a loan until the time we sell the loan. This time period is generally 10 to 40 days. Once we sell the mortgage loans, the risk of loss from loan defaults and foreclosure generally passes to the purchaser or insurer of the loans. However, in connection with the sale, we typically make certain representations and warranties to the purchasers and insurers of such loans. Such representations and warranties generally relate to the origination and servicing of loans in substantial conformance with the laws of the state of origination and applicable investor guidelines and program eligibility standards. We rely upon our underwriting department to ascertain compliance with individual investor standards prior to sale of the loans in the secondary market, and we rely upon our quality control department to test sold loans on a sample basis for compliance. The purchasers of such loans will typically conduct a more detailed review of such loans following acquisition to determine whether such loans were originated in compliance with the purchaser’s underwriting guidelines and program eligibility standards. We become liable for the unpaid principal and interest on any defaulted mortgage loan if there has been a breach of our representations and warranties. In such instances, we may be required to repurchase the loan.

We are also affected by loan delinquencies and defaults on mortgage loans that we service. At March 31, 2002, approximately 2.7% of the loans we serviced for others were 30 days or more delinquent (including foreclosures). Under certain types of servicing contracts, the servicer must advance all or part of the scheduled payments to the owner of the loan, even when loan payments are delinquent. Also, to protect their liens on mortgaged properties, owners of loans usually require the servicer to advance the cost of mortgage and hazard insurance and tax payments on schedule even if sufficient escrow funds are not available. The servicer will be reimbursed by the mortgage owner or from liquidation proceeds for payments advanced that the servicer is unable to recover from the mortgagor, although the timing of such reimbursement is typically uncertain. In the interim, the servicer must absorb the cost of funds advanced. Further, the servicer must bear the costs of attempting to collect on delinquent and defaulted loans. We do not collect servicing income from the time a loan becomes delinquent until foreclosure, at which time such amounts, if any, may be recovered.

If we foreclose on a defaulted mortgage loan to recover our investment in such mortgage loan, we may be subject to environmental liabilities in connection with the underlying real property. We may also have to pay for the entire cost of any removal and clean-up without the contribution of any other third parties. These liabilities and costs could exceed the fair value of the real property and may make the property impossible to sell.

If there are adverse conditions in one geographic area or with a few customers, these may have a disproportionately large effect on our financial results.

Historically, our single-family mortgage loan portfolio has been concentrated in certain geographic regions, particularly Michigan and California, based upon the location of the property

collateralizing the mortgage loan. Because borrowers of single-family mortgage loans usually reside on the collateral property, changes in economic and business conditions in the area in which the property is located can affect the borrower and thus have an effect on the performance of the loan. For instance, through December 31, 2001, the mortgage loans we serviced (as measured by unpaid principal balance), including loans held for investment, that were collateralized by property located in Michigan and California comprised 41.8% of total mortgage loans. As a result, unfavorable or worsened economic conditions in Michigan and California could have a material adverse effect on our financial condition and results of operations.

In addition to risks associated with a geographic concentration of our loan portfolio, our results of operations can be affected by concentration of credit to just a few borrowers. We currently provide warehouse lines of credit aggregating up to $22.5 million to certain mortgage companies. We have also originated commercial real estate loans in amounts up to $15.0 million. Repayment of such loans is primarily dependent upon the successful operation of the business involved and therefore could be subject to a greater extent to adverse conditions in the economy. If any single large loan customer defaults on their loan from us, it could adversely affect our operating results.

Our growth and development to date have been largely dependent on certain key employees, the loss of whom could have a material adverse effect. These key employees are: Thomas J. Hammond, Chairman of the Board (and until December 31, 2001, our Chief Executive Officer); Mark T. Hammond, Vice-Chairman of the Board, President and Chief Executive Officer; Michael W. Carrie, Executive Vice President and Chief Financial Officer; Joan H. Anderson, Executive Vice President; Kirstin A. Hammond, Executive Vice President; and Robert O. Rondeau, Jr., Executive Vice President. We do not carry “key person” life insurance on the lives of our officers.

Both our retail banking business and mortgage banking business are extremely competitive. With our retail banking operations, we generally must overcome long-standing relationships to attract customers away from other local financial institutions. With our mortgage banking operations, many of our competitors are, or are affiliates of, enterprises that have greater financial and marketing resources than we do.

Some of our competitors are not regulated as extensively as we are and, therefore, may have greater flexibility in competing for business. Some of these competitors are subject to similar regulation but have the advantages of established customer bases, higher lending limits, extensive branch networks, numerous automated teller machines or other factors. We compete by offering market rates on our products and prompt service to our customers.

We are subject to extensive regulation by state and federal banking authorities. These regulations govern our existence, our general operations and our other functions such as mortgage origination, processing, underwriting, selling and servicing. Many of these regulations are intended to protect depositors, the public or the Federal Deposit Insurance Corporation and not our shareholders. Regulatory requirements will affect our lending practices, capital structure, investment practices, dividend policy and growth. Any change in these regulatory requirements could adversely affect us. In some instances, regulatory changes are applied retroactively. Our mortgage banking operations are also affected by the rules and regulations of quasi-governmental agencies that purchase, guarantee or insure mortgage loans. Further, federal economic and monetary policies, which are entirely out of our control, will affect various aspects of our operations.

In addition, certain states require that interest be paid to mortgagors on funds deposited by them in escrow to cover mortgage-related payments such as property taxes and insurance premiums. Federal legislation has been introduced in the past that would, if enacted, revise current escrow regulations and establish a uniform escrow calculation methodology in all states. If such federal legislation were enacted or if other states enact legislation relating to payment of, or increases in the rate of, interest on escrow balances, or if such legislation were retroactively applied to loans in our servicing portfolio, our earnings would be adversely affected.

Immediately following the offering of the shares of our common stock, the Hammond family, including the Selling Stockholders, will beneficially own 44.4% of the outstanding shares of Common Stock, or approximately 43.6% if the underwriters exercise the over-allotment option in full. Such ownership percentage is based upon the anticipated sale of 2,250,000 shares of common stock by the Selling Stockholders in the offering (without assuming the sale of 225,000 shares that would be sold if the over-allotment option is exercised in full). See “Selling Stockholders.” Following completion of the offering, the combined ownership of the Selling Stockholders and other members of the Hammond family will still represent the largest holding of our common stock. In general, they will therefore still be able to control the election of the board of directors and thus direct our affairs, including decisions regarding acquisitions and other business opportunities, the declaration of dividends and the issuance of additional shares of our common stock and other securities.

Anti-takeover provisions of our charter may reduce the likelihood that we are acquired by a third party.

Our Restated Articles of Incorporation and Bylaws and applicable provisions of the Michigan Business Corporation Act, or MBCA, contain several provisions that may make it more difficult to acquire control of us without the approval of the board of directors. Certain provisions of our Restated Articles of Incorporation, among other things, (i) authorize the issuance of additional shares of common stock and serial preferred stock; (ii) classify the board of directors into three classes, each of which serves for staggered three-year periods; (iii) provide that our directors may be removed by the stockholders only for cause; (iv) provide that only our board of directors or chairman of the board may call special meetings of the stockholders; (v) provide that the stockholders may take action only at a meeting of the stockholders; (vi) provide that the stockholders must comply with certain advance notice procedures in order to nominate candidates for director to our board of directors or to place stockholders’ proposals on the agenda for communication at stockholders meetings; and (vii) provide that the stockholders may amend or repeal any of the foregoing provisions of the Restated Articles of Incorporation or Bylaws only by a vote of 80% of the stock entitled to vote generally in the election of directors. In addition, the MBCA contains various other anti-takeover provisions that apply to us even though those provisions are not in our Restated Articles.

We operate a business in an industry that has been subject to significant litigation.

In recent years, mortgage originators have been subject to class action lawsuits that allege violations of federal and state laws and regulations, including the propriety of collecting and paying various fees and charges and the calculation of escrow amounts. Class action lawsuits may continue to be filed in the future against mortgage originators generally. The results of our operations could be adversely affected if we suffer an unfavorable court judgment in any such lawsuit.

The success and growth of our business will depend on our ability to adapt to technological changes.

Our mortgage origination business is currently dependent on our ability to effectively interface with our customers and efficiently process loan applications and closings. This process is becoming more dependent on technological advancement, such as the ability to process applica-

tions over the Internet, accept electronic signatures, provide process status updates instantly and other customer expected conveniences that are cost efficient to our process. As these requirements increase in the future, we will have to remain competitive with new technology and such additions may require significant capital expenditures.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, the SEC. You may read and copy, upon payment of a fee set by the SEC, any document that we file with the SEC at its public reference room in Washington, D.C. (450 Fifth Street, N.W., 20549). You may also call the SEC at 1-800-432-0330 for more information on the public reference rooms. Our filings are also available to the public on the internet, through the SEC’s EDGAR database. You may access the EDGAR database at the SEC’s web site at http://www.sec.gov.

The SEC allows us to “incorporate by reference” into this prospectus the information we file with them. This means that we can disclose important business, financial and other information in our SEC filings by referring you to the documents containing this information. All information incorporated by reference is part of this prospectus, unless that information is updated and superseded by the information contained in this prospectus or by any information filed subsequently that is incorporated by reference or by any prospectus supplement. Any prospectus supplement or any information that we subsequently file with the SEC that is incorporated by reference will automatically supersede any prior information that is part of this prospectus or any prior prospectus supplement. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the termination of this offering:


	•	Annual Report on Form 10-K for the year ended December 31, 2001.

	•	Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.

	•	The description of our Common Stock contained in our Registration Statement on Form 8-A, dated June 28, 2001, which registers the Common Stock under Section 12(b) of the Exchange Act.

This prospectus is part of a registration statement (on Form S-3) we have filed with the SEC relating to our common stock registered under this prospectus. As permitted by SEC rules, this prospectus does not contain all of the information contained in the registration statement and accompanying exhibits and schedules we file with the SEC. You may refer to the registration statement, the exhibits and schedules for more information about us and our common stock. The registration statement, exhibits and schedules are also available at the SEC’s public reference rooms or through its EDGAR database on the internet.

You may obtain a copy of these filings at no cost by writing to us at Flagstar Bancorp, Inc., 5151 Corporate Drive, Troy, Michigan 48098, Attention: Michael W. Carrie, or by telephoning Mr. Carrie at (248) 312-2000. In order to obtain timely delivery, you must request the information no later than five business days prior to the date you decide to invest in our common stock.

Certain statements contained in (i) this prospectus, (ii) any applicable prospectus supplement and (iii) the documents incorporated by reference into this prospectus, may constitute “forward-looking statements” within the meaning of the federal securities laws. When used in our documents or oral presentations, the words “anticipate,” “estimate,” “expect,” “intend,” “believe,” “objective,” “projection,” “forecast,” “goal,” or similar words identify forward-looking statements. We qualify any such forward-looking statements entirely by these cautionary factors. Forward-looking statements are based on our management’s beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to them. These statements are not statements of historical fact. Forward-looking statements

are estimates and projections reflecting our judgment and involve risks and uncertainties that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. Some of the important factors that could cause our actual results, performance or financial condition to differ materially from our expectations or projections contained in the forward-looking statements are:


	•	The effect that changes in interest rates have on our earnings and assets.

	•	Our cost of funds.

	•	Our ability to resell mortgages.

	•	Our relationships with governmental agencies and related entities.

	•	Our level of loan defaults and delinquencies.

	•	Concentrations of our loans in one geographic area or with a few mortgage companies.

	•	Our ability to retain key personnel.

	•	The degree and nature of our competition.

	•	Changes in government regulation of our business.

	•	The threat of litigation in the mortgage banking business.

	•	Our ability to adapt to technological changes.

We believe these forward-looking statements are reasonable; however, these statements are based on current expectations. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

In light of these risks, uncertainties and assumptions, the forward-looking statements and events discussed in this prospectus might not be achieved or occur as planned. For more information on the uncertainty of forward-looking statements, see “Risk Factors” herein and our Form 10-K and our March 31, 2002 Form 10-Q, incorporated by reference in this prospectus.

The following table presents our selected consolidated financial data as of and for the three months ended March 31, 2001 and 2002, and as of and for each of the five years in the period ended December 31, 2001. The information has been derived from our consolidated financial statements, including our unaudited consolidated financial statements incorporated in this prospectus by reference to our March 31, 2002 Form 10-Q, and our audited consolidated financial statements incorporated in this prospectus by reference to our 2001 Form 10-K, and should be read in conjunction therewith and with the notes thereto. See “Where You Can Find More Information; Incorporation by Reference.” Historical results are not necessarily indicative of results to be expected for any future period. Results for the three month period ended March 31, 2002 are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole.

We are the third largest banking institution and largest savings institution headquartered in Michigan, and through Flagstar Bank, we are in the business of attracting retail deposits and originating or acquiring loans. Flagstar Bank is a federally-chartered savings institution that is regulated by the Office of Thrift Supervision. Its deposits are insured by the Federal Deposit Insurance Corporation, and it is a member of the FHLB System. During 2001, we were among the top 15 mortgage loan originators in the United States. Our retail banking centers and online distribution channels provide vehicles through which we attract deposits from the general public and local governmental units. We use these deposits, advances from the FHLB and other funds garnered from the secondary market to originate or acquire loans in our retail markets and on a nationwide basis. Additionally, we provide warehousing lines of credit on a nationwide basis, and originate commercial real estate loans, consumer loans, and non-real estate commercial loans within our retail market area. We also service a significant volume of mortgage loans secured by properties located throughout the United States.

At March 31, 2002, we had consolidated total assets of $6.4 billion, net loans of $5.7 billion, total deposits of $3.4 billion and total stockholders’ equity of $317 million. For the year ended December 31, 2001, our net earnings were $82.9 million, or $2.78 per diluted share, our return on average assets was 1.31% and our return on average equity was 34.98%. For the three months ended March 31, 2002, our net earnings were $25.5 million, or $0.83 per diluted share, our annualized return on average assets was 1.55% and our return on average equity was 33.58%. Net earnings for the first quarter ended March 31, 2002 exceeded net earnings for any prior first quarter in our history. Net earnings for the year ended December 31, 2001 exceeded net earnings for any prior year in our history.

Corporate Strategies and Objectives. Founded in 1987, we are a growth-oriented, return-on-equity driven company. We began our corporate existence as a bank in 1987 with $3.0 million in assets and one retail banking center. Our growth since 1987 has been substantial. Flagstar Bank was formed from a core operation that was in fact a mid-sized regional mortgage banking company. But since the formation of Flagstar Bank, we have concentrated on the growth of our retail banking operation by increasing its revenue stream and by expanding the deposit base through an increase in the number of banking center locations. Although our core operations are categorized as two distinct operations, they are complementary business lines. The mortgage banking operation increases assets available to our retail banking operation, and our retail banking operation provides a cross selling opportunity for the local mortgage banking operation.

After ten years in business, our asset base reached $1.3 billion and we were operating from fifteen retail banking centers at December 31, 1996. In May of 1997, we initiated an initial public offering of our common stock. Prior to this public offering, our common stock was held solely by the five members of the Thomas J. Hammond family. Currently, the Hammond family controls over 51.6% of our common stock.

We have continued to expand the banking center network and the amount of retail origination offices during 2002. Twenty-five new banking centers and twenty-four new retail origination offices have or are slated to be opened during the year. We believe this expansion will allow us to continue to grow our retail deposit base and our retail loan originations.

Also continuing into 2002, management has strived to stabilize the volatility of net income and to diversify its revenue stream. To achieve these objectives, management implemented strategies in 2001 and 2002 to generate: (1) an increase in net interest income achieved by increasing the amount of loans held for investment; (2) an increase in spread income by diversifying the product mix of the deposit liability portfolio; and (3) an increase in the fee income received from loan servicing and retail banking.

Retail Banking Operations. Through our Retail Banking Group, we offer a comprehensive line of consumer and business financial products and services to individuals and small and middle market businesses. We provide service to approximately 500,000 households through our 76 banking centers (both free-standing and in-store) and 111 automated teller machines located in Michigan and Indiana.

Our strategy is to expand our base of consumer and business relationships by combining a high level of customer service with our broad-based product line. We expect to continue to open new banking centers in areas that meet our demographic model and also expect to continue with price-focused introductory products and eventual focus on core deposit growth.

We offer various consumer and business deposit products, as well as a variety of value-added, fee-based banking services. Deposit products offered include various checking accounts, various savings accounts, and time deposit accounts. Fee-based services include, but are not limited to:


	•	payment choices, including debit card, pay-by-phone, on-line banking, money orders, bank checks, and traveler’s checks,

	•	a membership program featuring free checks, a variety of product discounts, shopping and travel services, and credit card protection service, and

	•	safety deposit box rentals.

One of our primary focuses in 2001 was the opening of 19 new banking centers. We expect to continue this focus during 2002 and expect to open 25 banking centers this year, primarily in Wal-mart superstore locations in Indiana and Michigan.

At March 31, 2002, we had 28 in-store facilities in operation, including 25 located within Wal-mart superstores. In 2000, we entered into an agreement with Wal-mart to provide banking services within new or refurbished Wal-mart superstore locations in Indiana and Michigan.

One of the our Retail Banking Group’s primary business objectives in 2002 is to expand our consumer lending activities, which generally offer higher yields than our mortgage lending products. We believe the size of our consumer loan portfolio has grown in recent years due in large part to the national roll-out of our second mortgage product line. The following consumer loan products are available through our retail banking centers:


	•	second mortgage loans, both for purposes unrelated to the property securing the loan and for renovation or remodeling, in the form of a fixed amortizing loan or a line of credit;

	•	loans for automobiles, marine and recreational vehicles;

	•	student loans;

	•	loans secured by deposit accounts; and

	•	secured and unsecured loans made under our personal line of credit or term loan programs.

At March 31, 2002, our consumer loan portfolio contained $223.1 million of second mortgage loans, $56.9 million of equity line loans, and $13.3 million of various other consumer loans such as personal lines of credit and automobile loans. Consumer loans comprised 5.2% of our total loan portfolio at March 31, 2002. Our underwriting standards for a consumer loan include an analysis of the applicant’s payment history on other indebtedness and an assessment of the applicant’s ability to meet existing obligations as well as payments on the proposed loan. During 2001, we originated a total of $244.3 million in consumer loans.

We also offer a full line of business loan products and banking services especially developed for our business consumers through our retail banking centers and main office location. We concentrate on developing and maintaining strong client relationships with small and mid-sized companies. Our core business customers are companies with $5 million to $100 million in sales. We provide the following loan products to our business customers:


	•	business lines of credit,

	•	working capital loans,

	•	equipment loans, and

	•	loans secured by real estate.

Commercial business loans are made on a secured or unsecured basis. Collateral for secured commercial loans may be business assets, real estate, personal assets, or some combination thereof. Our decision to make a commercial loan is based on an evaluation of the borrower’s financial capacity, including such factors as income, other indebtedness, credit history, company performance, and collateral. All loans on income-producing properties are evaluated by a qualified, certified appraiser to ensure that the appraised value of the property to be mortgaged satisfies our loan-to-value ratio requirements of no higher than 80%. We also generally require a minimum debt-service ratio of 1.2 to 1. In addition, we consider the experience of the prospective borrower with similar properties, the creditworthiness and managerial ability of the borrower, the enforceability and collectibility of any relevant guarantees and the quality of the asset to be mortgaged. Our officer processing the loan also generally performs various feasibility and income absorption studies in connection with the loan.

At March 31, 2002, our commercial real estate loan portfolio totaled $350.3 million, or 6.2% of our total loan portfolio. At March 31, 2002, our non-real estate commercial loan portfolio was $10.8 million, or 0.2% of our total loan portfolio. During 2001, we originated $195.6 million in commercial loans versus $94.2 million in 2000.

Mortgage Banking Operation. We conduct our retail lending operations from 76 retail banking centers and 73 loan origination centers located in eighteen states. Our largest concentration of offices is in southern Michigan, where 61 of our retail banking centers and 41 of our loan centers are located. We also maintain 15 wholesale lending offices that conduct business with correspondent mortgage lenders nationwide.

The origination or acquisition of residential mortgage loans constitutes our most significant lending activity. We originated or acquired $33.0 billion, $9.9 billion, and $14.6 billion of mortgage loans during the years ended December 31, 2001, 2000, and 1999, respectively. During the three months ended March 31, 2002, we originated or acquired $9.3 billion of mortgage loans. Each loan originated or acquired is for the purpose of acquiring or refinancing a one- to four-family residence and is secured by a first mortgage on the property. We offer traditional fixed-rate and adjustable-rate mortgage loans with terms ranging from one year to 30 years. The majority of our products conform to the respective underwriting guidelines established by Freddie Mac, Fannie Mae and Ginnie Mae. We also offer other residential mortgage loans that meet our underwriting guidelines, but have other terms and conditions customized to meet the needs of the borrower.

As a part of our overall mortgage banking strategy, we securitize the majority of our mortgage loans through Fannie Mae, Freddie Mac or Ginnie Mae. We generally securitize our longer-term, fixed-rate loans while we invest in shorter duration and adjustable rate products. Securitization is the process by which mortgage loans owned by us are exchanged for mortgage-backed securities that are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae and are collateralized by the same mortgage loans that were exchanged. These mortgage-backed securities are then sold to a secondary market investor. The servicing related to the sold loans is generally retained by us and, in some cases, later sold to other secondary market investors. For the most part, we do not sell the servicing rights to loans originated within our retail banking market area.

Our written underwriting guidelines for mortgage loans employ a system of internal controls designed to maintain the quality of the mortgage loan portfolio. All mortgage loans are reviewed by an underwriter at our national headquarters or at one of our wholesale lending centers. We also contract underwriters employed by mortgage insurance companies to underwrite loans. Additionally, our correspondents have been delegated underwriting authority. Any loan not underwritten by one of our employed underwriters is warranted by the individual underwriter’s employer, whether a mortgage company or a mortgage insurance company.

To further protect us from loss, we generally require that any loan with a loan-to-value ratio in excess of 80% must carry mortgage insurance. A loan-to-value ratio is the percentage that the original principal amount of a loan bears to the appraised value of the mortgaged property. In the case of a purchase money mortgage, the lower of the appraised value of the property or the purchase price of the property securing the loan is used. We require a lower loan-to-value ratio for non-owner-occupied loans. In addition, all home mortgage loans originated by us are subject to requirements for title, fire, and hazard insurance. Real estate taxes are generally collected and held in escrow for disbursement by us. We are also protected against fire or casualty loss on home mortgage loans by a blanket mortgage impairment insurance policy which insures us when the mortgagor’s insurance is inadequate.

We utilize three production channels to acquire mortgage loans. Each production channel produces similar loan product and each loan acquired is underwritten by us or a contracted representative.

Wholesale. In a wholesale purchase transaction, we supply the funding for the transaction at the closing table. The mortgage broker completes all of the initial loan documents and receives an origination fee from the mortgagor and a “servicing release” premium from us. During 2001, we closed $18.2 billion in loans utilizing this origination channel.

Correspondent. In a correspondent purchase transaction, we purchase the loan after the mortgage company has funded the transaction. The mortgage company completes the entire origination process and we pay a “servicing release” premium plus a market price for the loan. During 2001, we closed $11.8 billion utilizing this origination channel.

Retail. In a retail transaction, we originate the loan through a loan officer representative and also fund the transaction. We also complete the entire origination process. During 2001, we closed $3.0 billion utilizing this origination channel.

For the three months ended March 31, 2002, we produced $9.3 billion in mortgage loans. These included $8.5 billion in mortgage loans produced through the wholesale and correspondent network and $724.2 million originated through our retail network. During the years ended December 31, 2001 and 2000, our mortgage loan production totaled $33.0 billion and $9.9 billion, respectively. Of these amounts, $30.0 billion was produced during the year ended December 31, 2001 through our wholesale and correspondent loan production network and $3.0 billion was originated through our retail network (as compared to $8.9 billion and $1.0 billion, respectively, during 2000).

Generally, we retain the servicing rights to many of the loans that we sell, but we realize additional income by selling servicing rights on an individual and a bulk basis to other mortgage servicers. At March 31, 2002 and at December 31, 2001 and 2000, our loan servicing portfolio totaled $15.2 billion, $14.2 billion and $6.6 billion, respectively, net of loans subserviced for others, substantially all of which related to conventional loans.

We make extensive use of advanced technology and automated processes that we believe enhance our competitiveness and reduce the cost of our mortgage origination operations. We underwrite all of our mortgage loans using automated systems. We believe that our use of these systems reduces overhead, enhances customer service and better ensures that appropriate mortgage loans conform to our investors’ guidelines. We also believe that our utilization of technology provides an advantage over certain less active competitors in the industry, and should help us to continue to enhance our market share in the next several years.


	(a) continue to expand our banking center network into demographically desirable communities in Michigan and Indiana in order to gain access to additional retail funding sources;

	(b) as market conditions permit, retain a portion of our mortgage loan production volume or mortgage servicing rights or both (thereby benefiting from economies of scale); and

	(c) continue to utilize advanced technology and automated processes throughout our business to improve customer service, reduce costs and increase efficiencies.

We are a separate and distinct legal entity from our banking and other subsidiaries. Our principal source of funds to pay dividends on our common and preferred stock and debt service on our debt is dividends from our subsidiaries. Various federal and state statutes and regulations limit the amount of dividends that our banking and other subsidiaries may pay to us without regulatory approval.

As of and for the Three Months Ended March 31, 2002. For the quarter ended March 31, 2002, we earned $25.5 million, or $0.83 per share on a fully-diluted basis. These earnings constitute an increase of $13.6 million, or 114.3%, from net earnings of $11.9 million ($0.41 per share on a fully-diluted basis) reported for the comparable 2001 period. As a result, we had an annualized return on average equity of 33.6%; an annualized return on average assets of 1.55%; an increase in the net interest margin to 3.25%; a first quarter loan production of $9.3 billion; and an operating efficiency ratio of 55.90%.

Net interest income was $49.2 million compared to $25.3 million in the comparable 2001 period. The net interest margin for the 2002 quarter increased to 3.25%, compared with 1.80% for the same period last year, reflecting our lower liability funding cost. During the quarter, average rates on our retail deposits declined 136 basis points versus the comparative average rates reported in our fourth quarter of 2001. Similarly, FHLB advances repriced up 0.51% and the cost of wholesale deposits declined 0.76% from the fourth quarter of 2001.

We originated $9.3 billion in residential mortgage loans, during the first quarter of 2002, as compared to $5.4 billion originated in the comparable 2001 period. During March 2002, we closed $3.1 billion in mortgage loans. At March 31, 2002, we had unfunded mortgage loan rate-lock commitments of $2.9 billion. This level of commitments compares to the $3.1 billion reported at December 31, 2001.

Consolidated assets at March 31, 2002 were $6.4 billion, compared with $6.6 billion at December 31, 2001. Our retail deposit base decreased $0.2 billion during the first quarter of 2002, to $2.2 billion. Despite this relatively slight decrease in our retail deposit base, its cost decreased 97 basis points to 3.28%, from the 4.25% reported at December 31, 2001. At March 31, 2002, our transaction account balances, including checking, savings and money market accounts, represented 45.8% of retail deposits, compared with 30.6% at March 31, 2001. We opened three new banking centers in the first quarter of 2002 and, as a result, operated 74 banking centers located across southern Michigan and Indiana at March 31, 2002.

The allowance for losses totaled $45.0 million at March 31, 2002, an increase of $3.0 million, or 7.1%, from $42.0 million at December 31, 2001. The increase reflect management’s assessment of various factors, including the $6.6 million, or 5.2% increase in non performing assets, the $0.9 million increase in seriously delinquent loans, the 25% increase in charge-offs during the quarter, and the continued trend of economic uncertainty.

As of and for the Year Ended December 31, 2001. For the year ended December 31, 2001, we had annual earnings of $82.9 million, or $2.78 per share on a fully-diluted basis. This compares to the $28.9 million, or $1.05 per share on a fully-diluted basis for the year ended December 31, 2000. As a result, we had a return on average equity of 34.98%; a return on average assets of 1.31%; a net interest margin of 1.94%; loan production volume of $33.0 billion for 2001; an operating efficiency ratio of 50.20; and an increase of 26.6% in the retail deposit portfolio.

During 2001, non interest income increased in large part by $199.4 million in gains recorded on the sale of mortgage loans. This level of gains is $177.5 million greater than the gains achieved during 2000 and was attributable to the $22.9 billion increase in the amount of loans sold. The gain on sale spread equaled 65 basis points for 2001 versus 27 basis points in 2000.

Consolidated assets at December 31, 2001 were $6.6 billion, compared with $5.8 billion at December 31, 2000. The growth in the asset base is directly related to the increases associated with our mortgage banking operation’s loans held for sale. We originated a total of $33.0 billion in loans in 2001 versus $9.9 billion originated in 2000. At December 31, 2001, we had unfunded

The allowance for losses totaled $42.0 million at December 31, 2001. This total includes increases of $17.0 million during 2001 and $12.0 million during the fourth quarter of 2001. The allowance was $25.0 million at December 31, 2000. Management believes the increase was appropriate based upon a 12.5% increase in the loan portfolio during 2001; an increase in our portfolio of non-first lien single family mortgage loans and non-single family mortgage loans of $412.8 million, or 73.9% during 2001; an increase of $41.8 million, or 36.2%, in total loan delinquencies as compared to December 31, 2000; an increase in our seriously delinquent loans of $24.1 million, or 37.8% since December 31, 2000; and an increase in loan charge-offs of $3.8 million, or 165.2%, in the fourth quarter of 2000. The provision for losses was increased to $33.2 million in 2001 from $10.6 million for 2000. Net charge-offs were 0.29% and 0.18% of average loans outstanding during 2001 and 2000, respectively.

The allowance for losses as a percentage of non-performing loans was 47.9% and 39.3% at December 31, 2001 and December 31, 2000, respectively. Our non-performing loans totaled $87.7 million and $63.6 million at December 31, 2001 and December 31, 2000, respectively. The allowance for losses as a percentage of total loans was 0.71% and 0.48% at December 31, 2001 and December 31, 2000, respectively.

Our retail deposit base continued to increase. Retail deposits were $2.4 billion at December 31, 2001 compared with $1.9 billion at December 31, 2000. We continued to emphasize the growth and expansion of the retail banking operation throughout 2001 and opened 19 new banking centers during 2001. We operated 71 banking centers located across southern Michigan and Indiana at December 31, 2001.

At December 31, 2001, transaction account balances, including checking, savings and money market accounts, represented 47.9% of retail deposits, compared with 26.6% at December 31, 2000. Retail deposits increased $497.5 million, or 26.6%, through December 31, 2001, primarily in savings and checking accounts. Certificates of deposit decreased $138.3 million over the past year. Additionally, over the past year, we reduced our cost of funds on retail deposits by 184 basis points.

During 2001, net interest income grew $22.2 million, or 24.3%, versus 2000. The increase was primarily attributable to the $1.1 billion increase in average earning assets during 2001 versus 2000. The net interest rate spread increased to 1.82%, compared with 1.76% for last year, reflecting the company’s decreased cost on paying liabilities, somewhat offset by lower yield on earning assets. The margin was 1.94% in 2001 versus 1.91% in 2000.

Under our restated articles of incorporation (the “Restated Articles of Incorporation”), we are authorized to issue 40,000,000 shares of common stock, par value $.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per share.

Our common stock is currently listed on the New York Stock Exchange under the symbol “FBC”. Prior to our July 13, 2001 listing, the common stock was listed on the Nasdaq Stock Market under the symbol “FLGS”. The following table sets forth, for the periods indicated, the high and low closing sales prices of our common stock and the amount of the cash dividends per share declared as reported on either The Nasdaq Stock Market or the New York Stock Exchange since January 1, 2000. The prices reported prior to our move to the New York Stock Exchange reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not

necessarily represent actual transactions. All prices below have been adjusted to reflect the 3-for-2 stock split paid on July 12, 2001 and the 3-for-2 stock split payable on May 31, 2002.

Our declaration and payment of dividends are subject to the discretion of the Board of Directors and will depend upon levels of indebtedness, future earnings, capital requirements, our operating and financial condition and that of our subsidiaries, and general business conditions, as well as other factors that our Board of Directors considers relevant. As a holding company, our principal source of funds for the payment of dividends will be dividends received from Flagstar Bank, which are subject to certain regulatory restrictions.

The Selling Stockholders consist of Thomas J. Hammond and his children Mark T. Hammond, Catherine H. Rondeau and Carrie C. Langdon. The Hammond family, including the Selling Stockholders, beneficially own in the aggregate 15,339,396 shares, or 52.3%, of our outstanding shares of common stock as of the date of this prospectus. The shares of our common stock offered by this prospectus are already outstanding, and therefore, this offering will not affect the number of shares of common stock outstanding before and after the offering.

As of the date hereof, there were 29,220,596 shares of common stock outstanding. The following table sets forth information, as of the date of this prospectus, regarding the ownership of our common stock by the Selling Stockholders, the stock which they will respectively

beneficially own following the offering (assuming that the over-allotment options are not exercised) and their current respective positions with us or Flagstar Bank, if any.

Subject to the terms and conditions of the underwriting agreement among us, the Selling Stockholders and Keefe, Bruyette & Woods, Inc., Friedman Billings Ramsey and Fahnestock & Co. Inc., the underwriters have severally agreed to purchase from the Selling Stockholders, and we have agreed to sell to them, an aggregate of 2,250,000 common shares in the amounts set forth below opposite their respective names.

Under the terms and conditions of the underwriting agreement, the underwriters are committed to accept and pay for all of the shares, if any are taken. If an underwriter defaults, the underwriting agreement may be increased or, in certain cases, the underwriting agreement may be terminated. In the underwriting agreement, the obligations of the underwriters are subject to approval of certain legal matters by their counsel, including, without limitation, the authorization and the validity of the shares, and to various other conditions contained in the underwriting agreement, such as receipt by the underwriters of officers’ certificates and legal opinions.

The underwriters propose to offer the common shares to the public at the public offering price set forth on the cover page of this prospectus, and to certain securities dealers (who may include the underwriters) at such price, less a concession not in excess of $ per share. The underwriters may allow, and the selected dealers may reallow, a concession not in excess of $ per share to certain brokers and dealers. After the offering, the offering price and other selling terms may from time to time be changed by the underwriters.

The Selling Stockholders have granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to 225,000 additional shares, solely to cover over-allotments, if any, at the same price per share to be paid by the underwriters for the other shares in this offering. If the underwriters purchase any additional shares under this option, each underwriter will be committed to purchase the additional shares in approximately the same proportion allocated to them in the table above.

The following table shows the underwriting fees to be paid to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the over-allotment option.

In connection with the offering, the underwriters may engage in transactions that are intended to stabilize, maintain or otherwise affect the price of the common stock during and after the offering, such as the following:


	•	The underwriters may over-allot or otherwise create a short position in the common stock for their own account by selling more shares of common stock than have been sold to them;

	•	The underwriters may elect to cover any such short position by purchasing shares of common stock in the open market or by exercising the over-allotment option;

	•	The underwriters may stabilize or maintain the price of the common stock by bidding; and


	•	The underwriters may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if shares of common stock previously distributed in the offering are repurchased in connection with stabilization transactions or otherwise.

The effect of these transactions may be to stabilize or maintain the market price of the common stock at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the common stock to the extent that it discourages resales of the common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on the New York Stock Exchange or otherwise and, if commenced, may be discontinued at any time.

We and the Selling Stockholders have agreed to indemnify the underwriters and their controlling persons against specified liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments that the underwriters may be required to make for such liabilities.

We and the Selling Stockholders have agreed not to directly or indirectly offer for sale, sell, contract to sell, grant any option for the sale of, or otherwise issue or dispose of, any share of our common stock, options to acquire common shares, or any related security or instrument, for a period of 180 days after the date of this prospectus, without the prior written consent of Keefe, Bruyette & Woods, Inc., except in limited circumstances.

Certain of the underwriters and their affiliates have, from time to time, performed investment banking and other services for us and our affiliates in the ordinary course of business and have received fees from us for their services.

The validity of our common stock offered hereby will be passed upon for us by Kutak Rock LLP, 1101 Connecticut Avenue, N.W., Washington, D.C. 20036-4374. Certain legal matters relating to Michigan law will be passed upon for us by Albert J. Gladner, Esq., Senior Vice President and General Counsel of Flagstar Banks. The validity of our common stock will be passed upon for the underwriters by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004-2498. Kutak Rock LLP and Sullivan & Cromwell will rely upon the opinion of Mr. Gladner as to matters of Michigan law.

The consolidated financial statements incorporated in this prospectus by reference to our Annual Report on Form 10-K for the year ended December 31, 2001 have been so incorporated in reliance on the report of Grant Thornton LLP, independent certified public accountants, given on the authority of said firm as experts in auditing and accounting.


•	We have not authorized anyone to give you any information that differs from the information in this prospectus. If you receive any different information, you should not rely on it.

•	The delivery of this prospectus shall not, under any circumstances, create an implication that Flagstar Bancorp, Inc. is operating under the same conditions that it was operating under when this prospectus was written. Do not assume that the information contained in this prospectus is correct at any time past the date indicated.

•	This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities other than the securities to which it relates.

•	This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the securities to which it relates in any circumstances in which such offer or solicitation is unlawful.

The following table sets forth the estimated expenses in connection with the sale and distribution of the securities being registered hereby, other than underwriting discounts and commissions. All such expenses are to be paid by the Registrant:

Flagstar’s Restated Articles of Incorporation contain a provision, authorized by the Michigan Business Corporation Act (“MBCA”), and designed to eliminate in certain circumstances the personal liability of directors for monetary damages to Flagstar or its stockholders for breach of their fiduciary duty as directors. This provision, however, does not limit the liability of any director who breached his or her duty of loyalty to the Company or its stockholders, failed to act in good faith, obtained an improper personal benefit or paid a dividend or approved a stock repurchase or redemption or approved a loan that was prohibited under Michigan law. This provision will not limit or eliminate the rights of the Company or any stockholder to seek an injunction or any other nonmonetary relief in the event of a breach of a director’s duty of care. In addition, this provision applies only to claims against a director arising out of his or her role as a director and does not relieve a director from liability unrelated to his fiduciary duty of care or from a violation of statutory law such as certain liabilities imposed on a director under the federal securities laws.

The Company’s Restated Articles of Incorporation and Restated Bylaws also provide that the Company shall indemnify all directors and officers of the Company to the full extent permitted by the MBCA. Under the provisions of the MBCA, any director or officer who, in his or her capacity as such, is made or threatened to be made a party to any suit or proceeding, may be indemnified if the Board determines such director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company or its stockholders.

Officers and directors are covered within specified monetary limits by insurance against certain losses arising from claims made by reason of their being directors or officers of the Company or of the Company’s subsidiaries and the Company’s officers and directors are indemnified against such losses by reason of their being or having been directors or officers of another corporation, partnership, joint venture, trust or other enterprise at the Company’s or its subsidiaries’ request.

The following is a list of exhibits filed as part of this Registration Statement and also serves as the Exhibit Schedules:


(b)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.


	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

	(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement related to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Company’s annual report pursuant to Section 3(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act for 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Troy, State of Michigan, on the 24th day of May, 2002.


	By:	/s/ MARK T. HAMMOND



	Mark T. Hammond
	Vice-Chairman of the Board,
	President and Chief Executive Officer
	(Duly Authorized Representative)

Each person whose signature appears below hereby appoints Mark T. Hammond his or her true and lawful attorney-in-fact, with power to act and with full power of substitution, in any and all capacities, to sign any or all amendments (including post-effective amendments) to the Registration Statement and file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or their substitutes, may lawfully cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1933, this Registration Statement has been signed by the following persons (including a majority of the Board of Directors of the Registrant) in the capacities and on the dates indicated.


(b)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.


Michigan		38-3150651
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)






		Proposed Maximum	Proposed Maximum	Amount of
Title of Each Class of	Amount to be	Offering Price	Aggregate Offering	Registration
Securities to be Registered	Registered(2)	Per Share(1)	Price(1)	Fee


Common Stock, $0.01 par value	1,650,000	$29.67	$48,955,500	$4,508


PROSPECTUS SUMMARY
THE OFFERING
RISK FACTORS
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
BUSINESS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SELLING STOCKHOLDERS
UNDERWRITING
TRANSFER AGENT
VALIDITY OF COMMON STOCK
EXPERTS
TABLE OF CONTENTS
Form S-3
EX-1.0 Form of Underwriting Agreement
EX-5.1 Opinion/Consent of Kutak Rock LLP
EX-23.1 Consent of Independent CPA


	Per Share	Total

Public offering price	$	$
Underwriting discount	$	$
Proceeds to Selling Stockholders	$	$



		At or for the Three Months							At or for the Year Ended
		Ended March 31,							December 31,

		2002		2001		% Change			2001		2000		% Change


		(Dollars in thousands,							(Dollars in thousands,
		except per share data)							except per share data)
Summary of Consolidated Statements of Earnings:
	Interest income	$	114,821	$	112,075		2.5	%	$	438,771	$	381,635		15.0	%
	Interest expense		65,663		86,761		(24.3	)		325,041		290,126		12.0

Net interest income			49,158		25,314		94.2			113,730		91,509		24.3
	Provision for losses		8,174		5,980		36.7			33,197		10,576		213.9

Net interest income after provision for losses			40,984		19,334		112.0			80,533		80,933		(0.5	)
	Other income		58,711		34,736		69.0			213,044		65,353		226.0
	Operating and administrative expenses		60,268		35,312		70.7			164,710		100,992		63.1

Earnings before federal income tax provision			39,427		18,758		110.2			128,867		45,294		184.5
	Provision for federal income taxes		13,904		6,861		102.7			45,927		16,360		180.7

Net earnings		$	25,523	$	11,897		114.3		$	82,940	$	28,934		186.7

Basic earnings per share		$	0.89	$	0.45		97.8		$	2.99	$	1.06		182.1
Diluted earnings per share		$	0.83	$	0.41		102.4		$	2.78	$	1.05		164.8

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PAUL D. BORJA, ESQ. Kutak Rock LLP 1101 Connecticut Avenue, N.W., Suite 1000 Washington, DC 20036-4374 (202) 828-2400 (Phone) (202) 828-2488 (Fax)		ROBERT W. DOWNES, ESQ. Sullivan & Cromwell 125 Broad Street New York, NY 10004-2498 (212) 558-4000 (Phone) (212) 558-3588 (Fax)


Common stock outstanding immediately prior to the offering		29,220,596 shares

Common stock offered by the Selling Stockholders		2,250,000 shares(1)

Common stock to be outstanding immediately after the offering		29,220,596 shares

New York Stock Exchange symbol		“FBC”

Risk Factors		An investment in our common stock involves substantial risks. You should carefully read “Risk Factors” beginning on page 8 before deciding to invest in shares of our common stock.


(1)	Does not include up to 225,000 shares of common stock that may be sold by the Selling Stockholders upon exercise of the underwriters’ option. This option is referred to as an “over- allotment option.”



	At or for the
	Three Months Ended
	March 31,						At or for the Year Ended December 31,

	2002			2001			2001			2000			1999			1998			1997


	(Dollars in thousands, except per share data)
Summary of Consolidated Statements of Earnings:
Interest income	$	114,821		$	112,075		$	438,771		$	381,635		$	238,670		$	191,261		$	122,752
Interest expense		65,663			86,761			325,041			290,126			173,732			137,187			80,033

Net interest income		49,158			25,314			113,730			91,509			64,938			54,074			42,719
Provision for losses		8,174			5,980			33,197			10,576			7,296			18,631			5,015

Net interest income after provision for losses		40,984			19,334			80,533			80,933			57,642			35,443			37,704
Other income		58,711			34,736			213,044			65,353			81,981			118,413			59,836
Operating and administrative expenses		60,268			35,312			164,710			100,992			80,430			86,843			62,503

Earnings before federal income tax provision		39,427			18,758			128,867			45,294			59,193			67,013			35,037
Provision for federal income taxes		13,904			6,861			45,927			16,360			20,772			25,950			13,265

Net earnings	$	25,523		$	11,897		$	82,940		$	28,934		$	38,421		$	41,063		$	21,772

Basic earnings per share(1)	$	0.89		$	0.45		$	2.99		$	1.06		$	1.25		$	1.33		$	0.75
Diluted earnings per share(1)	$	0.83		$	0.41		$	2.78		$	1.05		$	1.22		$	1.29		$	0.75
Dividends per common share(1)	$	0.05		$	0.04		$	0.18		$	0.18		$	0.16		$	0.13		$	0.03
Summary of Consolidated Statements of Financial Condition:
Total assets	$	6,402,675		$	6,371,534		$	6,623,824		$	5,763,224		$	4,310,039		$	3,046,445		$	1,901,084
Loans receivable		5,653,540			5,071,977			5,875,290			5,222,491			3,808,731			2,558,716			1,655,259
Mortgage servicing rights		154,865			132,300			168,469			106,425			131,831			150,258			83,845
Retail deposits		2,161,496			2,121,802			2,368,205			1,870,731			1,293,183			835,097			509,106
Wholesale deposits		1,219,358			1,526,333			1,239,898			1,537,234			967,780			1,088,273			600,827
FHLB advances		1,975,000			1,995,000			1,970,505			1,733,345			1,477,000			456,019			482,378
Stockholders’ equity		317,232			210,401			291,488			196,830			185,714			163,852			126,617
Other Financial and Statistical Data:
Tangible capital ratio		6.70	%		4.95	%		6.13	%		5.31	%		6.76	%		6.44	%		5.40	%
Core capital ratio		6.70	%		4.95	%		6.13	%		5.32	%		6.80	%		6.54	%		5.62	%
Total risk-based capital ratio		12.45	%		9.98	%		11.44	%		10.30	%		13.16	%		12.93	%		11.74	%
Equity-to-assets ratio (at the end of the period)		4.95	%		3.30	%		4.40	%		3.42	%		4.31	%		5.38	%		6.66	%
Equity-to-assets ratio (average for the period)		4.60	%		3.30	%		3.75	%		3.62	%		4.69	%		5.03	%		6.22	%
Book value per share(1)	$	10.95		$	7.76		$	10.15		$	7.35		$	6.41		$	5.33		$	4.11
Shares outstanding(1)		28,968			27,120			28,710			26,765			29,006			30,758			30,758
Average shares outstanding(1)		28,817			27,021			27,723			27,347			30,509			30,758			28,884
Average diluted shares(1)		30,593			29,232			29,820			27,555			31,102			31,846			29,254
Mortgage loans originated or purchased	$	9,262,184		$	5,437,547		$	32,996,998		$	9,865,152		$	14,550,258		$	18,852,885		$	7,873,099
Mortgage loans sold		8,944,320			5,395,001			30,879,271			7,982,200			12,854,514			17,803,958			7,222,394
Mortgage loans serviced for others		15,249,763			7,637,022			14,222,802			6,644,482			9,519,926			11,472,211			6,412,797
Capitalized value of mortgage servicing rights		1.02	%		1.73	%		1.18	%		1.60	%		1.38	%		1.31	%		1.31	%
Interest rate spread		3.10	%		1.70	%		1.82	%		1.76	%		1.85	%		1.85	%		2.10	%
Net interest margin		3.25	%		1.80	%		1.94	%		1.91	%		2.02	%		2.14	%		2.74	%
Return on average assets		1.55	%		0.77	%		1.31	%		0.56	%		1.05	%		1.45	%		1.29	%
Return on average equity		33.58	%		23.31	%		34.98	%		15.47	%		21.37	%		28.77	%		20.69	%
Efficiency ratio		55.90	%		58.30	%		50.20	%		63.60	%		53.90	%		49.60	%		59.70	%
Net charge-off ratio		0.35	%		0.22	%		0.29	%		0.18	%		0.14	%		0.17	%		0.20	%
Ratio of allowance to total loans		0.79	%		0.55	%		0.71	%		0.48	%		0.60	%		0.78	%		0.33	%
Ratio of non-performing loans to total loans		1.56	%		1.62	%		1.48	%		1.22	%		1.09	%		1.43	%		2.68	%
Ratio of non-performing assets to total assets		2.08	%		1.40	%		1.91	%		1.49	%		1.47	%		1.97	%		3.29	%
Ratio of allowance to non- performing loans		50.80	%		43.20	%		47.90	%		39.30	%		55.00	%		53.80	%		12.40	%
Number of retail banking centers		74			59			71			52			35			28			19
Number of retail loan origination centers		73			49			69			42			38			31			35
Number of correspondent offices		15			15			15			15			16			15			16


(1)	All amounts have been adjusted to reflect the 3-for-2 stock split declared on June 26, 2001 and paid July 12, 2001 and the 3-for-2 stock split declared on May 3, 2002 and payable on May 31, 2002.


		Highest		Lowest				Dividends
		Closing		Closing		Closing		Declared in
Period Ending		Price		Price		Price		the Period

Year ending December 31, 2002
	2nd Quarter (through , 2002)	$		$		$		$	0.053
	1st Quarter		15.73		12.74		15.52		0.047
Year Ended December 31, 2001
	4th Quarter		16.70		12.83		13.42		0.047
	3rd Quarter		17.33		9.91		15.40		0.047
	2nd Quarter		11.78		9.09		9.29		0.044
	1st Quarter		11.11		9.31		11.11		0.044
Year Ended December 31, 2000
	4th Quarter		11.17		4.75		11.11		0.044
	3rd Quarter		5.72		3.43		5.47		0.044
	2nd Quarter		6.25		3.63		3.63		0.044
	1st Quarter		7.09		5.81		5.81		0.044


		Shares of		Common							Common
		Common		Stock			Shares of		Shares of		Stock
		Stock		Percentage			Common		Common		Percentage
		Owned		Owned			Stock		Stock Owned		Owned
		Before the		Before the			Offered		After the		After the
Name of Beneficial Owner		Offering(5)(6)		Offering			Hereby(7)		Offering(5)		Offering(6)

Thomas J. Hammond(1)			8,949,557		30.5	%		1,500,000		7,449,557		25.3	%
Mark T. Hammond(2)			2,332,845		7.9			250,000		2,082,845		7.1	%
Catherine H. Rondeau(3)			2,104,179		7.2			250,000		1,854,179		6.3	%
Carrie C. Langdon(4)			1,952,816		6.7			250,000		1,702,816		5.8	%

	Total		15,339,396		52.3			2,250,000		13,089,396		44.4


(1)	Thomas J. Hammond is our Chairman of the Board and of Flagstar Bank. Through December 31, 2001, Mr. Hammond also served as our Chief Executive Officer and of Flagstar Bank. Includes 2,166,554 shares of common stock held by Mr. Hammond’s wife, Janet G. Hammond, as to which Mr. Hammond disclaims beneficial ownership. Also does not include any shares held by Mark Hammond, Catherine Rondeau or Carrie Langdon, all of whom are adult children of Mr. and Mrs. Hammond.

(2)	Mark T. Hammond is our Vice-Chairman of the Board, President and Chief Executive Officer and of Flagstar Bank. Mark T. Hammond is the son of Thomas J. Hammond. Mr. Hammond disclaims 28,082 shares beneficially owned by Mrs. Kirstin A. Hammond, his wife and an executive vice president of the Bank.

(3)	Catherine H. Rondeau is the daughter of Thomas J. Hammond and the wife of Robert O. Rondeau, Jr., one of our executive officers. Ms. Rondeau disclaims 15, 896 shares beneficially owned by Mr. Rondeau.

(4)	Carrie C. Langdon is the daughter of Thomas J. Hammond.

(5)	For purposes of the above table, a person is considered to “beneficially own” any shares with respect to which he/she exercises sole or shared voting or investment power or of which he/she has the right to acquire the beneficial ownership within 60 days of the date of this prospectus.

(6)	“Percentage of Class” is calculated by dividing the total number of outstanding shares beneficially owned by the Selling Stockholders as of the date of this prospectus plus the number of shares such person has the right to acquire within 60 days of the date of this prospectus into the total number of outstanding shares as of the date of this prospectus plus the total number of shares that any person has the right to acquire within 60 days of the date of this prospectus.

(7)	This table assumes no exercise of the underwriters’ over-allotment option granted by the Selling Stockholders. If the underwriters exercise the over-allotment option in full, (i) the number of shares being offered by the Selling Stockholders would be 2,475,000 shares, (ii) the number of shares owned by the Hammond family, including the Selling Stockholders, after the offering would be 12,719,451, and (iii) the percentage of class owned by the Hammond family, including the Selling Stockholders, after the offering would be 43.6%.


		Number of
Underwriters		Shares

Keefe, Bruyette & Woods, Inc.
Friedman Billings Ramsey
Fahnestock & Co. Inc.

	Total		2,250,000


	Page

Prospectus Summary		3
The Offering		7
Risk Factors		8
Where You Can Find More Information; Incorporation by Reference		14
Special Note of Caution Regarding Forward-Looking Statements		14
Selected Consolidated Financial Data		16
Business		17
Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Market Price and Dividend Information		23
Selling Stockholders		24
Underwriting		26
Transfer Agent		27
Validity of Common Stock		27
Experts		27


		No Exercise	Full Exercise

Per Share		$	$
	Total	$	$


Exhibit
Number		Description

	1.0	Form of Underwriting Agreement
	4.0	Specimen of Stock Certificate of the Company(a)
	5.1	Opinion of Kutak Rock LLP
	21	Subsidiaries of the Registrant(b)
	23.1	Consent of Independent Certified Public Accountant
	23.2	Consent of Kutak Rock LLP (included in Exhibit 5.1)
	24.1	Power of Attorney (reference is made to the signature page)


	Flagstar Bancorp, Inc.


Signature	Title	Date

/s/ JAMES D. ISBISTER James D. Isbister	Director	May 24, 2002
/s/ RICHARD S. ELSEA Richard S. Elsea	Director	May 24, 2002
/s/ JOHN R. KERSTEN John R. Kersten	Director	May 24, 2002
/s/ C. MICHAEL KOJAIAN C. Michael Kojaian	Director	May 24, 2002


SEC registration fee		$
NYSE filing fee
Blue Sky filing fees and expenses
Accounting fees and expenses
Legal fees and expenses
Printing, postage and mailing
Stock transfer agent fees
Other

	Total	$


(a)	Incorporated by reference from the Company’s Registration Statement on Form S-1, Registration Statement No. 333-21621, as filed on February 12, 1997 and thereafter amended.