8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2009

Flagstar Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Michigan	1-16577	38-3150651
(State or other jurisdiction of	(Commission File	(I.R.S. Employer
incorporation)	Number)	Identification No.)
5151 Corporate Drive, Troy, Michigan		48098
(Address of principal executive offices)		(Zip Code)

(248) 312-2000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

þ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-10.1

EX-99.1

Item 1.01. Entry into a Material Definitive Agreement

On February 27, 2009, Flagstar Bancorp, Inc. (“Flagstar”) entered into a Second Purchase Agreement with MP Thrift Investments L.P. (“MatlinPatterson”), an entity formed by MP (Thrift) Global Partners III LLC, an affiliate of MatlinPatterson Global Advisers LLC (the “Second Purchase Agreement”), pursuant to which Flagstar raised $25 million through the direct sale to MatlinPatterson of Flagstar’s Convertible Participating Voting Preferred Stock, Series B (the “Preferred Stock”). Flagstar entered into the Second Purchase Agreement as part of a closing agreement that it entered into with MatlinPatterson on January 30, 3009, pursuant to which MatlinPatterson agreed to purchase $100 million in equity capital from Flagstar in addition to the $250 million in equity capital purchased by MatlinPatterson on January 30, 2009. With the investment reported herein and the $25 million investment consummated on February 17, 2009, MatlinPatterson has invested $50 million of the $100 million in equity capital. Flagstar anticipates that the final investment of $50 million from MatlinPatterson, in the form of trust preferred securities convertible into Flagstar common stock, will close in March. The terms and conditions of the closing agreement are more fully described in Item 1.01 of Flagstar’s Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 2, 2009 (the “Prior Form 8-K”), which description is incorporated herein by reference. The applicable terms and preferences attached to the Preferred Stock are more fully described in Item 1.01 of Flagstar’s Form 8-K filed with the SEC on December 19, 2008, which description is incorporated herein by reference.

Under the terms of the Second Purchase Agreement, MatlinPatterson purchased 25,000 shares of the Preferred Stock at a purchase price and liquidation preference of $1,000 per share. After receipt of stockholder approval to increase the number of authorized shares of Flagstar common stock, the Preferred Stock will automatically convert into 31,250,000 shares of Flagstar’s common stock at a conversion price of $0.80 per share of common stock, subject to customary anti-dilution provisions. Also, pursuant to the Second Purchase Agreement, Flagstar has agreed to file a registration statement covering the common stock acquired upon conversion of the Preferred Stock. The description of the Second Purchase Agreement is a summary and does not purport to be a complete description of all of the terms of such agreements, and is qualified in its entirety by reference to the Second Purchase Agreement attached hereto as Exhibit 10.1.

Item 3.02 Unregistered Sales of Equity Securities.

As described in Item 1.01 hereof (which description is incorporated herein by reference), Flagstar sold 25,000 shares of Preferred Stock to MatlinPatterson at a purchase price and liquidation preference of $1,000 per share, which is the second portion of the $100 million investment by MatlinPatterson previously reported in Item 3.02 of the Prior Form 8-K. The Preferred Stock was offered and sold to MatlinPatterson in an offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(2) of the Securities Act. As described above in Item 1.01, upon approval of Flagstar’s stockholders, each share of Preferred Stock will automatically convert into 31,250,000 shares of Flagstar’s common stock at a conversion price of $0.80 per shares of common stock, subject to customary anti-dilution provisions.

Item 8.01. Other Events.

On February 27, 2009, Flagstar issued a press release announcing the closing of a previously announced transaction described in Item 1.01 above under the closing agreement. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.

Additional Information

In connection with the proposed MatlinPatterson investment, a definitive proxy statement relating to certain of the matters discussed in this Form 8-K is expected to be filed with the SEC. When filed, copies of the definitive proxy statement and other related documents may be obtained free of charge on the SEC website (www.sec.gov). FLAGSTAR’S SHAREHOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders are encouraged to read the definitive proxy statement when filed, and Flagstar notes that the shareholder meeting on the matters discussed in the definitive proxy statement will occur after the closing of the MatlinPatterson investment and the issuance of the voting preferred stock which provides MatlinPatterson with the ability to control the vote at any shareholder meeting. Flagstar, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” of proxies from Flagstar’s shareholders in connection with certain of the matters discussed in this Form 8-K. Information regarding such persons and their interests in Flagstar is contained in Flagstar’s proxy statements and annual reports on Form 10-K filed with the SEC. Shareholders and investors may obtain additional information regarding the interests of Flagstar and its directors and executive officers in the matters discussed in this Form 8-K, which may be different than those of Flagstar’s shareholders generally, by reading the definitive proxy statement and other relevant documents regarding the matters discussed in this Form 8-K, which are expected to be filed with the SEC.

The information contained in this release is not intended as a solicitation to buy Flagstar’s stock and is provided for general information. This Form 8-K contains certain statements that may constitute “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements include statements about the company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates, and intentions, that are subject to significant risks and uncertainties, and are subject to change based upon various factors (some of which may be beyond Flagstar’s control). The words “may,” “could,” “should,” “would,” “believe,” and similar expressions are intended to identify forward-looking statements.

Item 9.01 Financial Statements and Exhibits

          (c) The following exhibits are being furnished herewith:

Exhibit No.	Exhibit Description
10.1	Second Purchase Agreement, effective as of February 27, 2009, by and between Flagstar and MatlinPatterson
99.1	Press Release dated February 27, 2009.

SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	FLAGSTAR BANCORP, INC.
Dated: February 27, 2009	By:	/s/ Paul D. Borja
		Paul D. Borja
		Executive Vice-President and Chief Financial Officer

EX-10.1

Exhibit 10.1

SECOND PURCHASE AGREEMENT

     THIS SECOND PURCHASE AGREEMENT (this “Agreement”) is effective as of the 27th day of February, 2009, by and between Flagstar Bancorp, Inc. (the “Company”), a corporation organized under the laws of the State of Michigan, with its principal offices at 5151 Corporate Drive, Troy, Michigan 48098-2639 and MP Thrift Investments L.P., a Delaware limited partnership (the “Purchaser”).

     WHEREAS, the Company entered into an Investment Agreement dated as of December 17, 2008 with the Purchaser (the “Investment Agreement”), pursuant to which the Purchaser purchased from the Company 250,000 shares of the Company’s Convertible Participating Voting Preferred Stock, Series B (the “Series B Preferred Stock”), at a purchase price of $1,000 per share, with each share convertible into common stock, par value $0.01 per share, of the Company (the “Common Stock”), at the liquidation preference divided by $0.80;

     WHEREAS, all capitalized terms used in this Agreement, but which are not defined herein, shall have the definition that is ascribed to them under the Investment Agreement;

     WHEREAS, in connection with the issuance of the Series B Preferred Stock, the Company entered into an Amendment and Waiver Agreement dated as of January 30, 2009 with the Purchaser (the “Closing Agreement”), pursuant to which, subject to the terms and conditions set forth therein, the Company agreed to issue and sell, and, the Purchaser agreed to purchase: (i) 50,000 shares of the Company’s preferred stock with terms substantially identical to the Series B Preferred Stock at a purchase price of $1,000 per share, with each share convertible into Common Stock, at the liquidation preference divided by $0.80 (the “Conversion Shares”), and (ii) $50 million of trust preferred securities with a 10% coupon, both as described in the Closing Agreement;

     WHEREAS, in connection with the Closing Agreement, the Company entered into a Purchase Agreement dated as of February 17, 2009 with the Purchaser, pursuant to which the Purchaser purchased from the Company 25,000 shares of the Series B Preferred Stock, at a purchase price of $1,000 per share, with each share convertible into Common Stock, at the liquidation preference divided by $0.80;

     IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

     SECTION 1. Agreement to Sell and Purchase the Shares. At the Closing (as defined in Section 3), the Company will, subject to the terms and conditions of this Agreement, issue and sell to the Purchaser and the Purchaser will buy from the Company, upon the terms and conditions hereinafter set forth, 25,000 shares of Series B Preferred Stock (the “Further Additional Shares”) at $1,000 per share (the “Purchase Price”).

     SECTION 2. Delivery of the Shares at the Closing.

     2.1 The completion of the purchase and sale of the Further Additional Shares (the “Closing”) shall occur on February 27, 2008 at the offices of Sullivan & Cromwell LLP located at 125 Broad Street, New York, New York 10004 or such other date or location as agreed by the parties, but not prior to the date that the conditions for Closing set forth below have been satisfied or waived by the appropriate party (the “Closing Date”).

     2.2 At the Closing, the Purchaser shall deliver, in immediately available funds, the full amount of the Purchase Price for the Further Additional Shares being purchased hereunder to an account designated by the Company and the Company shall deliver to the Purchaser the Further Additional Shares evidenced by one or more share certificates incorporating the terms set forth in the certificate of designations of the Series B Preferred Stock bearing an appropriate legend referring to the fact that the Series B Preferred Stock were sold in reliance upon the exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) thereof and Rule 506 thereunder as more further described in Section 3.5.

     SECTION 3. Representations, Warranties and Covenants of the Purchaser. The Purchaser represents and warrants to, and covenants with, the Company that:

     3.1 Experience. (i) The Purchaser is knowledgeable, sophisticated and experienced in financial and business matters, in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Further Additional Shares, including investments in securities issued by the Company and comparable entities, has the ability to bear the economic risks of an investment in the Further Additional Shares and has reviewed carefully the information provided by the Company to the Purchaser in connection with this Agreement and the purchase of the Further Additional Shares hereunder, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Further Additional Shares; (ii) the Purchaser is acquiring Further Additional Shares in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of the Further Additional Shares or any arrangement or understanding with any other persons regarding the distribution of such Further Additional Shares (this representation and warranty not limiting the Purchaser’s right to sell pursuant to a registration statement or in compliance with the Securities Act and the rules and regulations promulgated thereunder (the “Rules and Regulations”)); (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Further Additional Shares, nor will the Purchaser engage in any short sale that results in a disposition of any of the Further Additional Shares by the Purchaser, except in compliance with the Securities Act and the Rules and Regulations and any applicable state securities laws; (iv) the Purchaser is an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act.

     3.2 Reliance on Exemptions. The Purchaser understands that the Further Additional Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws and that

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the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Further Additional Shares.

     3.3 Investment Decision. The Purchaser understands that nothing in the Agreement or any other materials presented to the Purchaser in connection with the purchase and sale of the Further Additional Shares, constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Further Additional Shares.

     3.4 Risk of Loss. The Purchaser understands that its investment in the Further Additional Shares involves a significant degree of risk, including a risk of total loss of the Purchaser’s investment, and the Purchaser has full cognizance of and understands all of the risk factors related to the Purchaser’s purchase of the Securities. The Purchaser understands that the market price of the Common Stock into which the Further Additional Shares is convertible has been volatile, and that no representation is being made as to the future value of the Further Additional Shares.

     3.5 Legend. The Purchaser understands that, until such time as a registration statement has been declared effective or the Further Additional Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Further Additional Shares will bear a restrictive legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF DECEMBER 17, 2008, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.”

     3.6 Transfer Restrictions. Consistent with the legend set forth in Section 3.5, the Further Additional Shares may only be disposed of in compliance with state and federal securities laws and the transfer and other restrictions set forth in the Investment Agreement as if they were “Securities” thereunder.

     SECTION 4. Representations, Warranties and Covenants of the Company. The Company represents and warrants to, and covenants with, the Purchaser that:

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     4.1 Organization and Standing.  The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Michigan.

     4.2 Execution and Delivery; Enforceability. The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). No other corporate proceedings are necessary for the execution and delivery by the Company of this Agreement, the performance by it of its obligations hereunder or the consummation by it of the transactions contemplated hereby, subject, in the case of the authorization of the Conversion Shares, to receipt of the Stockholder Approvals identified in the Certificate of Designations.

     4.3 Due Authorization. The Further Additional Shares have been duly authorized and, when issued and delivered against receipt of consideration therefore as provided in this Agreement, will be validly issued, fully paid and non-assessable, will not be issued in violation of or subject to preemptive rights of any other stockholder of the Company and will not result in the violation or triggering of any price-based antidilution adjustments under any agreement to which the Company is a party. The voting rights of the holders of the Further Additional Shares will be enforceable in accordance with the terms of the Certificate of Designations. The Certificate of Designations has been filed with the Secretary of State of the state of Michigan and, as of the Closing Date, will be in full force and effect and enforceable against the Company in accordance with its terms.

     4.4 Governmental Consents. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares and such consents, approvals, authorizations or other orders as have been obtained and are in full force and effect.

     4.5 No Conflicts. Neither the execution and delivery by the Company of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof (including, without limitation, the conversion provisions of the Convertible Preferred Stock), will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests and other encumbrances of any kind upon any of the material properties or assets of the Company or any Subsidiary under any of the terms, conditions or provisions of (i) subject in the case of the authorization and issuance of the Conversion Shares to receipt of the approval by the Company’s stockholders of the Stockholder Proposals, its Certificate of Incorporation or bylaws

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(or similar governing documents) or the certificate of incorporation, charter, bylaws or other governing instrument of any Subsidiary or (ii) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any Subsidiary is a party or by which it may be bound, or to which the Company or any Subsidiary or any of the properties or assets of the Company or any Subsidiary may be subject, or (B) violate any law, statute, ordinance, rule, regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Company or any Subsidiary or any of their respective properties or assets.

     SECTION 5. Registration Rights. The Purchaser shall have the right to have the Further Additional Shares (including the Conversion Shares) registered for resale under the Securities Act, and related indemnification rights, as set forth in Section 4.7 of the Investment Agreement, as if the Further Additional Shares (including the Conversion Shares) were “Registrable Securities” thereunder.

     SECTION 6. New York Stock Exchange Listing. The Company shall promptly use its reasonable best efforts to cause the Conversion Shares to be approved for listing of the New York Stock Exchange or such other nationally recognized securities exchange on which the Common Stock may be listed, subject to official notice of issuance.

     SECTION 7. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

(a) if to the Company, to:

Flagstar Bancorp, Inc.
5151 Corporate Drive,
Troy, Michigan 48098-2639
Attention: Mr. Paul Borja
Facsimile: (248) 312-6833
E-mail: paul.borja@flagstar.com

with a copy to:

Kutak Rock LLP
1101 Connecticut Avenue, N.W.
Suite 1000
Washington, DC 20036-4374
Attention: Jeremy Johnson, Esq.
Facsimile: (202) 828-2488
E-mail: jeremy.johnson@KutakRock.com

     or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

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(b) if to a Purchaser, to:

MP Thrift Investments L.P.
520 Madison Avenue
New York, New York 10022
Attention: Robert H. Weiss, General Counsel
Facsimile: (212) 651-4014

with a copy to:

Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attention: Mitchell S. Eitel, Esq.
                  George J. Sampas, Esq.
Facsimile: (212) 558-3588

     or at such other address or addresses as may have been furnished to the Company in writing.

     SECTION 8. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Purchaser. Any amendment or waiver effected in accordance with this Section 6 shall be binding upon the Purchaser and the Company.

     SECTION 9. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

     SECTION 10. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

     SECTION 11. Governing Law; Venue. This Agreement is to be construed in accordance with and governed by the federal law of the United States of America and the internal laws of the State of New York without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of New York to the rights and duties of the parties, except that the parties hereto intend that the provisions of Sections 5-1401 and 5-1402 of the New York general obligations law shall apply to this Agreement. Each of the Company and the Purchaser submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Company and the Purchaser irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court

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and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

     SECTION 12. Counterparts; Facsimile. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. Facsimile signatures shall be deemed original signatures.

     SECTION 13. Entire Agreement. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.

     SECTION 14. Further Assurances. Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurance as may be reasonably requested by any other party to evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this Agreement.

[Remainder of Page Left Intentionally Blank]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

FLAGSTAR BANCORP, INC.
	By:
	Name:
	Title:
MP THRIFT INVESTMENTS L.P.
	By:	MP (Thrift) Global Partners III LLC, its General Partner
	Name:
	Title:

EX-99.1

Exhibit 99.1

	NEWS RELEASE For more information, contact:
	Paul D. Borja Executive Vice President / CFO (248) 312-2000
	FOR IMMEDIATE RELEASE

Flagstar Reports Completion of Second $25 Million Investment by MP Thrift Investments L.P.

TROY, Mich. (February 27, 2009) – Flagstar Bancorp, Inc. (NYSE: FBC) (“Flagstar”), the holding company of Flagstar Bank FSB, today reported the completion of an investment of $25 million from MP Thrift Investments L.P. (“MatlinPatterson”), an entity formed by MP (Thrift) Global Partners III LLC, an affiliate of MatlinPatterson Global Advisers. The investment resulted in the issuance of 25,000 shares of Flagstar’s Convertible Participating Voting Preferred Stock, Series B, which, subject to stockholder approval to increase the number of authorized shares of Flagstar common stock, will be convertible into 31,250,000 shares of Flagstar common stock at a conversion price of $0.80 per share. With today’s investment, MatlinPatterson has invested $50 million of the previously announced $100 million in equity capital that MatlinPatterson had agreed to purchase from Flagstar, which is in addition to the $250 million investment made by MatlinPatterson on January 30, 2009. Flagstar anticipates that the final investment of $50 million from MatlinPatterson, in the form of trust preferred securities convertible into Flagstar common stock, will close in March, 2009.

Flagstar Bancorp, Inc.

Flagstar Bancorp, with $14.2 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At December 31, 2008, Flagstar operated 175 banking centers in Michigan, Indiana and Georgia and 104 home loan centers in 21 states. Flagstar Bank originates loans nationwide and is one of the leading originators of residential mortgage loans.

About MatlinPatterson Global Advisers LLC

MatlinPatterson Global Advisers LLC is a $9 billion private equity franchise specializing in distressed control investments on a global basis. Over a 14-year period, the firm and its investment professionals have successfully made substantial investments in more than 65 companies across a broad range of industries. MatlinPatterson has a strong record of working with management teams to further their strategic plans.

ADDITIONAL INFORMATION

In connection with the proposed MatlinPatterson investment, a definitive proxy statement relating to certain of the matters discussed in this news release is expected to be filed with the SEC. When filed, copies of the definitive proxy statement and other related documents may be obtained free of charge on the SEC website (www.sec.gov). FLAGSTAR’S SHAREHOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders are encouraged to read the definitive proxy statement when filed, and Flagstar notes that the shareholder meeting on the matters discussed in the definitive proxy statement will occur after the closing of the MatlinPatterson investment and the issuance of the voting preferred stock which provides MatlinPatterson with the ability to control the vote at any shareholder meeting. Flagstar, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” of proxies from Flagstar’s shareholders in connection with certain of the matters discussed in this news release. Information regarding such persons and their interests in Flagstar is contained in Flagstar’s proxy statements and annual reports on Form 10-K filed with the SEC. Shareholders and investors may obtain additional information regarding the interests of Flagstar and its directors and executive officers in the matters discussed in this news release, which may be different than those of Flagstar’s shareholders generally, by reading the definitive proxy statement and other relevant documents regarding the matters discussed in this news release, which are expected to be filed with the SEC.

The information contained in this release is not intended as a solicitation to buy Flagstar’s stock and is provided for general information. This release contains certain statements that may constitute “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements include statements about the company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates, and intentions, that are subject to significant risks and uncertainties, and are subject to change based upon various factors (some of which may be beyond Flagstar’s control). The words “may,” “could,” “should,” “would,” “believe,” and similar expressions are intended to identify forward-looking statements.