Flagstar Bancorp (FBC) in Troy, Mich., plans to outsource the servicing of some $3 billion of defaulted mortgages.

The $13.1 billion-asset company said Wednesday that it expects to hire a subservicer, which it did not name, to handle its default servicing business. This business makes up less than 4% of Flagstar's overall servicing portfolio, which totaled about $74 billion in unpaid principal balances as of the end of the first quarter, according to a regulatory filing. (In a subservicing arrangement, a company keeps the servicing rights on a portfolio of mortgages but farms out some or all of the work to another party.)

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