Flagstar Bancorp (FBC) is facing further fallout from the housing crisis.

The $14.9 billion-asset company based in Troy, Mich., was sued Friday by MBIA (MBI), which charges Flagstar with misleading the company about the condition of loans that backed $1.02 billion in securities MBIA insured in the years that preceded the financial crisis.

The case stems from MBIA's agreement to insure two securitizations that Flagstar sponsored in 2006 and 2007. In both cases, the bank aggregated mortgage loans that it sold to trusts, which issued securities backed by payments on the loans and insurance issued by MBIA.

The 2006 securitization allegedly held 8,300 loans with a total balance of roughly $400 million. The securitization in 2007 involved 12,500 loans with a combined balance of roughly $625 million. MBIA says the trusts later had combined losses of $225 million that forced MBIA to pay roughly $165 million in claims.

According to MBIA, Flagstar said that information the bank provided to the insurer in connection with both the originations and securitizations was true and that each loan adhered to the bank's underwriting guidelines.

"To induce MBIA to guaranty payments due on certain securities, Flagstar made extensive warranties concerning its loans and operations and attesting to the veracity of the representations it made," MBIA wrote in court papers filed Friday in the U.S. District Court in Manhattan. "Flagstar's warranties were false."

Flagstar's representation were "particularly important to MBIA because MBIA's insurance policy irrevocably guaranteed timely payment of interest and ultimate repayment of principal on the bonds," added the insurer, which alleges that Flagstar also has failed to honor promises to buy back defective loans.

"As a result, MBIA was forced to initiate today's litigation to recover the losses it has incurred from Flagstar's wrongful behavior," MBIA spokesman Kevin Brown said in an email.

A Flagstar spokeswoman declined to comment on the lawsuit, which comes amid a series of suits that charges Flagstar with misleading insurers in the run-up to the mortgage meltdown.

Shares of Flagstar fell 80 cents Friday to close at $17.85.

In February, Flagstar agreed to pay $133 million to settle charges over its underwriting practices on loans insured by the Federal Housing Administration. In September, a federal judge in New York ruled that Flagstar must stand trial over charges by Assured Guaranty Municipal Corp. that the bank breached contracts for financial guaranty insurance on roughly $1 billion in mortgage-backed securities it issued.

The squabbles have hit Flagstar financially. Earnings at the company tumbled 7% in the third quarter of 2012 as litigation costs offset a gain from the sale of loans. MBIA cites the litigation in its complaint as evidence that its experience with Flagstar "is not unique." In December, Flagstar sold $1.2 billion in commercial loan commitments in the Northeast to a unit of CIT Group as part of a plan by the bank to focus its business on mortgages and Michigan.

Flagstar is scheduled to release fourth-quarter results on Jan. 23.

MBIA also has sued Bank of America (BAC) to recover billions of dollars the insurer paid investors who bought mortgage-backed securities issued by Countrywide, which Bank of America in 2008, that later dropped in value.

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