Flagstar Bancorp Inc had agreed to pay  $105 million to Assured Guaranty Ltd as settlement to a lawsuit against the bank for misrepresenting loan quality which was part of a $900 million of mortgage-backed securities.

A Manhattan federal judge ordered Flagstar to pay bond insurer Assured Guaranty to settle the litigation which was closely monitored by banks with similar troubled securities.  The ruling came after similar other settlements in bondholder lawsuits against banks.

Assured filed the lawsuit in 2011 accusing Troy, Michigan-based Flagstar of misrepresenting the quality of home loans packaged into two securitizations issued in 2005 and 2006.  U.S. District Judge Jed Rakoff  issued a ruling in February which favored Assured.

According to Flagstar CEO Alessandro DiNello, the agreement with Assured represents a favorable resolution of Flagstar's last remaining significant legacy legal matter.

Assured Guaranty also said Flagstar will reimburse other future claims on its insurance policies.