02/09/2021: Flagstar Bank Bulk Sale Online Bill Pay – Determine if Funds Received Electronically or by Physical Check

Summary: 

Determine how funds are remitted from online banking and/or bill pay services for Flagstar Bank bulk sale customers to know if their online banking/bill pay payment will be rejected back to the online banking financial institution or bill pay provider. Previously we stated generically that bill pay payments were rejected back to the provider, however this is not always the case. If the bill pay provider or financial institution remits the mortgagor’s payment through issuing and mailing a physical check, the checks will be processed and forwarded through the end of March 2021.


Details:

Retained servicing customers transferred to Flagstar Bank on February 1, 2021 who remit their monthly payment to Fairway/ServiceMac using online banking or a third party bill-pay service will experience one of the scenarios outlined below.


Two types of bill payments exist. Some online banking and bill pay services remit funds electronically while others print and mail physical checks. 


Bill pay funds received electronically: Customers whose funds were transmitted electronically on or after January 29, 2021 will receive an email or letter advising their payment has been returned to their financial institution or third party bill pay service provider (a letter will be sent if an email address is not available)


Bill pay funds received by physical check: The physical check will be forwarded to Flagstar Bank for 60 days after the February 1, 2021 transfer effective date (through March 2021 end of month)


Determine if funds for payments received prior to the servicing transfer were received electronically or by check by viewing the batch code in MSP. 


This only provides data for payments posted before January 29, 2021 but may indicate the trend of how previous payments were remitted (electronic or check).


View the P309 screen, then type /S4 to view screen 4 of P309

Locate the BATCH field and review previously posted payment transactions

  • Batch code 8EB indicates funds are remitted electronically
  • Batch code in the 600 range indicates funds are remitted by check


Below is an example of a bill pay loan in MSP where funds are remitted electronically – batch code 8EB

Remember – bill pay/online banking payments remitted to Fairway on or after January 29, 2021 will not appear in MSP.


Type “MSP Batch Codes” in the search window in KnowledgeOwl for Retained Servicing for the detailed procedure.


Talking points for customers:

  • All online banking/bill pay customers must update the payee information with their online banking or bill pay service to reflect their new servicer, Flagstar Bank:

Payment details must be updated as follows:

Pay to the order of: Flagstar Bank
 Reference: Flagstar loan #__________
 Mail to/reference the: Payment Processing Department
 Flagstar Bank, P.O. Box 660263
 Dallas, TX 75266-0263

  • If funds are remitted electronically to Fairway:

o   Payments remitted through their bank online bill pay or a third party bill pay service beginning 01/29/2021 are being rejected and returned to the sender (online banking or bill pay service) 

o   Funds are automatically returned the business day after they are received, it may take 3 – 7 business days for customers to see funds in their account

o   Customers should contact their bank or third party bill pay service for details on receiving the returned funds

  • If funds are remitted by physical check to Fairway:

o   The physical check will be forwarded to Flagstar Bank for 60 days after the February 1, 2021 transfer effective date 

o   After the 60 day RESPA protection period is over, funds remitted by check to Fairway through online banking will be returned to the bill pay provider


It is critically important all of these customers update their online banking/online bill payee information to reflect Flagstar Bank. 


View a list of customers whose bill pay funds were remitted electronically and returned by accessing the shared drive path below – must access through the Citrix desktop:


X:\Servicing\Customer Experience\Bill Pay Rejects Flagstar Bank Transfer