Credit rating agency Moody's Investors Service on Wednesday downgraded the long-term deposit rating for Flagstar Bank, the banking subsidiary of Flagstar Bancorp Inc.
Moody's downgraded the bank to the lowest investment grade of "Baa3" from "Baa2" because of continued deterioration in the residential and commercial mortgage markets.
Further delinquencies and defaults are likely to increase credit costs for Flagstar and pressure earnings, Moody's said in a statement.
The outlook for Flagstar remains negative, meaning Moody's could again downgrade the company. Any further downgrade would lead to a junk rating.
Shares of Flagstar fell 33 cents, or 4 percent, to $7.98 in morning trading. Shares have traded between $5.06 and $14.93 during the past year.
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