<PAGE>   1
                                    FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934


Commission File No.:     000-23821
                    ------------------



                          FLAGSTAR CAPITAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          MICHIGAN                                              38-3386801
-------------------------------                              ------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


 2600 TELEGRAPH ROAD, BLOOMFIELD HILLS, MICHIGAN                48302-0953
------------------------------------------------                ----------
     (Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code:  (248) 338-7700
                                                      --------------


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days. Yes    X      No
                                                 --------     --------

         As of August 13, 1999, 1,000,000 shares of the registrant's Common
Stock, $1.00 par value, were issued and outstanding and 2,300,000 shares of the
registrant's Series A Preferred Shares, $25.00 par value, were issued and
outstanding.



<PAGE>   2


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The unaudited condensed financial statements of the Registrant are as follows:

         Statement of Financial Condition - June 30, 1999 and December 31, 1998

         Statement of Earnings - For the three and six months ended June 30,
         1999 and the three months and the period ended June 30, 1998

         Statement of Cash Flows - For the six months ended June 30, 1999 and
         the period ended June 30, 1998

         Condensed Notes to Financial Statements.

                                       2
<PAGE>   3





                          FLAGSTAR CAPITAL CORPORATION
                        STATEMENT OF FINANCIAL CONDITION
                                 (IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    JUNE 30,            DECEMBER 31,
                                                                      1999                 1998
                                                               ------------------    -----------------
<S>                                                                 <C>                 <C>
ASSETS
Cash and cash equivalents                                         $  4,808               $  6,989
Mortgage loans receivable                                          120,563                116,675
Accrued interest receivable                                          1,280                  1,307
Other assets                                                         3,106                  5,103
                                                                  --------               --------
        Total assets                                              $129,757               $130,074
                                                                  ========               ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Due to parent                                                     $    406               $    722
Other liabilities                                                       24                     25
                                                                  --------               --------
               Total liabilities                                       430                    747
STOCKHOLDERS' EQUITY
Series A Preferred Stock - $25.00 liquidation value,
   2,300,000 shares authorized and issued at June 30,
   1999 and December 31, 1998                                       57,500                 57,500

Common stock - $1.00 par value, 1,000,000 shares
 authorized and issued at June 30, 1999 and
 December 31, 1998                                                   1,000                  1,000
Additional paid in capital                                          70,827                 70,827
Retained earnings                                                        -                      -
                                                                  --------               --------
               Total stockholders' equity                          129,327                129,327
                                                                  --------               --------
        Total liabilities and stockholders' equity                $129,757               $130,074
                                                                  ========               ========
</TABLE>
        THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.


                                       3
<PAGE>   4

                          FLAGSTAR CAPITAL CORPORATION
                              STATEMENT OF EARNINGS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>


                                              FOR THE           FOR THE       FOR THE SIX        FOR THE
                                              QUARTER           QUARTER         MONTHS           PERIOD
                                               ENDED             ENDED           ENDED           ENDED
                                              JUNE 30,          JUNE 30,        JUNE 30,        JUNE 30,
                                                1999              1998            1999            1998
                                           --------------     ------------  --------------    --------------

<S>                                           <C>              <C>              <C>              <C>
 Interest on loans                            $1,731           $1,776           $3,611           $2,559
 General and administrative expenses             105               26              207              126
                                              ------           ------           ------           ------
NET EARNINGS                                  $1,626           $1,750           $3,404           $2,433
                                              ======           ======           ======           ======

PREFERRED STOCK DIVIDENDS                     $1,222           $1,222           $2,444           $1,705
                                              ======           ======           ======           ======

NET EARNINGS AVAILABLE TO COMMON SHARES       $  404           $  528           $  960           $  728
                                              ======           ======           ======           ======

EARNINGS PER COMMON SHARE                     $ 0.40           $ 0.73           $ 0.96           $ 1.13
                                              ======           ======           ======           ======
</TABLE>

        THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       4
<PAGE>   5






                          FLAGSTAR CAPITAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                      FOR THE SIX              FOR THE
                                                                                      MONTHS ENDED           PERIOD ENDED
                                                                                        JUNE 30,              JUNE  30,
                                                                                         1999                    1998
                                                                                   -------------------    ----------------
<S>                                                                                   <C>                    <C>
   OPERATING ACTIVITIES
    Net earnings                                                                        $   3,404            $   2,433
    Adjustments to reconcile net earnings to net cash used in operating activities
      Decrease (increase) in accrued interest receivable                                       27               (1,044)
      Decrease (increase) in payments in process                                            1,997               (1,433)
      (Decrease) increase in liabilities due parent                                          (316)                 576
      (Decrease) increase in liabilities                                                       (1)                  27
                                                                                        ---------            ---------
          Net cash provided by operating activities                                         5,111                  559
INVESTING ACTIVITIES
      Purchase of mortgage loans                                                          (25,009)            (132,314)
      Principal repayments received on mortgage loans                                      21,121                9,369
                                                                                        ---------            ---------
          Net cash used in investing activities                                            (3,888)            (122,945)
FINANCING ACTIVITIES
      Sale of common stock to Flagstar Bank, FSB                                                -               74,954
      Sale of preferred stock                                                                   -               57,500
      Preferred stock issuance costs paid                                                       -               (3,127)
      Dividends paid to common stockholders                                                (2,444)                (728)
      Dividends paid to preferred stockholders                                               (960)              (1,705)
                                                                                        ---------            ---------
          Net cash (used in) provided by financing activities                              (3,404)             126,894
                                                                                        ---------            ---------
Net (decrease) increase in cash and cash equivalents                                       (2,181)               4,508
Beginning cash and cash equivalents                                                         6,989                   -
                                                                                        ---------            ---------
Ending cash and cash equivalents                                                        $   4,808            $   4,508
                                                                                        =========            =========
</TABLE>

        THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       5
<PAGE>   6






                          FLAGSTAR CAPITAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1 - NATURE OF BUSINESS

Flagstar Capital Corporation (the "Company"), is an operating subsidiary of
Flagstar Bank, FSB (the "Bank"), a federally chartered stock savings bank
founded in 1987. The primary business of the Company is to acquire, hold, and
manage residential mortgage loans that will generate income that can be
distributed to stockholders.

NOTE 2 - FORMATION OF THE COMPANY

On February 24, 1998, the Company sold to the Bank 499,900 shares of common
stock, $1.00 par value, providing proceeds totaling $65.5 million. The Company
also sold 2.0 million shares of its 8.50% Series A Preferred Stock, $25.00 par
value, to the public in an initial offering, providing gross proceeds totaling
$50.0 million.

On May 21, 1998, in response to the underwriters exercising their over-allotment
option, the Company issued an additional 300,000 shares of its 8.50% Series A
Preferred Stock, $25.00 par value, to the public and 500,000 shares of common
stock, $1.00 par value, providing additional proceeds totaling $17.0 million,
gross. All shares of common stock are held by the Bank.

The Company used the net proceeds from the equity offerings to purchase mortgage
loans from the Bank.

NOTE 3. - BASIS OF PRESENTATION

The accompanying consolidated unaudited financial statements of the Company,
have been prepared in accordance with generally accepted accounting principles
for interim information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X as promulgated by the Securities and Exchange
Commission. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. All interim amounts are subject to year-end audit, the results of
operations for the interim period herein are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999.

                                       6
<PAGE>   7

ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

The principal business of the Company is to acquire, hold, and manage mortgage
loans that will generate income that can be distributed to stockholders. The
Company intends to acquire all its mortgage loans from the Bank.

RESULTS OF OPERATIONS

The Company reported net earnings for the quarter ended June 30, 1999 of $1.6
million. Interest income from loans was $1.7 million, which was offset by
$43,000 in administrative expenses, and $62,000 in advisory fees. During the
quarter ended June 30, 1998 the Company reported net earnings of approximately
$1,750,000. Interest income from loans for the quarter was $1,776,000, which was
offset by $23,000 in administrative expenses, and $3,000 in outside directors
fees.

The Company reported net earnings of $3.4 million for the six months ended June
30, 1999. Interest income from loans was $3.6 million for the six months ended
June 30, 1999, which was offset by $82,000 in administrative expenses and
$125,000 in advisory fees. For the period ended June 30, 1998, the Company
reported $2.4 in net earnings. Interest income from loans was $2.5 million,
which was offset by $33,000 in administrative expenses, $5,000 in outside
directors fees, and $88,000 in advisory fees.

The Company reported net earnings per common share of $0.40 and $0.73 for the
quarters ended June 30, 1999 and 1998, respectively. For the six months ended
June 30, 1999 and the period ended June 30, 1998, the Company reported net
earnings per common share of $0.96 and $1.13, respectively.

During the quarters ended June 30, 1999 and 1998, the Company declared and paid
$1,222,000 in preferred stock dividends. For the six months ended June 30, 1999
and the period ended June 30, 1998, the Company declared and paid $2,444,000 and
$1,705,000, respectively, in preferred stock dividends.

The Company declared a common stock dividend of $404,000 and $528,000 for the
quarters ended June 30, 1999 and 1998, respectively. For the six months ended
June 30, 1999 and the period ended June 30, 1998, the Company declared common
stock dividends of $960,000 and $728,000, respectively.

MORTGAGE LOANS

The Company's residential mortgage loans ("Mortgage Loans") consist of
Adjustable Rate Mortgages ("ARMs"), and Fixed Rate Mortgages ("FRM's").
Reinvestments made in Mortgage Loans will be initiated in a manner to maintain
the original composition of the portfolio which was approximately 70% ARMs and
30% FRMs. All Mortgage Loans are expected to be purchased from the Bank.

The following table gives a breakdown of the Mortgage Loans at June 30, 1999.
<TABLE>
<CAPTION>

===============================================================================================================
                              Principal        Average      Interest
Product Type       Loans       Balance         Balance        Rate         WAM           WARM   % of Total
---------------------------------------------------------------------------------------------------------------

<S>                  <C>   <C>            <C>                <C>           <C>            <C>      <C>
  3 year ARM         138   $ 35,584,000   $    257,852       6.737%        360            342      29.9

  5 year ARM         106     27,194,000        256,543       6.875         360            344      22.8

  7 year ARM          79     18,439,000        233,407       6.935         360            345      15.5

15 year Fixed        154     14,384,000         93,405       6.505         180            165      12.1

30 year Fixed        183     23,541,000        128,641       6.931         360            344      19.7
---------------------------------------------------------------------------------------------------------------
       Total         660   $119,142,000   $    180,518       6.809%        338            322     100.0%
===============================================================================================================
</TABLE>

                                       7
<PAGE>   8

LIQUIDITY

The objective of maintaining liquidity within the Company is to ensure the
availability of sufficient cash flows to meet all of the Company's financial
commitments. In managing liquidity, the Company takes into account various legal
limitations placed on a REIT as discussed below in Other Matters.

The Company's operational concerns involve the maintainenance of the current
Mortgage Loan portfolio size through the acquisition of additional Mortgage
Loans as Mortgage Loans currently in the portfolio mature, or prepay. Mortgage
Loans are acquired from the Bank at the estimated fair value. The Company must
also pay cash dividends to the holders of the Series A Preferred Shares, while
distributing the remainder of net earnings to the common stockholders.

During June 1999, the Company purchased from the Bank $25.1 million in principal
balance of residential mortgage loans at a purchase price of $25.3 million,
their estimated fair value.

For the quarter and six months ended June 30, 1999, the Company received
principal repayments from mortgage loans totaling approximately $10.4 million
and $21.1 million, respectively.

The Company does not anticipate any material capital expenditures other than for
the acquisition of additional residential mortgage loans.

At June 30, 1999 the Company had a liquidity coverage ratio (Projected interest
income divided by REIT dividends plus Advisory fees plus Servicing Fees ) of
1.58 versus the liquidity coverage ratio at December 31, 1998 of 1.53 and at
inception of 1.67.

OTHER MATTERS

As of June 30, 1999, the Company believed that it was in compliance with the
REIT tax rules and that it will continue to qualify as a REIT under the
provision of the Internal Revenue Code (the "Code"). The Company calculates
that:

*        its Qualified REIT Assets, as defined in the Code, are approximately
         100% of its total assets, as compared to the federal tax requirements
         that at least 75% of its total assets must be Qualified REIT Assets.

*        100% of its revenues qualify for the 75% source of income test and 100%
         of its revenues qualify for the 95% source of income test under the
         REIT rules.

*        none of the revenue was subject to the 30% income limitation under the
         REIT rules.

The Company also met all REIT requirements regarding the ownership of its common
and preferred stocks and anticipates meeting the 1999 annual distribution and
administrative requirements.


ITEM 3.  MARKET RISK

The Company does not utilize any derivatives or hedging instruments to adjust
for market risk. Management believes that the use of these instruments is not
necessary.

                                       8
<PAGE>   9
                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities

         None.

Item 3.  Defaults upon Senior Securities

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits
                  Exhibit 11
                  Exhibit 27 (SEC Use only)

         (b)      Reports on Form 8-K

                  None

                                       9
<PAGE>   10





                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                  FLAGSTAR CAPITAL CORPORATION



Date:    August 12, 1999          /S/ Thomas J. Hammond
                                  ---------------------
                                  Thomas J. Hammond
                                  Chairman of the Board and
                                  Chief Executive Officer
                                  (Duly Authorized Officer)




                                  /S/ Michael W. Carrie
                                  ---------------------
                                  Michael W. Carrie
                                  Executive Vice President and
                                  Chief Financial Officer
                                  (Principal Financial and Accounting Officer)


                                       10
<PAGE>   11
                                 Exhibit Index
                                 -------------

<TABLE>
<CAPTION>
Exhibit No.                    Description
-----------                    -----------
<S>                           <C>
    11                         Computation of Net Earnings per Share
    27                         Financial Data Schedule
</TABLE>