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                                                                   EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of
May 25, 2005 (the "Effective Date"), by and between FLAGSTAR BANCORP, INC.
("BANCORP") AND FLAGSTAR BANK, FSB (the "Bank" and, together, with Bancorp, the
"Company") and Paul D. Borja (the "Employee").

         WHEREAS, the Company wishes to assure retention of the services of the
Employee for the period provided in this Agreement; and

         WHEREAS, the Employee is willing to serve in the employ of the Company
for said period.

         NOW, THEREFORE, it is agreed as follows:

         SECTION 1. EMPLOYMENT. The Employee is employed as the Executive Vice
President of Bancorp and of Flagstar Bank, fsb ("Bank") from the Effective Date
through June 20, 2005 and thereafter also as Chief Financial Officer of Bancorp
and the Bank. The Employee shall render such administrative and management
services for the Company as are currently rendered and as are customarily
performed by persons situated in such similar executive capacities. The Employee
shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Company. The Employee's other duties shall
be such as the Board of Directors of Bancorp or of the Bank, as the case may be
(collectively, the "Board") may from time to time reasonably direct, including
normal duties as an officer of the Company.

         SECTION 2. BASE COMPENSATION. Bancorp and Bank, jointly and severally,
agree to pay the Employee during the term of this Agreement a salary at the rate
of $383,000 per annum, payable in a manner consistent with the Company's payroll
practices. The Board shall review, not less often than annually, the rate of the
Employee's salary and, in its sole discretion, may decide to increase the
Employee's salary. If the Employee's salary is reduced to less than $383,000 per
annum, subsequent to a change in control of the Bank as defined in Section
11(a)(ii) hereof, the Employee may, within 90 days of such reduction, terminate
this Agreement and shall thereby be entitled to the payments and thereby be
entitled to the payments and terms as under Section 11(a) of this Agreement.

         SECTION 3. DISCRETIONARY BONUSES. From time to time, the Employee may
be entitled to discretionary bonuses at the sole discretion of the Board. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Employee's right to participate in such discretionary bonuses.

         SECTION 4. (a) PARTICIPATION IN RETIREMENT, MEDICAL AND OTHER PLANS.
The Employee shall participate in any plan that the Company maintains for the
benefit of its employees if the plan relates to (i) pension, profit-sharing or
other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses or (iii) other group benefits, including
disability and life insurance plans.

                  (a)      EMPLOYEE BENEFITS; EXPENSES. The Employee shall
         participate in any fringe benefits which are or may become available to
         the Company's senior management employees and which are commensurate
         with the responsibilities and functions to be performed by the Employee
         under this Agreement. The Employee shall be reimbursed for all
         reasonable out-of-pocket business expenses that the Employee shall
         incur in connection with services under this Agreement upon
         substantiation of such expenses in accordance with the policies of the
         Company. In addition, the Employee shall receive an annual car
         allowance of $7,200 payable in accordance with the Company's payroll
         practices.

                  (b)      LIABILITY INSURANCE; INDEMNIFICATION. The Company
         shall provide the Employee (including heirs, executors and
         administrators) with coverage under a standard directors' and officers'
         liability insurance policy at the Company's expense, or in lieu
         thereof, shall indemnify the Employee (and heirs, executors and
         administrators) to the fullest extent permitted under Michigan law
         against all expenses and liabilities reasonably incurred in connection
         with or arising out of any action, suit or proceeding in


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         which the Employee may be involved by reason of having been a director
         or officer of the Company (whether or not the Employee continues to be
         a director or officer at the time of incurring such expenses or
         liabilities); such expenses and liabilities to include, but not be
         limited to, judgments, court costs and attorneys' fees and the cost of
         reasonable settlements, and such settlements to be approved by the
         Board of Directors of the Company; provided, however, that such
         indemnification shall not extend to matters as to which the Employee is
         finally adjudged to be liable for willful misconduct or gross
         negligence in the performance of duties as a director or officer of the
         Company.

         SECTION 5. TERM. The Company hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement, for the term
commencing on the Effective Date and ending 36 months thereafter (or such
earlier date as is determined in accordance with Section 9). Additionally, on or
before the thirty-first of December of each year starting on or before December
31, 2006, the Employee's term of employment may be extended for an additional
one-year term, provided the Board determines in a duly adopted resolution that
this Agreement shall be extended.

         SECTION 6. LOYALTY; NONCOMPETITION.

                  (a)      During the term of employment hereunder and except
         for illnesses, reasonable vacation periods and reasonable leaves of
         absence, the Employee shall devote all business time, attention, skill
         and efforts to the faithful performance of duties hereunder to the
         Company and its subsidiaries; provided, however, that from time to time
         the Employee may serve on the boards of directors of, and hold any
         other offices or positions in, companies or organizations which will
         not present any conflict of interest with the Company or any of its
         subsidiaries or affiliates, or unfavorably affect the performance of
         the Employee's duties pursuant to this Agreement or will not violate
         any applicable statute or regulation. During the term of employment
         under this Agreement, the Employee shall not engage in any business or
         activity contrary to the business affairs or interests of the Company,
         or be gainfully employed in any other position or job other than as
         provided above; and

                  (b)      Nothing contained in this Section 6 shall be deemed
         to prevent or limit the Employee's right to invest in the capital stock
         or other securities of any business dissimilar from that of the
         Company, or, solely as a passive or minority investor, in any business.

         SECTION 7. STANDARDS. The Employee shall perform duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Company will provide the Employee with the
working facilities and staff customary for similar executives and necessary to
perform duties.

         SECTION 8. VACATION AND SICK LEAVE. At such reasonable times as the
Board shall in its discretion permit, the Employee shall be entitled, without
loss of pay, to be absent voluntarily from the performance of employment under
this Agreement. All such voluntary absences will count as vacation time,
provided that:

                  (a)      The Employee shall be entitled to paid time off in
         accordance with the policies that the Board periodically establishes
         for senior management employees of the Company.

                  (b)      The Employee shall not receive any additional
         compensation from the Company on account of the Employee's failure to
         take a vacation except to the extent authorized by the Board;

                  (c)      In addition to the aforesaid paid vacations, the
         Employee shall be entitled, without loss of pay, to be absent
         voluntarily from the performance of employment with the Company for
         such additional periods of time and for such valid and legitimate
         reasons as the Board may, in its discretion, determine. Further, the
         Board may grant to the Employee a leave or leaves of absence, with or
         without pay, at such time or times and upon such terms and conditions
         as such Board, in its discretion, may determine; and


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         SECTION 9. TERMINATION AND TERMINATION PAY. Subject to Section 11
hereof, the Employee's employment hereunder may be terminated under the
following circumstances:

                  (a)      DEATH. The Employee's employment under this Agreement
         shall terminate upon the Employee's death during the term of this
         Agreement, in which event the Employee's estate shall be entitled to
         receive six months' compensation, payable in a lump sum if election is
         made by the estate within 30 days of the Employee's death or otherwise
         on a monthly basis, plus any accrued and unpaid discretionary bonus due
         the Employee at the time of the Employee's death, payable in a lump sum
         amount within 30 days of the Employee's death. In addition, the Company
         shall maintain the existing medical insurance for the Employee's
         immediate family for six months after the Employee's death.

                  (b)      DISABILITY. The Company may terminate the Employee's
         employment after having established the Employee's Disability. For
         purposes of this Agreement, "Disability" means a physical or mental
         infirmity which impairs the Employee's ability to substantially perform
         duties under this Agreement, or which can be expected to impair the
         Employee's ability to substantially perform duties under this Agreement
         for a period of 180 consecutive days. The Employee shall be entitled to
         the compensation and benefits provided for under this Agreement for (i)
         any period during the term of this Agreement and prior to the
         establishment of the Employee's Disability during which the Employee is
         unable to work due to the physical or mental infirmity or (ii) any
         period of Disability which is prior to the Employee's termination of
         employment pursuant to this Section 9(b).

                  (c)      JUST CAUSE. The Board may, by written notice to the
         Employee, immediately terminate the Employee's employment at any time
         for Just Cause. The Employee shall have no right to receive
         compensation or other benefits for any period after termination for
         Just Cause. Termination for "Just Cause" shall mean termination because
         of, in the good faith determination of the Board, the Employee's
         personal dishonesty, willful misconduct, breach of fiduciary duty
         involving personal profit, intentional failure to perform stated
         duties, willful violation of any law, rule or regulation (other than
         traffic violations or similar offenses) or final cease-and-desist
         order, or material breach of any provision of this Agreement. No act,
         or failure to act, on the Employee's part shall be considered "willful"
         unless the Employee has acted, or failed to act, with an absence of
         good faith and without a reasonable belief that the action, or failure
         to act, was in the best interest of the Company. Notwithstanding the
         foregoing, the Employee shall not be deemed to have been terminated for
         Just Cause unless there shall have been delivered to the Employee a
         copy of a resolution duly adopted by the affirmative vote of not less
         than a majority of the membership of the Board at a meeting of the
         Board called and held for that purpose (after reasonable notice to the
         Employee and an opportunity for the Employee to be heard before the
         Board), finding that in the good faith opinion of the Board the
         Employee was guilty of conduct set forth above in this subsection (c)
         and specifying the particulars thereof in detail.

                  (d)      WITHOUT JUST CAUSE; CONSTRUCTIVE DISCHARGE.

                           (i)      The Board may, by written notice to the
                  Employee, immediately terminate employment at any time for a
                  reason other than Just Cause, in which event the Employee
                  shall be entitled to receive the following compensation and
                  benefits (unless such termination occurs within the time
                  period set forth in Section 11(b) hereof, in which event the
                  benefits and compensation provided for in Section 11 shall
                  apply): (A) the consideration provided pursuant to Section 2
                  hereof, for one year following the date of termination (the
                  "Severance Period"); and (B) cash in an amount equal to the
                  cost to the Employee of obtaining all health, life, disability
                  and other benefits in which the Employee would have been
                  eligible to participate based upon the benefit levels
                  substantially equal to those that the Company provided for the
                  Employee at the date of termination of employment for a period
                  of 12 months. All amounts payable to the Employee shall be
                  paid, at the option of the Employee, either (I) in quarterly
                  payments or (II) in one lump sum within 10 days of such
                  termination, provided, however, that in either instance, such
                  payment shall be delayed until the minimum time required if
                  deemed necessary by the Company to comply subject to and
                  conditioned upon compliance with Internal Revenue Code Section
                  409A and regulations promulgated thereunder regarding any
                  delay in such payment by the Company.


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                           (ii)     The Employee may voluntarily terminate
                  employment under this Agreement, and the Employee shall
                  thereupon be entitled to receive the compensation and benefits
                  payable under Section 9(d)(i) hereof, within 90 days following
                  the occurrence of any of the following events, which has not
                  been consented to in advance by the Employee in writing
                  (unless such voluntary termination occurs within the time
                  period set forth in Section 11(b) hereof in which event the
                  benefits and compensation provided for in Section 11 shall
                  apply): (A) the requirement that the personal residence of the
                  Employee be moved, or perform principal executive functions,
                  more than 50 miles from the Employee's primary office; (B) a
                  material reduction without reasonable cause in the Employee's
                  base compensation; (C) the failure by the Company to continue
                  to provide the Employee with compensation and benefits
                  provided for under this Agreement, or with benefits
                  substantially similar to those provided under any of the
                  employee benefit plans in which the Employee now or hereafter
                  becomes a participant, or the taking of any action by the
                  Company which would directly or indirectly reduce any of such
                  benefits or deprive the Employee of any material fringe
                  benefit enjoyed; (D) the assignment to the Employee of duties
                  and responsibilities materially different from those normally
                  associated with the Employee's position as referenced at
                  Section 1; or (E) a material diminution or reduction in the
                  Employee's responsibilities or authority (excluding reporting
                  responsibilities) in connection with his employment with the
                  Company.

                           (iii)    Notwithstanding the foregoing, but only to
                  the extent required under federal banking law, the amount
                  payable under Section 9(d)(i) hereof shall be reduced to the
                  extent that on the date of the Employee's termination of
                  employment, the present value of the benefits payable under
                  Section 9(d)(i) hereof exceeds the limitation on severance
                  benefits that is set forth in applicable regulations of the
                  Office of Thrift Supervision ("OTS"), as in effect on the
                  Effective Date. In the event that Section 280G of the Internal
                  Revenue Code of 1986, as amended (the "Code"), becomes
                  applicable to payments made under this Section 9(d), and the
                  payments exceed the "Maximum Amount" as defined in Section
                  11(a) hereof, the payments shall be reduced so not to exceed
                  maximum requirements.

                  (e)      VOLUNTARY TERMINATION BY EMPLOYEE. Subject to Section
         11 hereof, the Employee may voluntarily terminate employment with the
         Company during the term of this Agreement, upon at least 60 days' prior
         written notice to the Board of Directors, in which case the Employee
         shall receive only compensation, vested rights and employee benefits up
         to the date of termination (unless such termination occurs pursuant to
         Section 9(d)(ii) hereof or within the time period set forth in Section
         11(a) hereof, in which event the benefits and compensation provided for
         in Section 9(d) or 11, as applicable, shall apply). Should the Employee
         voluntarily terminate employment without providing 60 days' prior
         written notice to the Board of Directors, the Board of Directors may,
         at its election, negate and void any vested rights and/or employee
         benefits accrued.

         SECTION 10. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and no such payment shall be offset or reduced by
the amount of any compensation or benefits provided to the Employee in any
subsequent employment.

         SECTION 11. CHANGE IN CONTROL.

                  (a)      CHANGE IN CONTROL; INVOLUNTARY TERMINATION.

                           (i)      Notwithstanding any provision herein to the
                  contrary, if the Employee's employment under this Agreement is
                  terminated by the Company, without the Employee's prior
                  written consent and for a reason other than Just Cause, in
                  connection with or within 12 months after any change in
                  control (as hereinafter defined) of the Company, the Employee
                  shall be paid an amount equal to the difference between (A)
                  the product of 2.99 times "base amount" as defined in Section
                  280G(b)(3) of the Internal Revenue Code of 1986, as amended
                  (the "Code"), and regulations promulgated thereunder and (B)
                  the sum of any other parachute payments (as defined under
                  Section 280G(b)(2) of the Code) that the Employee receives on
                  account of the change in


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                  control. Said sum shall be paid in one lump sum within 10 days
                  of such termination, and shall be paid in lieu of the payment
                  of any benefits under Section 9 hereof. The Company shall also
                  maintain existing health insurance for six months after
                  termination of the Employee's employment, or if the Employee
                  dies within such six months, the Company shall maintain health
                  insurance for the Employee's spouse, if living, for the
                  remainder of the six-month period. At the election of the
                  Employee, which election is to be made within 30 days of the
                  Employee's termination, such payments shall be made in a lump
                  sum or paid monthly during the remaining term of this
                  Agreement following the Employee's termination, and shall be
                  payable, in the event of the Employee's death before full
                  payment is made, to the Employee's surviving spouse, if any,
                  and otherwise to the Employee's estate. In the event that no
                  election is made, payment to the Employee will be made on a
                  monthly basis during the remaining term of this Agreement.

                           (ii)     The term "change in control" shall mean (A)
                  the ownership, holding or power to vote more than 50% of the
                  Company's voting stock, (B) the acquisition of the ability to
                  control the election of a majority of the Company's directors,
                  (C) the acquisition of a controlling influence over the
                  management or policies of the Company by any person or by
                  persons acting as a "group" (within the meaning of Section
                  13(d) of the Securities Exchange Act of 1934 (except in the
                  case of (A), (B) and (C) hereof, ownership or control of the
                  Flagstar Bank by the Company itself shall not constitute a
                  "change in control"). The term "person" means an individual
                  other than the Employee, or a corporation, partnership, trust,
                  association, joint venture, pool, syndicate, sole
                  proprietorship, unincorporated organization or any other form
                  of entity not specifically listed herein. The decision of the
                  Continuing Directors as to whether a change in control has
                  occurred shall be conclusive and binding.

                  (b)      CHANGE IN CONTROL; VOLUNTARY TERMINATION.
         Notwithstanding any other provision of this Agreement to the contrary,
         the Employee may voluntarily terminate employment under this Agreement
         within 12 months following a change in control of the Company, as
         defined in paragraph (a) of this Section 11, should any of the
         following events occur and which have not been consented to in advance
         by the Employee in writing (and the Employee shall thereupon be
         entitled to receive the payment and terms as described in Section 11(a)
         of this Agreement within 90 days): (i) the requirement that the
         Employee move personal residence or perform principal executive
         functions more than 50 miles from the Employee's primary office as of
         the date of the change in control; (ii) a material reduction in the
         Employee's base compensation as in effect on the date of the change in
         control or as the same may be changed by mutual agreement from time to
         time; (iii) the failure by the Company to continue to provide the
         Employee with compensation and benefits provided for under this
         Agreement, as the same may be increased from time to time, or with
         benefits substantially similar to those provided under any employee
         benefit plans in which the Employee now or hereafter becomes a
         participant, or the taking of any action by the Company which would
         directly or indirectly reduce any of such benefits or deprive the
         Employee of any material fringe benefit enjoyed at the time of the
         change in control; (iv) the assignment to the Employee of duties and
         responsibilities materially different from those normally associated
         with the Employee's position as referenced at Section 1; or (v) a
         material diminution or reduction in the Employee's responsibilities or
         authority (excluding reporting responsibilities) in connection with
         employment with the Company. Said sum shall be paid in lieu of the
         payment of any benefits under Section 9 hereof.

                  (c)      COMPLIANCE WITH 12 U.S.C. SECTION 1828(k). Any
         payments made to the Employee pursuant to this Agreement, or otherwise,
         are subject to and conditioned upon their compliance with 12 U.S.C.
         Section 1828(k) and any regulations promulgated thereunder.

                  (d)      COMPLIANCE WITH IRC SECTION 409A. Any payments made
         to the Employee under this Section 11 are subject to and conditioned
         upon their compliance with Section 409A of the Internal Revenue Code of
         1986, as amended, and any regulations promulgated under Section 409A
         regarding any delay in such payments by the Company.


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         SECTION 12. ARBITRATION; REIMBURSEMENT OF EXPENSES.

                  (a)      ARBITRATION. Any dispute or controversy arising under
         or in connection with this Agreement shall be settled exclusively by
         arbitration in accordance with the rules of the American Arbitration
         Association then in effect. Judgment may be entered on the arbitration
         award in any court having jurisdiction; provided, however, that until
         the Expiration Date the employee shall be entitled to seek specific
         performance of the Employee's right to be paid during the pendency of
         any dispute or controversy arising under or in connection with this
         Agreement. Any arbitration proceeding shall be governed by and subject
         to Michigan arbitration law.

                  (b)      REIMBURSEMENT. All reasonable costs and legal fees
         paid or incurred by the Employee pursuant to any dispute or question of
         interpretation relating to this Agreement, or its specific performance,
         shall be paid or reimbursed by the Company, if the Employee is the
         prevailing party. Such payment or reimbursement shall be made within 10
         days of the Employee's furnishing the Company written evidence, which
         may be in the form, among other things, of a canceled check or receipt,
         of any costs or expenses incurred by the Employee.

         SECTION 13. FEDERAL INCOME TAX WITHHOLDING. The Company may withhold
all federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or
ruling.

         SECTION 14. SUCCESSORS AND ASSIGNS.

                  (a)      COMPANY. This Agreement shall not be assignable by
         the Company; provided, however, that this Agreement shall inure to the
         benefit of and be binding upon any corporate or other successor of the
         Company which shall acquire, directly or indirectly, by merger,
         consolidation, purchase or otherwise, all or substantially all of the
         assets or stock of the Company.

                  (b)      EMPLOYEE. Since the Company is contracting for the
         unique and personal skills of the Employee, the Employee shall be
         precluded from assigning or delegating the Employee's rights or duties
         hereunder without first obtaining the written consent of the Company;
         provided, however, that nothing in this paragraph shall preclude (i)
         the Employee from designating a beneficiary to receive any benefit
         payable hereunder upon death or (ii) the executors, administrators or
         other legal representatives of the Employee or the Employee's estate
         from assigning any rights hereunder to the person or persons entitled
         thereunto.

                  (c)      ATTACHMENT. Except as required by law, nor right to
         receive payments under this Agreement shall be subject to anticipation,
         commutation, alienation, sale, assignment, encumbrance, charge, pledge
         or hypothecation or to exclusion, attachment, levy or similar process
         or assignment by operation of law, and any attempt, voluntary or
         involuntary, to effect any such action shall be null, void and of no
         effect.

         SECTION 15. AMENDMENTS. No amendments, no oral discussions and/or
additions to this Agreement shall be binding unless made in writing and signed
by all of the parties, except as herein otherwise specifically provided.

         SECTION 16. APPLICABLE LAW. Except to the extent preempted by federal
law, the laws of the State of Michigan shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.

         SECTION 17. SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

         SECTION 18. [Intentionally Omitted]


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         SECTION 19. NON-SOLICITATION. Without the Bank's express written
approval, the Employee shall not, while employed by the Company, and for a
period of one year following termination (whether voluntary or involuntary) of
employment, directly or indirectly solicit any key employee, officer or senior
manager of Bancorp or the Bank for the purpose of hiring any of them or inducing
any of them to leave their position with the Company or the Bank, as the case
may be.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of this
10th day of May , 2005 which shall be effective as of the Effective Date
specified above.

                                         FLAGSTAR BANCORP, INC.



                                         By  /s/ Mark T. Hammond
                                             ----------------------------------
                                             Mark T. Hammond
                                             Chief Executive Officer

                                         FLAGSTAR BANK, fsb



                                         By  /s/ Mark T. Hammond
                                             ----------------------------------
                                             Mark T. Hammond
                                             Chief Executive Officer

                                         EMPLOYEE:




                                         /s/ Paul D. Borja
                                         --------------------------------------
                                         Paul D. Borja