Fremont General Corp. announced on Friday in a filing to the Securities & Exchange Commission that it is exiting the subprime lending business. The Santa Monica-based lender said it will post a loss for the fourth quarter and is in negotiations with the Federal Deposit Insurance Corp. in regard to its subprime lending practices, including the way in which it calculated the value of its loan portfolio, according to the filing. Fremont also said it was in talks with several potential buyers for its subprime business.
The lender earlier this week announced it would delay fourth quarter earnings and miss the deadline to file its annual report. Fremont filed the form 12b-25 to the SEC after the close of markets on Friday to notify of the late filing and provide an explanation.
Fremont is the third-largest subprime mortgage lender in the U.S. The FDIC's involvement in Fremont's lending practices could signify a stepped up effort by the agency. In what may be the first time, the FDIC specifically cited Fremont's failure to "operate consistently" with the FDIC interagency guidance on subprime lending practices. The news came as Federal regulators released a new set of proposed guidelines for subprime lending practices.
