Mortgage lender Fremont General Corp. disclosed Friday it was unable to estimate the cost of selling its subprime mortgage loan business, adding there is no guarantee of finding a buyer for the troubled unit.
Fremont, a major home lender to people with weak credit, disclosed last week that it planned to leave the subprime mortgage business and agreed to a cease-and-desist order with federal regulators related to improper lending practices.
“No agreement has yet been reached regarding the sale of this business and there is no assurance that the company will be able to enter into any transaction,” Fremont General said in a Securities and Exchange Commission filing Friday.
Federal bank regulators on Wednesday ordered Fremont General to tighten its loan policies to avoid future losses from defaults by borrowers, the first move by federal regulators against an institution related to the recent turmoil in the market for subprime mortgages — higher-interest loans for people with poor credit records.
The Federal Deposit Insurance Corp. found the bank was making subprime mortgage loans without having the proper criteria for assessing borrowers’ ability to repay, and that it was marketing and making the loans “in a way that substantially increased the likelihood of borrower default or other loss to the bank.”
Home-mortgage delinquencies and foreclosures are spiking, especially for people who took out subprime mortgages during the housing boom that waned in the second half of 2005.
Fremont General’s battered stock rebounded earlier this week after the company told employees that its subprime mortgage business had drawn interest from five or six potential buyers.
Shares fell 31 cents, or 3.7 percent, to close at $8.03 on the New York Stock Exchange.