Fremont General Sells Subprime Portfolio Santa Monica based Fremont General is selling most of it's sub prime portfolio. The buyer is still undisclosed but there are some notable things about this deal.

• Fremont General is taking a 100 million dollar pretax loss.
  
• The deal is largely being underwritten by the sale of it's residential real estate assets to the same entity. "The Company alsoannounced that it has entered into exclusive negotiations with the same institution under an executed letter of intent to sell most of it's residential real estate business and assets." From PRNewswire
  
• After the sale the companies cash position remains strong with 1.5 billion in assets.
  

Fremont General will exit the sub prime market with this sale. The discount is pretty heavy but considering that the current subprime market has a foreclosure rate of 4%. Fremont General was smart to leave the market. Remember this is going to be the first year where ARMS are resetting to actually include principal. We can expect the ARM foreclosure rate to sky rocket in the upcoming years. This won't hit the California market as hard since the California economy is vibrant. I expect it to hit parts of Texas, Indiana, Georgia and other bid up secondary markets pretty hard.
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Fremont General

Official Announcement of Fremont General's sale it's subprime portfolio

Labels: FremontGeneral, Subprime, subprimemortgagecalifornia, subprimeportfolio

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