Fremont Cautions Sale Isn't Done

Fremont General's (FMT Quote) stock slid in after-hours trading after the lender cautioned that a sale of its subprime lending business isn't a done deal.

The news came after Fremont shares roared 26% higher in regular action Wednesday after Bloomberg reported the company had had talks with as many as six potential buyers. The news sent shares across the hard-hit subprime lending sector soaring.

Santa Clara, Calif.-based Fremont said Friday that it would try to sell the business, which focuses on lending to home buyers with weak credit histories, after the Federal Deposit Insurance Corporation proposed sending the company a cease-and-desist order. Shares of Fremont and other subprime lenders, led by New Century (NEW Quote), dropped sharply as investors worried that some lenders might go under if their banks cut off funding.

Fremont said in a statement late Wednesday that "there can be no assurance that the company will be able to enter into any transaction involving its residential loan origination platform."

On Tuesday, ResMAE Mortgage said hedge fund Citadel was purchasing assets from the firm for $22 million. The Brea, Calif., subprime lender filed for bankruptcy last month.

Shares fell 30 cents to $8.23.