Fremont General (FMT) said late Friday that it's looking to sell off its subprime mortgage business.
The Santa Monica, Calif. company said the planned sale was in line with a proposed order it received Tuesday from the Federal Deposit Insurance Corp. calling on it to restrict its level of subprime lending. Fremont has retained Credit Suisse to serve as its adviser on the sale.
Subprime lenders make higher-interest loans to people with weak credit. They have run into trouble as real estate prices have softened and defaults have risen. On Friday, another subprime lender,
New Century Financial
federal prosecutors were investigating trading in its stock and accounting errors.
Fremont said the FDIC's proposed order will allow it to continue to accept retail deposits. The company also will continue to originate commercial real estate loans, a business that Fremont says remains profitable.
The company's shares ended Friday's regular trading session down 39 cents, or 4.3%, at $8.71 but fell an additional 18.1% to $7.13 in after-hours trading following news of the planned sale.