Cash-strapped Fremont General ( FMT) is rapidly running out of options as it faces new trouble related to $3.15 billion in subprime loans it sold a year ago.

The Brea, Calif.-based savings and loan on Tuesday revealed that it has received default notices from two buyers of its mortgage loans, who allege the bank has failed to meet at least one if its obligations under the sale agreement.

Fremont in March 2007 sold the subprime residential real estate loans and received roughly $950 million in cash from the first installment under the agreements. The purchases required Fremont to provide the buyers with assurances that it met the net worth covenant, which was $250 million.

The company's new management, however, cannot confirm that it is able to satisfy the covenant because it is tangled up with auditors and can't complete its financial statements. The notices don't allege that Fremont is in breach of the obligations under the loan sale agreement, but that it didn't deliver the required financial statements.

The agreement specifies that if the bank can't meet the requirements, then it must provide an acceptable letter of credit or deposit funds into a reserve account. Fremont stated it was not in a position to do either.

Fremont said it has initiated talks with the purchasers to seek a waiver of this guaranty requirement, but no assurances can be made as to whether the talks will be successful or that the purchasers won't file a lawsuit against Fremont or declare an event of default. If it comes to a lawsuit, and Fremont can't defend itself, the company may go under, Fremont said.

The once high-flying California bank said just last week that it was facing a liquidity crunch. Its revenue stream has dried up since it was forced out of residential subprime lending by the Federal Deposit Insurance Corp. and agreed to sell its commercial loan business to iStar Financial ( SFI). Additionally, Fremont is working with investment banks Credit Suisse and Sandler O'Neill to explore ways to address its cash shortfall.

Fremont did not disclose who the notices came from. Although according to regulatory filings, Harbert Management disclosed that it owned 9% of the company, and its distressed product hedge fund Harbinger owned 6%. A spokesman for Fremont declined comment beyond the public statement. Harbert Management did not return calls for comment.

Fremont isn't alone in having difficulty with filing an annual report on time. Mortgage insurers Radian Group ( RDN - Get Report) and PMI Group ( PMI) both on Monday said they would be late to file. Both stocks are down in recent trading on Tuesday, with Radian losing 11.6% and PMI losing 6.3%.

Fremont shares have collapsed. Once a $30 stock, it is now a penny stock trading at 46 cents, losing 34.9% of its value in the market Tuesday.