Fremont General selling $2.9 billion of subprime residential loans and residential real estate business

By Lisa Kerner

Charlotte, N.C., April 16 - Fremont General Corp., doing business primarily through Fremont Investment & Loan, entered into an agreement to sell roughly $2.9 billion of its subprime residential real estate loans and entered into exclusive negotiations to sell most of its residential real estate business and assets to an unnamed buyer.

The pre-tax loss on the sale of the loans is estimated at $100 million, according to a company news release.

Fremont General said it will sell the loans at a discount, reflecting the current conditions in the subprime mortgage market.

Under an executed letter of intent, the buyer will obtain Fremont General's subprime residential loan servicing platform, as well as a portion of the company's subprime loan origination platform. Fremont will also sell its mortgage servicing rights, servicing advances, residual interests and mortgage-backed securities to the buyer.

Fremont General and the buyer are completing due diligence, finalizing terms and working toward the completion of a definitive agreement, according to the release.

Fremont General is a Santa Monica, Calif., financial services holding company engaged in real estate lending nationwide.

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