Moody's cuts Fremont General

Moody's Investors Service said it downgraded its ratings on Fremont General Corp. (senior to Caa2 from B3) including its lead subsidiary, Fremont Investment and loan (deposits to B2 from B1).

The bank financial strength rating of Fremont Investment and loan was affirmed at E+, the agency said.

The rating on the preferred stock issued by Fremont General Financing I was lowered to Ca from Caa2, Moody's noted, adding that the downgrades are a response to low capital levels at the bank and increased uncertainty that the holding company can meet its obligations.

Moody's said that negative developments at Fremont include a fall in Fremont's capital ratios, remaining risk to subprime mortgages and the participating interest in the commercial real estate loan portfolio that it sold to iStar Financial, along with increased uncertainty about the sale of its subprime mortgage servicing platform.

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