Fremont General Corp., which is leaving its subprime mortgage business, said Wednesday it had agreed to sell $4 billion of its mortgages at a discount, resulting in a $140 million pre-tax loss. It said the loan sales would be completed over the next few weeks, and that it had already received $950 million as a first installment from an unspecified buyer. The sale price represents a 3.5% discount to face value. The company shut down its mortgage-lending operations on March 5 and put its employees on paid leave. On Monday Fremont said it had given two-months notice to some of the unit's 2,400 employees. It continues to operate its commercial real estate, residential loan-servicing and retail banking units. Shares, which are down about 33% on the year, were up 16% to $10.19 in Wednesday trading.
Sources: Bloomberg, New York Times
Commentary: Housing and Subprime: This Was No Surprise • Who's to Blame for Subprime Woes? Not the Fed. • The Mess Beyond Subprime : Its the "E" in P/E That Worries Me
Stocks/ETFs to watch: Fremont General Corp. (FMT). Competitors: Accredited Home Lenders Holding Co. (LEND), New Century Financial (OTCQB:NEWC), Countrywide Financial Corp. (CFC), NovaStar Financial Inc. (NFI). ETFs: iShares Cohen & Steers Realty Majors (NYSEARCA:ICF), iShares Dow Jones US Real Estate (NYSEARCA:IYR), Vanguard REIT ETF (NYSEARCA:VNQ)
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.