A cease and desist order was disclosed by Fremont General Corp. — which said it will exit subprime lending.
A proposed cease and desist order was received by the Santa Monica, Calif.-based company from the Federal Deposit Insurance Corp. on Feb. 27, according to an announcement late today.
The order called for Fremont to “make a variety of changes designed to restrict the level of lending in its subprime residential mortgage business,” the statement said.
Citing the legislative, regulatory and market environment, the company said it enlisted Credit Suisse Securities LLC to shop its mortgage business.
Fremont indicated it will continue to seek deposits and originate commercial mortgages.
“Thanks in part to its very substantial equity and $8 billion retail deposit franchise, Fremont Investment & Loan has significant balance sheet strength and funding capacity that we believe will enable us to exit the subprime lending business in an orderly and disciplined way,” said Fremont President and Chief Executive Officer Louis J. Rampino in the press release.
Last month, Fremont informed its brokers it would no longer make piggy-back seconds and all other second lien loans, a spokesperson told MortgageDaily.com. On Jan. 8, Fremont had eliminated from its loan products 95 percent loan-to-value mortgages that are purchase money and stated income.
