Regulators have labeled Brea-based subprime lender Fremont General Corp. as “undercapitalized” and say it must to come up with money or sell itself in 60 days.
The Federal Deposit Insurance Corp. and the California Department of Financial Institutions have given the operator of Fremont Investment & Loan until May 26 to comply.
The regulators also said Fremont is restricted in what it could pay its depositors in interest and also is barred from unloading funds to the company or affiliates, as well as issuing bonuses to officers and directors.
Fremont must hold at least a year’s worth of funding to be considered safe, according to regulators.
Fremont was once one of the country’s largest subprime home lenders.
Late last month it began working with Credit Suisse and Sandler O’Neil & Partners LP on possible financing solutions.
After ending 2007 with $21 million in cash, the company said it had a “significant liquidity risk.”
Chief Executive Stephen Gordon was hired last November to turn the company around, and had suggested it might convert itself into a community bank. He recently moved the company from Santa Monica to Brea.
Fremont has a market value of $45 million. Its shares are off nearly 10% following the news.
