Santa Monica-based Fremont General Corp., which runs Brea’s Fremont Investment & Loan, has hired a chief executive to help it get out from under a mess purred by subprime mortgages.
The company’s new boss is a familiar face in Orange County: Stephen Gordon, who started Irvine’s Commercial Capital Bancorp and sold it to Washington Mutual Inc. for nearly $1 billion in 2006.
Joining Gordon, who’s also chairman, are several former colleagues at Commercial Capital.
They include David DePillo, who joins Fremont as vice chairman and president, and Richard Sanchez, who’ll serve as executive vice president and chief administration officer.
Gordon and his team are tasked with turning around a company that was forced to unload its subprime mortgage lending business and has been operating under government restrictions.
Fremont’s difficulties began with the collapse of the subprime market earlier this year. In early 2006, the company’s Brea-based operation was the nation’s No. 4 maker of mortgages to borrowers with imperfect credit.
In March, the Federal Deposit Insurance Corp. ordered Fremont to stop making loans and to come up with a plan to restore its finances.
The FDIC also charged the company with “operating with management whose policies and practices are detrimental to the bank,” and required Fremont to “retain qualified management” acceptable to the FDIC and to the California Department of Financial Institutions.
Regulators still need to sign off on the appointment of Gordon and the others.
Fremont has sold off $4 billion worth of its subprime loans and its $6 billion in commercial real estate loans.
It now runs 22 savings and loan branches.
“We plan to move quickly to address the critical issues that are facing the company, beginning with the regulatory and legal issues, improving the cost structure, continuing to restructure the balance sheet and enhancing earnings and thereby shareholder value,” Gordon said in a statement.
New York-bred Gordon earned his spurs in East Coast banking circles, rising to become partner in the early 1990s with investment bank Sandler O’Neill & Partners LP.
A decade ago, Gordon traded his 104th floor office in the World Trade Center for a glitzy office at the Balboa Bay Club in Newport Beach where he launched Financial Institutional Partners Mortgage Corp., a lender to apartment investors.
Commercial Capital grew out of Financial Institutional Partners.
DiPillo, a former banker with H.F. Ahmanson & Co.’s Home Savings, ran Commercial Capital’s apartment loans.
The company went public in 2002 and started stringing together a handful of acquisitions to grab a bigger piece of the region’s apartment and commercial real estate loan market. The thrift nearly doubled in size in 2004 when it bought Hawthorne Financial Corp.
Gordon has kept a relatively low profile since selling Commercial Capital. He’s chief executive of Vitruvian Group LP, which is starting a private equity fund focused on banks and savings and loans.
Fremont saw its shares jump last week after it said it lost less money selling off mortgages. The company has a market value of $200 million, down 90% from early 2006.
