Santa Monica-based Fremont General Corp. said Wednesday that it’s selling $4 billion of loans made by its shuttered Brea-based subprime mortgage division.
The company said it expects to see a $140 million pre-tax loss from the sale. The price reflects the current difficulties in the subprime market, the company said. The buyer of the loans wasn’t disclosed.
The loss reflects a discount to face value of about 4%,or 96 cents on the dollar, a better deal than most industry watchers had expected. Fremont’s shares rose more than 10% on the news in early trading Wednesday.
The company was recently ordered by federal regulators to halt subprime lending. The company said earlier this week it was letting go a number of its 2,400 workers at its Brea offices.
Fremont is in talks with several potential buyers for the subprime division, it said earlier this month. It continues to operate its commercial real estate lending and residential loan servicing operations.
