Santa Monica-based Fremont General Corp. said Friday it’s lined up a $1 billion expanded credit line that should boost sale prospects for its shuttered Brea-based subprime mortgage business.
The financing, along with word of a sale of mortgages to investors by San Diego’s Accredited Home Lenders Holding Co., gave a boost to beaten-down subprime lenders on Wall Street.
Credit Suisse AG increased its line of credit to Fremont Investment & Loan to $1 billion. The financing will allow Fremont “to exit the subprime residential loan origination business in an orderly and disciplined way,” the company said in a statement.
Fremont, the third-biggest provider of subprime loans through brokers, closed its subprime business earlier this month. It put employees at the Brea-based unit on paid leave while it searches for a buyer.
The company recently said it was in early sales talks with “five or six companies.”
Fremont is continuing to operate its commercial real estate lending and residential loan servicing operations.
The news provided a modest boost to Fremont’s slumping stock on Friday. Other battered subprime lenders saw similar gains.
Irvine’s New Century Financial Corp., the hardest hit of publicly traded subprime lenders, saw its shares nearly double before Friday’s close to about $2.30 a share.
