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Fremont General Must Recapitalize or Sell Banking Unit

The New York Times is reporting that the FDIC has ruled Fremont General’s banking unit under-capitalized and must find additional funds or sell the unit in two months. Fremont, which should be considered the bastion of terrible underwriting, received default notices related to $3.15 worth of subprime loans. And we’re talking SUBPRIME. Fremont was known as the “get it done” place of last resort for many of the most subprime loans. My favorite was their self-employed borrower guidelines. If you were self-employed and couldn’t prove a) your income or b) you actually owned a business you could state your income (like everyone else) and use 3 letters of reference if you couldn’t produce say a business license or any documentation that you actually were in business for yourself. Seems like good, commonsense underwriting to me!
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