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Fremont General says may file for bankruptcy

NEW YORK
Fri May 9, 2008 6:02pm EDT

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NEW YORK (Reuters) - Fremont General Corp FMNT.PK, which is selling assets after regulators ordered it last year to stop subprime mortgage lending, on Friday said it may file for bankruptcy protection.

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The company, which has already agreed to sell substantially all assets of its Fremont Investment & Loan unit, said that absent another "viable transaction" for remaining assets, it expects to file for Chapter 11 protection from creditors.

Fremont has announced sales of mortgage servicing rights to Litton Loan Servicing LP, an affiliate of Goldman Sachs Group Inc (GS.N), and bank branches and deposits to CapitalSource Inc (CSE.N). It said should these transactions take place, it plans to complete an "orderly liquidation" of the Fremont Investment & Loan thrift unit.

More than 100 mortgage lenders have sold their businesses or stopped offering home loans since the U.S. housing slump began. In March, the U.S. Federal Deposit Insurance Corp declared Fremont undercapitalized and ordered it to raise money or find a buyer by May 26.

(Reporting by Jonathan Stempel, editing by Gerald E. McCormick)
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