Fremont Sells Servicing Rights Back to Carrington Affiliate
Fremont General Corporation said late Thursday that it will sell servicing rights on $1.9 billion in mortgage loans -- 13 percent of its existing servicing portfolio -- back to an affiliate of private equity firm Carrington Capital Management, as the troubled thrift looks to generate additional liquidity to fund its own operations. The loans being transferred are held in securitization trusts sponsored by an affiliate of Carrington, Fremont said. Carrington, you'll recall, scooped up failed subprime lender New Century Financial Corp.'s servicing platform after the Irvine, Calif.-based company filed for bankruptcy last year. It now operates the servicing shop under the name Carrington Mortgage Services, LLC, which at last count managed 90,000 loans with an outstanding principal balance of over $16 billion. The acquisition would stand to grow Carrington's servicing portfolio by roughly 12 percent. Terms of the deal were not disclosed, but Fremont said it expects to close the sale before the start of April. In addition to the purchase price for the mortgage servicing rights, Fremont will be reimbursed over a twelve month period for outstanding servicing advances, it said. Fremont did not comment on whether the sale would affect employees in its servicing operations. The troubled thrift has been the subject of strong industry speculation since it first disclosed a cash crunch at the end of February. The bank has said it may sell itself, among other options. For more information, visit http://www.fremontgeneral.com.