Late Thursday, Fremont General Corp. said that it had agreed to sell its remaining $12.2 billion servicing portfolio to Litton Loan Servicing LP, a well-known subprime and scratch-and-dent mortgage servicer. The sale represents a coup of sorts for Goldman Sachs (GS), which picked up Litton from the rubble of former scratch-and-dent giant Credit-Based Asset Servicing and Securitization late last year. For Fremont's Investment & Loan subsidiary -- once one of the largest subprime lending and servicing operations in the country -- the sale likely is the final step before it heads into bankruptcy and liquidation, according to a company statement released Friday morning. Under the terms of the deal with Litton, Fremont's servicing rights will be sold at an undisclosed value, and Litton will also pay for any outstanding servicing advances on Fremont's books. The deal does not involve the Brea, Calif.-based bank's servicing platform, which it said it intends to wind down after the sale is complete. While the details of the proposed deal aren't yet known, industry experts pointed to a recent deal involving Option One Mortgage Corp. and American Home Mortgage Servicing, Inc. as a likely model. "$980 million of the $1.3 billion negotiated purchase price covered Option One's servicing advances alone," said the source, a senior executive at a large bank, who asked that his name not be used. "That means the entire servicing portfolio and platform was sold for just over $300 million -- and [the Fremont/Litton deal] doesn't involve a servicing platform, only the portfolio." Fremont entered an agreement with CapitalSource, Inc. (CSE) in mid-April covering most of the bank's assets and deposit liabilities. With the likely sale of servicing assets and wind-down of it's servicing platform, Fremont said that it will likely file for bankruptcy once both deals have been completed. "It is the expectation of the board of directors of FGC that it will cause FGC to file a petition for a voluntary bankruptcy proceeding solely with respect to FGC under Chapter 11 of the U.S. Bankruptcy Code following the receipt of all requisite approvals of the Regulatory Authorities of the CapitalSource transaction," Fremont said in its press statement. An expected bankruptcy marks the end of the road for a bank that has been faced with regulatory pressure since March of last year, when the FDIC first issued a Cease and Desist order that effectively killed the bank's once-booming subprime mortgage business. In March of this year, the FDIC issued a so-called Supervisory Prompt Corrective Action Directive to Fremont after the bank warned that it faced severe capital shortages. Disclosure: The author held no positions in Fremont General when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.