Subprime Mortgage Lender's Stock Price Gets Hammered

More bad news in the sub-prime mortgage market as shares of mortgage lender Fremont General Corp., the parent company of subprime mortgage lender Fremont Investment & Loan, fell sharply on Wednesday, a day after the company said it would postpone the release of its fourth quarter and full-year 2006 results, which were previously scheduled for Wednesday, according to an article in TradingMarkets.com. It also said that it would not file its annual Form 10-K report for the year 2006 by its March 1 deadline. The company did not give any reasons for the postponement.

This comes at time when "subprime mortgage lenders are struggling with rising delinquencies and defaults, as slowing home price appreciation makes it more difficult to refinance. Lending margins have narrowed, and investors are forcing many lenders to buy back soured loans at a loss", according to the article.

Three weeks ago, the stock price Fremont's larger sub prime mortgage lending rival New Century Financial Corp. took a beating of more than 36%, "[a] day after the company delayed its fourth quarter and full year 2006 results, projected a net loss for the fourth quarter and said it would restate results for the first three quarter of 2006 that would result in the reduction in net earnings for those periods."

Fremont's announcement comes on the heels of Freddie Mac's announcement that it would tighten its mortgage lending underwriting guidelines on "exotic" home loans.

The signs of trouble in the industry continue.

To read the full article, see Fremont Shares Tumble After Postponement Of Q4 Result.

For other links to stories on the troubles in the subprime mortgage market, see

• Are foreclosures on the rise?, which discusses how mortgage delinquencies are sending subprime morgage lenders into a tailspin, and
• Sub Prime Mortgage Market Compared To "The Titanic".

revised 2/2/07 (12:26pm)

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