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FDIC Issues Cease & Desist Order Against Fremont Investment & Loan

http://www.nyforeclosureinformation.com/?p=27 FDIC Issues Cease and Desist Order Against Fremont Investment & Loan

Date March 8, 2007

On March 8, 2007 the Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order against Fremont Investment & Loan, Brea, California (”Bank”), and its parent corporations, Fremont General Corporation and Fremont General Credit Corporation. The FDIC found that the bank was operating without effective risk management policies and procedures in place in relation to its subprime mortgage and commercial real estate lending operations. The FDIC determined, among other things, that the bank had been operating without adequate subprime mortgage loan underwriting criteria, and that it was marketing and extending subprime mortgage loans in a way that substantially increased the likelihood of borrower default or other loss to the bank.

The order sets forth a variety of corrective actions to be undertaken. The order requires that the bank adopt a five-year strategic plan for its business. The order also requires that the bank, within 90 days, adopt a subprime mortgage lending policy with provisions designed to correct its lending practices, including that it underwrite future subprime loans with an analysis of the borrower’s ability to repay at the fully indexed rate and provide borrowers with clear information about the benefits and risks of the products. The order also requires the bank within 90 days to describe efforts it will make to restructure loans in distress consistent with the marketability of such loans and with sound principles of underwriting. In addition, the order requires the bank to fully comply with all consumer protection laws. The order also requires the bank to correct its commercial real estate lending practices.

Source of post: FDIC press release.

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October 19, 2009 - Posted by | Foreclosure Filings - General, Fremont Investment & Loan

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