Fremont General Corporation
| Company type | Public |
|---|---|
| Industry | Financial services, Subprime mortgage lending, Insurance (former) |
| Predecessor | Lemac Corporation (incorporated 1972) |
| Founded | 1963 |
| Fate | Filed for Chapter 11 bankruptcy protection in 2008; exited bankruptcy in 2010 |
| Successor | Signature Group Holdings Inc. (post-bankruptcy) |
| Headquarters | Brea, California , United States |
Key people | James A. McIntyre (CEO 1976–2004; Chairman 1989–2008) |
| Products | Subprime mortgages, mortgage-backed securities, insurance (former) |
Fremont General Corporation functioned as a U.S.-based holding entity for Fremont Investment & Loan, an industrial bank situated in Santa Monica, California.
During its height in the early to mid-2000s, it ranked among the leading subprime mortgage lenders across the United States. However, the company filed for bankruptcy protection in 2008 amid the turmoil of the 2008 financial crisis.
Origins and initial development
Established in 1963 and formally incorporated under the name Lemac Corporation in 1972, the firm adopted the Fremont General Corporation name in March 1973 to serve as a holding company. It transitioned to a publicly traded company by 1977. Initially, its operations centered around insurance sectors including property, casualty, and life insurance, with its workers' compensation segment becoming the seventh largest nationwide.
Over time, Fremont gradually exited the insurance market, culminating in the shutdown of its final unit, Fremont Indemnity, in 2001. Oversight of the workers' compensation segment shifted to California regulators in 2000; by 2003, after Fremont agreed to wind down insurance activities, the state assumed conservatorship.
James A. McIntyre held leadership roles as CEO from 1976 until 2004 and served as chairman from 1989 through January 2008.
Expansion into subprime lending during the 1990s
In 1990, Fremont acquired Tomar Financial Corp, which owned two state-chartered industrial banks—Investors Thrift & Loan and Liberty Thrift & Loan—with combined assets near $182 million. These entities were consolidated and rebranded as Fremont Investment & Loan, headquartered in Brea, California.
The bank experienced rapid asset growth, reaching $12.7 billion by year-end 2006 with deposits totaling $10.1 billion. It held the position of sixth largest subprime mortgage originator nationally in both 2005 and 2006 and was among the top issuers of subprime mortgage-backed securities (MBS), ranking eighth in 2005 and fourth in 2006 by issuance volume.
Despite this expansion, Fremont posted a net loss of $202 million in 2006 and a $856 million deficit during the first three quarters of 2007. Regulatory action by the Federal Deposit Insurance Corporation resulted in a cease and desist order that compelled Fremont Investment & Loan to exit subprime lending activities in 2007.
In May of that year, the bank divested its commercial lending division to iStar Financial. The company also relocated its headquarters to Brea, California, in 2008.
Bankruptcy proceedings in 2008
In June 2008, Fremont General Corporation initiated Chapter 11 bankruptcy protection. Subsequently, Fremont Investment & Loan's assets were liquidated and it relinquished its state banking charter. The retail banking operations—including deposit accounts—were sold to CapitalSource Inc., which operates as CapitalSource Bank. Mortgage servicing rights were transferred to Litton Loan Servicing, formerly owned by Goldman Sachs and currently under Ocwen's ownership.
By June 2009, Fremont reached a settlement with Massachusetts authorities regarding predatory lending allegations, agreeing to provide $10 million for consumer relief alongside civil penalties and associated costs. The company had issued adjustable-rate mortgages without adequately evaluating borrowers’ capacity to meet payments once introductory rates expired. Additionally, Fremont faced a class action lawsuit filed in 2008.
Aftermath
Following its bankruptcy exit in 2010, the company was purchased by Signature Group Holdings LLC and subsequently rebranded as Signature Group Holdings Inc. The firm’s most valuable asset at that time consisted of nearly $1 billion in net operating loss tax carryforwards. In 2013, investor Sam Zell took ownership and renamed the business Real Industry, Inc. after acquiring Real Alloy, a company specializing in aluminum recycling.