Fremont General Corporation was an American

holding company A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ...

for Fremont Investment & Loan, an industrial bank based in

Santa Monica, California Santa Monica (; Spanish language, Spanish: ''Santa Mónica'') is a city in Los Angeles County, California, Los Angeles County, situated along Santa Monica Bay on California's South Coast (California), South Coast. Santa Monica's 2020 United Sta ...

. At its peak, during the early and mid 2000s, it was one of the largest

subprime mortgage lenders In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) is the provision of loans to people in the United States who may have difficulty maintaining the repayment schedule. Historically, subpr ...

in the United States. The company filed for bankruptcy in 2008 during the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

History

Foundation and early years

The company was founded in 1963 and incorporated in 1972 under the name Lemac Corporation. It changed its name in March 1973 to Fremont General Corporation and served as a holding company. It went public in 1977. The company primarily owned insurance businesses during its early years, including property, casualty and life insurance. Their workers' compensation insurance business was the seventh largest in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

. The insurance operations were gradually disposed of, with the last, Fremont Indemnity, discontinued in 2001. The state of

California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...

took over supervision of the worker's compensation business in 2000, and the company agreed to cease its insurance operations, with the state assuming conservatorship in 2003. The company was headed by James A. McIntyre, who served as the company's CEO from 1976 to 2004, and as chairman of the board from 1989 to January 2008.

Subprime lending business 1990s

In 1990, the company acquired Tomar Financial Corp, which owned two state-chartered industrial banks, Investors Thrift & Loan and Liberty Thrift & Loan. At the time, the two banks had combined assets of about $182 million (~$ in ). The two banks were merged and their name changed to Fremont Investment & Loan, based in

Brea, California Brea (; ) is a city in northern Orange County, California, United States. The population as of the 2020 United States census, 2020 census was 47,325. It is southeast of Los Angeles. Brea is part of the Los Angeles metropolitan area. The city ...

. The bank's assets grew rapidly, to a peak of $12.7 billion at the end of 2006, with deposits of $10.1 billion. The bank was among the largest subprime mortgage lenders in the U.S., ranking sixth in 2005 and 2006 in the dollar volume of subprime mortgage originations. The bank was also among the largest issuers of subprime

mortgage-backed securities A mortgage-backed security (MBS) is a type of asset-backed security (an "Financial instrument, instrument") which is secured by a mortgage loan, mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals ( ...

in the U.S., ranking eighth in 2005 and fourth in 2006 in the dollar volume of subprime MBS issuances. The company had a net loss of $202 million in 2006, and a net loss of $856 million in the first nine months of 2007. Fremont Investment & Loan was forced out of the subprime lending business in 2007 after their regulators, the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is a State-owned enterprises of the United States, United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was cr ...

, filed a cease and desist notice against the bank. The bank also sold their commercial lending business in May 2007 to iStar Financial. The company moved their headquarters to Brea,

in 2008.

Bankruptcy 2008

Fremont General Corp. filed for Chapter 11

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

in June 2008. Fremont Investment & Loan's assets were sold off and it surrendered its state banking charter. The bank's retail business, including its deposits, were sold in 2008 to CapitalSource Inc. in

Chevy Chase, Maryland Chevy Chase () is the colloquial name of an area that includes a town, several incorporated villages, and an unincorporated census-designated place in southern Montgomery County, Maryland; and one adjoining neighborhood in northwest Washington, D ...

(which operated as CapitalSource Bank). The bank's mortgage-servicing rights were sold to Litton Loan Servicing (owned at the time by

Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...

, now owned by Ocwen). In June 2009, the company agreed to a legal settlement with the

State of Massachusetts Massachusetts ( ; ), officially the Commonwealth of Massachusetts, is a U.S. state, state in the New England region of the Northeastern United States. It borders the Atlantic Ocean and the Gulf of Maine to its east, Connecticut and Rhode ...

regarding predatory lending practices. They agreed to pay $10 million in consumer relief, civil penalties and costs. The company had made

adjustable-rate mortgage A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.Wie ...

loans without considering the customers ability to pay after the initial teaser rate had expired. The company also faced a class action lawsuit in 2008.

Aftermath

The company emerged from bankruptcy in 2010 and was acquired by Signature Group Holdings LLC. Fremont General Corp.'s name was changed to Signature Group Holdings Inc. Its primary asset was almost $1 billion in net operating loss tax carryforwards. Investor

Sam Zell Samuel Zell (born Shmuel Zielonka; September 28, 1941 – May 18, 2023) was an American billionaire businessman and philanthropist primarily engaged in real estate investment. Companies founded by or controlled by Zell include Equity Residential ...

acquired control of the company in 2013, and the name was changed to Real Industry, Inc. after its acquisition of Real Alloy, an aluminum recycling company.Real Industry, Inc. Corporate Overview March 2017 p. 23
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References

{{Reflist Subprime mortgage lenders Subprime mortgage crisis Mortgage lenders of the United States Financial services companies of the United States Companies that filed for Chapter 11 bankruptcy in 2008