Massachusetts Attorney General Martha Coakley announced this week that embattled subprime lender Fremont Investment & Loan, a subsidiary of Fremont General Corp., will not be allowed to offload the servicing rights of troubled mortgage loans onto an interested buyer—unless that buyer is willing, in writing, to accept full responsibility for those loans.
Coakley’s office said Tuesday that a Massachusetts judge agreed to expand a preliminary injunction filed against Fremont General to include provisions that prohibit the lender’s buyer, Carrington Mortgage Services, from taking on the servicing rights of 290 Fremont loans without first agreeing to be responsible for an earlier court injunction that places parameters around Fremont’s foreclosure process in regards to those loans.
The parameters were set to ensure that all foreclosures coming out of Fremont’s lending platform are not the result of unfair or deceptive origination practices, Coakley’s office said.
“We are pleased that the Court has held Fremont accountable for the unfair loans it originated,” said Attorney General Coakley. “This decision reflects that lenders cannot escape responsibility for their illegal conduct and contribution to the foreclosure crisis simply by selling off their loans or servicing rights.”

Coakley’s office filed the request for an expansion to the court’s injunction after Fremont General issued a statement saying hundreds of loans will be transferred to Carrington as part of a transaction. Fremont added, “For the avoidance of doubt, [Carrington] will not assume or have any liability or responsibility with respect to any liability of any nature or kind whatsoever relating to Fremont’s business or the Purchased Assets that exist or arises out of the operation or ownership of [Fremont’s] business or the Purchased Assets prior to the closing …”
This particular line in the agreement prompted the Attorney General’s office to file for an immediate expanded injunction, seeking an affirmative statement from the court that Fremont could not avoid responsibility for the loans unless a sale is made in which the buyer agrees to adhere to the same preliminary injunction agreement that Fremont submitted to.
News coverage of Fremont General’s troubles prompted an unrelated company, Fremont, California-based Fremont Bank, to officially release a notice to the media, saying Fremont Bank is a full-service community bank that is completely unaffected by the troubles at Fremont General Corp.
“Fremont Bank, a leading full-service community bank in Northern California, would like to clarify many erroneous claims of being associated with the Brea, California-based Fremont General Corporation, including a media segment that appeared recently on CNN concerning Fremont General Corporation,” Fremont Bank said. “Fremont Bank officially announces that it is in no way affiliated with Fremont General or its wholly-owned subsidiary Fremont Investment & Loan.”