In more subprime mortgage news, Friedman, Billings, Ramsey Group, or FBR has agreed to sell its struggling subprime division to an affiliate of private equity firm Sun Capital Partners.
The subprime mortgage unit, First NLC Financial Services, will be infused with $15 million from FBR as well as $60 million from Sun Capital to help move things along.
In the first quarter, First NLC reported $124.2 million in losses, proving to be a bane to FBR’s results, ultimately causing the company to look for a new suitor.
The timing for the purchase of First NLC Financial Services was truly unfortunate, with FBR making the purchase in 2005 at the height of the subprime boom for a price of $101 million.
The dumping off of subprime units marks a growing trend for large mortgage lenders to pare their losses by focusing on A-paper borrowers and avoiding high-risk subprime deals.
The stock is hovering above its low of 4.50 for the year, sitting at a price of 5.50 in trading today.