Franklin Posts Big Loss, Extends Loan Agreement
Franklin Credit Management Corp. lost $8.6 million last year, or $1.90 per share. The company cited the "rapid and substantial" deterioration in the housing and subprime mortgage markets as key factors in reducing the performance of loan portfolios acquired by the company. That forced the company to reassess its allowance for loan losses. The company's provision for loan losses totaled $254.7 million at the end of 2007, up from $53.3 million at the end of 2006. Franklin Credit Management said it has reached a restructuring and forbearance agreement with its lead lending bank. That forbearance agreement led to a net gain of $284.2 million on debt forgiveness for the fourth quarter of last year.
Franklin said it has been seeking to begin providing services to third parties on a fee basis. Those services are related to the company's loan servicing operations and portfolio acquisition experience. According to The Wall Street Journal, the company also disclosed that it has filed a lawsuit against WMC Mortgage, a former subprime affiliate of General Electric, seeking damages related to alleged breaches of loan purchase requirements.
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