Fremont to Brokers: No More Seconds

Fremont Investment & Loan, the nation's fifth-largest subprime wholesaler, told loan brokers Tuesday that it will no longer fund second mortgages.In an e-mail message provided to MortgageWire, Fremont predicted that its competitors will make "similar changes in the next few weeks." Seconds are used in popular "80/20" combo loan programs and "piggyback" arrangements used to avoid private mortgage insurance. The e-mail message says, "Due to general negative Industry sentiment, due to recent articles in the media, and the ripple effect in the secondary market," Fremont is making changes to its loan menu, including the immediate elimination of second mortgages. In the message, the company warns brokers that have 80/20 "combo" loan "prequals" with Fremont that they will need to contact the wholesaler to obtain new pricing. Based in Santa Monica, Calif., Fremont is a publicly traded nondepository.