Fremont General Corp

Morgan Stanley, the second-biggest U.S. securities firm, sued mortgage lender Fremont General Corp. for $10 million over its refusal to repurchase hundreds of bad home loans it sold. Loans purchased by Morgan Stanley Mortgage Capital Holdings from Fremont Investment & Loan in 2005 and 2006 misstated the borrowers' income, employment and assets, according to a complaint filed in federal court in New York. Fremont was forced to exit the sub-prime mortgage business after losing $1.

A Fremont General Corp. shareholder seeking to take over the lender or have it put up for auction has retained a former Countrywide Financial Corp. executive to advance its efforts. Santa Monica-based Fremont is one of the 10 largest providers of sub-prime mortgages. Amalgamated Gadget, which owns 8.2% of Fremont's stock, said in a regulatory filing that it had engaged Nicholas Krsnich, a former Countrywide chief investment officer and chief financial officer of Countrywide Bank.

The move is part of a divestment plan announced a year ago by Santa Monica-based Fremont General Corp. The plan, subject to shareholder approval, calls for shareholders to be given stock in a new holding company, Fremont Insurance Group, which would become the parent of the Fremont Indemnity and Fremont Compensation Insurance units. Fremont General also intends to sell or liquidate its domestic reinsurance and excess lines while retaining Commercial Bankers Life and Commonwealth Financial Corp.

Fremont General Corp. of Santa Monica, one of the nation's largest workers' compensation insurers, said Monday that it will buy San Francisco-based Industrial Indemnity Holdings from Talegen Holdings Inc., a Xerox Corp. subsidiary, for $444 million in cash and assumed debt. James A. McIntyre, chairman and chief executive of Fremont General, said the purchase of Industrial Indemnity will broaden his company's reach, which had been concentrated in California and Illinois.

Fremont General Corp., which made thousands of sub-prime loans in Massachusetts, will stop foreclosure proceedings in the state to give officials time to review all transactions, the state said Wednesday. Martha Coakley, Massachusetts' attorney general, said her office had reached a preliminary agreement in which the Santa Monica-based lender would stop foreclosures on more than 2,000 Massachusetts loans that the company services.