Fremont sees net income fall 38%

Fremont General Corp. said third-quarter profit declined, but its shares soared 46% after the troubled savings and loan said it significantly reduced losses by selling residential real estate loans.

Profit fell 38% to $18.3 million, or 23 cents a share, from $29.5 million, or 39 cents, a year earlier.

Results reflected a $65.6-million gain from the July 2 sale of a $6.27-billion commercial real estate loan portfolio to IStar Financial Inc. for $1.89 billion in cash, plus an interest in the portfolio. Operating profit in the quarter totaled $32.2 million, largely from the gain.

Fremont posted a $4.1-million loss in the quarter from the sale of $243.9 million of residential real estate loans. It said it had lost $877 million from January to June from the sale of about $8.5 billion of residential loans. It said it still had $995.9 million of residential loans held for sale as of Sept. 30.

Fremont, based in Santa Monica, had been one of the 10 largest U.S. providers of sub-prime mortgages, which go to people with poor credit, before regulators in March ordered it to stop offering the home loans.

It is exploring strategic alternatives after its agreement to obtain an $80-million infusion from a group led by billionaire investor Gerald J. Ford broke down last month.

Shares of Fremont closed up 84 cents at $2.66.