Shares of Accredited Home Lenders Holding
On Monday, Accredited shares fell after the closing bell on news Grant Thornton resigned as auditor for the company. Grant Thornton also dropped Fremont General as a client, saying both companies no longer meet requirements for client acceptance.
Grant Thornton had resigned as the auditor of both companies after advising them that it needed to "significantly expand" the scope of its audit of their 2006 financial statements.
Accredited, Fremont and other lenders to home buyers with weak credit histories have struggled in recent months amid rising defaults and a downturn in residential real estate.
News of Grant Thornton's resignation came on the same day that New Century Financial, a leader in the once-booming subprime lending industry, filed for bankruptcy.
After the two lenders disclosed its resignation, a Grant Thornton spokesman confirmed that the same reason was behind both resignations.
"We have informed Fremont General Corporation and Accredited Home Lenders they no longer meet our requirements for client acceptance," the spokesman said via email. "As a result we have resigned as auditor for both companies."
Both firms said they were now seeking new independent auditors but that there was no guarantee that they would be able to find them.
Officials at Grant Thornton could not immediately be reached for comment.
Farallon Capital Offers $230 Million Loan
Accredited closed a deal with Farallon Capital under which the hedge fund has agreed to extend it a 5-year, $230 million loan, one of several measures to boost liquidity.
The San Diego-based company had previously disclosed the loan agreement, saying it was for $200 million.
Accredited also said it had $350 million of available cash on hand as of March 31 and that it originated $1.8 billion in mortgage loans in the United States and Canada in the quarter ended March 31.
Accredited also said it was considering strategic options including a possible merger, though there was no guarantee that any such deal would take place.