Pacific Thrift to Curtail Sub-Prime Mortgages

Pacific Thrift & Loan of Woodland Hills said it has agreed to curtail its sub-prime mortgage lending and to boost its capital levels, after federal and state regulators issued corrective action orders. The thrift, a subsidiary of PacificAmerica Money Center Inc., said it agreed to a stipulation from the Federal Deposit Insurance Corp. to boost its risk-based capital level, a cushion used to protect against losses, to 10% by Jan. 31; Pacific’s level had dropped to 4.8% as of Sept. 30. To help raise capital, Pacific has proposed a $20-million bond or stock offering. Pacific Thrift also agreed to stipulations by both the FDIC and the California Department of Financial Institutions that it stop packaging and selling sub-prime mortgages, which are home loans made to lenders with poor credit. Regulators expressed concern after Santa Monica-based Fremont General Corp. in October called off its plans to buy PacificAmerica, citing turmoil in the sub-prime lending market. PacificAmerica shares fell 3 cents to close at 47 cents on Nasdaq.