Investment bank Friedman Billings Ramsey Group Inc. said on 1/18/2008 its subprime mortgage origination subsidiary filed for bankruptcy protection due to worsening mortgage market conditions.

Friedman Billings Ramsey said the voluntary filing by First NLC Financial Services LLC would provide an orderly liquidation of its assets. The petition was filed in the U.S. Bankruptcy Court for the Southern District of Florida.

Subprime lenders make home loans to people with poor credit and many such lenders have closed in the last year amid rising defaults, falling home prices and the unwillingness of investors to buy riskier loans on the secondary market.

FBR had also said it would not complete its plan to recapitalize and sell First NLC and it did not expect to recover its remaining $12 million investment in First NLC as a result of the expected bankruptcy.

Arlington, Virginia-based FBR had agreed to sell an 80 percent stake in First NLC last July to private equity firm Sun Capital Partners Inc. It had expected First NLC to be recapitalized, with Sun Capital investing $60 million and FBR investing $15 million.