Interest Rate Roundup

Wednesday, March 05, 2008

Merrill Lynch pulls the plug on First Franklin

In the "no surprise here" department, Merrill Lynch just announced that it has decided to pull the plug on its First Franklin subprime lending business. Specifically, it will stop originating loans through First Franklin and will try to sell Home Loan Services, FF's loan servicing division.

Merrill noted that it has already let go 70% of the unit's staff, while another 650 will lose their jobs as a result of the decision to shut down originations. Merrill will continue to make prime loans to wealth management clients here, as well as home loans internationally.

As I noted previously, I can't believe Merrill bought First Franklin in the first place in late 2006 for $1.3 billion. The housing market was clearly slowing at the time, and subprime mortgage credit tremors were already starting to be felt.


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