Merrill Lynch Discontinues First Franklin Mortgage Origination

Merrill Lynch is discontinuing mortgage origination at its First Franklin subsidiary in the U.S. and will explore the sale of Home Loan Services, a mortgage loan servicing unit for First Franklin.
The company says it made the decision to discontinue lending by First Franklin because of the deterioration of the subprime lending market.

‘Since July, we have reduced staffing at First Franklin by nearly 70 percent, but after evaluating a number of strategies, we believe it is appropriate to discontinue mortgage origination,’ says David Sobotka, head of Fixed Income, Currencies & Commodities at Merrill Lynch.

About 650 people will be affected by the discontinuation of mortgage origination at First Franklin and First Franklin's NationPoint division. The firm estimates total charges, primarily severance and real estate costs related to this matter, for 2008 of approximately $60 million, of which approximately half will be recorded in the first quarter.

The actions do not affect mortgage origination through the firm's Global Wealth Management Group, including prime mortgages originated through Merrill Lynch Credit Corp.

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