First Franklin Financial Corp., not to be confused with 1st Franklin Financial Corporation, was a

San Jose, California San Jose, officially the City of San José ( ; ), is a cultural, commercial, and political center within Silicon Valley and the San Francisco Bay Area. With a city population of 997,368 and a metropolitan area population of 1.95 million, it is ...

-based home mortgage lender that specialized in subprime loans. It had been owned by two of the biggest casualties of the

subprime mortgage crisis The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010, contributing to the 2008 financial crisis. It led to a severe economic recession, with millions becoming unemployed and many busines ...

National City Corp. National City Corporation was a regional bank holding company based in Cleveland, Ohio, founded in 1845; it was once one of the ten largest banks in America in terms of deposits, mortgages and home equity lines of credit. Subsidiary National Ci ...

in Cleveland and

Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investm ...

. (National City was acquired by

PNC Financial Services The PNC Financial Services Group, Inc. is an American bank holding company and financial services corporation based in Pittsburgh, Pennsylvania. Its banking subsidiary, PNC Bank, operates in 27 states and the District of Columbia, with 2,629 ...

in October 2008 and Merrill Lynch was acquired by

Bank of America The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...

in September 2008, both in hastily arranged shotgun marriages.)

History

First Franklin was founded in 1981 in

, US, to serve the prime credit market, but in 1994 it switched to serve the nonprime lending market. (One of the co-founders of the company was Bill Dallas, who served as its chairman, CEO and chairman emeritus until 2003, and who subsequently bought OwnIt Mortgage Solutions, which was 20% owned by Merrill Lynch. OwnIt filed

Chapter 11 bankruptcy Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, w ...

in December 2006.) In 1994, the company was purchased by

DLJ Merchant Banking Partners aPriori Capital Partners is a private equity investment firm focused on leveraged buyout transactions. The firm was founded as an affiliate of Credit Suisse and traces its roots to Donaldson, Lufkin & Jenrette, the investment bank acquired by Cr ...

, a unit of

Donaldson, Lufkin & Jenrette Donaldson, Lufkin & Jenrette (DLJ) was a U.S. investment bank founded by William H. Donaldson, Richard Jenrette, and Dan Lufkin in 1959. Its businesses included securities underwriting; sales and trading; investment and merchant banking; financi ...

. In 1999 First Franklin was purchased by

from a subsidiary of Bank of America for $266 million (~$ in ). By 2003, the company helped National City become the sixth largest mortgage lender in the country. In December 2006, First Franklin was sold to Merrill Lynch for $1.3 billion (~$ in ), at a time when the shakeout in the subprime mortgage lending market had started to begin. Merrill Lynch acquired the company with the intent to create a pipeline of loans that it could package into mortgage-backed securities. During the fourth quarter of 2006, First Franklin ranked as the fifth largest subprime lender in the country. On March 5, 2008, the company halted loan originations. The next month Merrill Lynch alleged that National City had misrepresented the condition of the company.

References

{{reflist, 1 Subprime mortgage lenders Subprime mortgage crisis Companies based in San Jose, California American companies established in 1981