First Franklin Financial Corp.
| Company type | Subsidiary |
|---|---|
| Industry | Mortgage lending |
| Founded | 1981 |
| Headquarters | San Jose, California , United States |
| Products | Subprime home loans |
First Franklin Financial Corp., headquartered in San Jose, California, was a mortgage lender focusing on subprime home loans. The company was owned by prominent financial firms affected by the subprime mortgage crisis, such as National City Corp. and Merrill Lynch. In October 2008, PNC Financial Services acquired National City, while Bank of America took over Merrill Lynch in September 2008.
History
Initially established in 1981 to cater to the prime credit market, First Franklin transitioned to specializing in nonprime lending by 1994. Bill Dallas, a co-founder, held the roles of chairman and CEO until 2003, after which he purchased OwnIt Mortgage Solutions—a company partially owned by Merrill Lynch; OwnIt later filed for Chapter 11 bankruptcy protection in 2006.
In 1994, First Franklin was acquired by DLJ Merchant Banking Partners, a division of Donaldson, Lufkin & Jenrette. Five years later, in 1999, National City Corp. bought the company from a Bank of America subsidiary for $266 million (~$). By 2003, First Franklin played a significant role in establishing National City as the sixth largest mortgage lender in the United States. Merrill Lynch acquired First Franklin in December 2006 for $1.3 billion (~$), intending to create a steady flow of loans for mortgage-backed securities.
At the end of 2006, First Franklin was ranked as the fifth largest subprime lender nationwide. Nevertheless, it halted loan originations on March 5, 2008. The subsequent month saw Merrill Lynch alleging that National City had provided false information regarding First Franklin’s financial status during the acquisition process.