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

San Jose, California San Jose, officially San José (; ; ), is a major city in the U.S. state of California that is the cultural, financial, and political center of Silicon Valley and largest city in Northern California by both population and area. With a 2020 popu ...

-based home mortgage lender that specialized in subprime loans. It had been owned by two of the biggest casualties of the subprime mortgage crisis, National City Corp. in Cleveland and Merrill Lynch. (National City was acquired by PNC Financial Services in October 2008 and Merrill Lynch was acquired by

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

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 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 ...

, 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; fina ...

. In 1999 First Franklin was purchased by National City Corp. from a subsidiary of Bank of America for $266 million. 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, 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