Industry News

First Franklin drags on past, present owners

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Merrill Lynch & Co. said it will lay off an unspecified number of workers at its subprime lending subsidiary, First Franklin Financial, which it purchased from National City Corp. earlier this year for $1.3 billion. First Franklin's previous owner, National City Corp., has increased its estimates of third-quarter losses from mortgage banking to between $130 million and $160 million, in part because of rising losses on loans originated by First Franklin. Although National City Corp. reported a $622 million gain on the sale of First Franklin, it retained $7.3 billion in loans originated by company. In a mid-quarter update to investors today, National City reported nonperforming residential real estate loans in its portfolio grew to $236 million at the end of August, up from $213 million at the end of July and $149 million a year ago. Nonconforming loans originated by First Franklin and National City's former Altegra/Loan Zone business units accounted for more than a third of the t...