Former Troubled Loan Investor Now Just Subservicing

Franklin Credit Holdings, which made a name for itself as an investor in troubled mortgages, has restructured and is operating mostly as a subservicer. But the firm's servicing rights are now housed on the balance sheet of Huntington Bancshares, Columbus, Ohio, which still has financial ties to Franklin. In the first quarter, the bank restructured its relationship with Franklin, buying certain assets from the nonbank. (Huntington is a large receipient of government money through the Troubled Asset Relief Program.) "We used to put troubled loans on our balance sheet but now we're just a provider of services," said Franklin CEO Gordon Jardin. Mr. Jardin noted that Franklin has a "financial commitment" to Huntington, which used to bank Franklin. Currently, the Jersey City-based Franklin has $2 billion of subservicing contracts, most of which are tied to Huntington. "We're the subservicer for them," said Mr. Jardin. "We're going to try and grow our subservicing business," he added, saying the firm will focus on "scratch and dent" loans, subprime, and alt-A. FCH's shares are still publicly traded but in the OTC "pink sheets" market.