Merrill Buying First Franklin for $1.3B

Merrill Lynch & Co. has agreed to buy subprime mortgage giant First Franklin Financial Corp., San Jose, Calif., and two affiliates for $1.3 billion.Meanwhile, sources have told MortgageWire that First Franklin's owner, Cleveland-based National City Corp., is now considering selling part of its 'A' paper mortgage business as well. When asked about a possible sale of National City Mortgage (see item below), a bank spokesman would only say that the unit "is not part of the strategic review" being conducted on the bank's subprime divisions. The bank announced Tuesday morning that it would sell First Franklin; National City Home Loan Services, Pittsburgh; and NationsPoint, Lake Forest, Calif., to Merrill, which already has a foot in the subprime industry through conduits and a specialty servicer called Wilshire Credit Corp., of Oregon. First Franklin ranks 10th among all subprime funders, according to the Quarterly Data Report, a MW affiliate. Subprime servicer NCHLS ranks 11th, with $44 billion in receivables. NCC said it would book a $1 billion pretax gain on the sale. First Franklin relies mostly on wholesale. NationsPoint is a direct-to-consumer lender. Merrill Lynch can be found online at http://www.merrilllynch.com, and First Franklin can be found at http://www.first-franklin.com.