First Franklin - Merrill Lynch - Wholesale & Retail


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Update - 2008-03-05: In an article out today from Yahoo! Finance, we finaly know the fate of NationPoint, the Retail arm of First Franklin:

"About 650 people will be affected by the discontinuation of mortgage origination at First Franklin and First Franklin's NationPoint division. The firm estimates total charges, primarily severance and real estate costs related to this matter, for 2008 of approximately $60 million, of which approximately half will be recorded in the first quarter."

In a message dated Wednesday March 5, 2008 from Andrew Pollock, President & CEO of First Franklin, he confirms the shutdown of all operations, including NationsPoint. Click here (.pdf) to view the email that just went out to all employees.

Our Discussion Forum on this subject has been adopted by current (?) and former AE's and employees, with over 1,000 posts... over 254,000 page views. For a peek at some 'frank' and sometimes volatile open expression, click here.

Update - 2008-03-01: Sources inside First Franklin tell us this is far from over for the AE's and others left out of the loop of information. Mother Merrill has forgotten to tell them it's over. We've heard it's all about liability issues. One tipster suggests,

"... AEs remaining will not be paid a severence for the ONLY reason that they do not want a lawsuit from the prior AEs. It was tossed around to pay them or not. The loop hole that they are worried about is the being sued for the base pay amount of severence. Since they were paying a base they worry that it categorizes them as [partial] salary and they will be liable for it....hmmmmmm Not to bad if you were [entitled] to a 12 week minimum payout lump sum of about 6/k plus all vacation pay... For those longer it could really help them."

Update - 2008-02-29: is reporting from their source "it's more likely that the troubled subprime lender's existing servicing portfolio would be moved to the Wall Street bank's Beaverton, Oregon-based Wilshire Credit Services servicing platform." CNBC's original report suggests First Franklin might keep "only a small servicing shop."

Midday Update - (3:50 pm, PST) In a conversation with Bill Halden (3:30pm), spokesperson for Merrill Lynch, we still don't know the fate of NationPoint, the Retail arm of First Franklin. "It's company policy not to comment on rumors" he stated. We reminded him that this 'rumor' has been put out there as 'fact' on Reuters and CNBC, but that was not enough to elicit further comment. Orange County CA can not afford to lose another (estimated) 100 jobs in the Mortgage Industry, so we really hope that Merrill can step up to the pump, accept 'community' responsibility for the losses, and take care of the families affected.

We had one email that suggested Mother Merrill was acting like "an absentee Landlord, not caring about who was being hurt while the building was still burning."

Original Implode - 2008-02-28: It's official. Merrill Lynch announced today that it would be shutting down First Franklin, Reuters reported today. An email tip we received just moments before the release said they would be "keeping open only a small servicing shop." "The move could result in the elimination of 400 to 500 jobs." No details were given as to a timeline for the winding down of operations.

NationPoint out of Lake Forest CA is a division of First Franklin Financial Corporation, an operating subsidiary of Merrill Lynch. We put in a phonecall to their offices, and were promised a call back from the HR Manager (who happened to be on a conference call at that moment (12:40pm (PST)). Calls to any of the 52 Loan Officers listed on their web site all returned the same corporate phrase, "I can't comment on that." The fate of NationPoint will be known shortly, I'm sure.

Our Discussion Forum topic on First Franklin has been visited almost 200,000 times. Click to read the latest postings.

Update to Ailing Post - 2008-02-18: Dismal volume reports and additional office cuts coming in the next few weeks are the buzz we're hearing. Sales Managers have all been let go, and only a handful of AE's remain for each of the six operating offices.

One poster said "For sure two branches will be gone by the end of the month, maybe more."

Another writes "It really looks like the hammer is coming down this week."

Sources tell us that all but two offices (San Jose, CA and the servicing center in PA) will be closed by or before the end of March. Plans to implement FHA/Conforming products are understandably stymied by licensing, staffing, retraining and other issues, including the extensive restructuring of their existing IT platform(s) that would be required to integrate any new systems (like DU/LP etc) and will delay the process. AE's had been promised these roll-outs as soon as March of 2008, but realistically it would take much longer (next year?) without some magic wand.

Apparently, the Implode-O-Meter and Forum participants have played a significant role in developments. Here are a few quotes from emails we have received:

" would have been shut down much faster and over by now had their not been a public web site tracking every move they made. "Given the attention directed at Merrill Lynch and FF the process has strategically slowed down as it would be a direct reflection on stocks and add an extra spotlight on the stupidity of the purchase of FF.""
"I have a strong feeling that our/your Shock and Awe thread influenced ML's strategy with the layoffs."
"..decisions have been made and some of it is wrapped around ml-implode. Had they imploded it awhile ago it may have already been over."
"The mass exposure of our thread undoubtedly made them rethink their plan of action ..."
"We(YOU) definitely rattled ML's cage, and that's not so easy to accomplish."

Mother Merrill still can't figure out how to close First Franklin without further embarrassment. It seems our previous Premium Alerts (First Franklin'stein & First Franklin - Shock & Awe) were pretty popular. Our Forum thread (click to read) has attracted more than 176 thousand views.

Update to Ailing Post - 2008-02-04: Word from our tipsters is First Franklin will keep enough of the company open to make a play for Agency conforming business, perhaps in place as early as June, 2008.

We were sent the following regarding January's business:

"3 loans funded for the company for $350,000 - two from the Phoenix branch one from Atlanta. The change in headcount from December is minimal - maybe 6 people total dropped off from the entire company. There is a total of about $8 million in the pipeline...doubt much of that will be funded."

We've been told some Regional managers have been given the boot, (last day is the end of this month) with one fired by voicemail.

Update to Ailing Post - 2008-01-04: December's volume nationwide was reportedly a dismal $1.8 million. California accounted for only 2 loans. A year-end headcount report submitted by a tipster reflects just over 300 people left (not counting AE's). The same report indicated 274 AE's. Broker inquiries to the 800 number on the web site are being referred to the New Jersey office or a recording that politely advises you to "contact your Account Representative on their cell phone."

It's already been reported that most of the remaining AE's have left or are actively seeking other employment. Some are even burning both ends of the candle. One broker in Ohio actually had business cards for a current AE who has actually been working full time for a credit repair firm they said "since August." A quick check of the company's website confirmed it, and revealed another recognized AE there, as well.

The funding issues haven't gone unnoticed, either. An article on Calculated Risk mentions:

"Merrill bought First Franklin from National City just over a year ago--but apparently nobody explained to the First Franklin folks that they no longer had a parent with a big fat hold-to-maturity portfolio with which loan originators can be subsidized in a low-volume period."

Update to Ailing Post - 2007-12-30: Today is the one year anniversary of Merrill's purchase of First Franklin.

We don't have an official word yet, but it's pretty much a given that this tree, and its star have fallen. It became painfully apparent when we received the following tip on 12-29-07:

"They are pricing the loans so that they do not get any [business] when they could be priced better to keep the AES from funding any loans because they cannot keep them on the balance sheets or afford any first payment defaults. First Franklin had asked for credit lines to fund loans and keep them on the books and it was denied and they were told they could only fund what they can sell."

We were also told "The loans they are funding now are based on Flagstar's rate sheets and a credit line that is weak... They are losing millions every month"

Just the day before, on 12-28-07 someone submitted "I guess it is pretty bad at the hub. There is like 12 people left... some VP's is about it." Another poster had confirmed this a few days prior, on 12-23-07 "I heard VP's were just released last week. Very quiet."

A poster to the Yahoo message board for Merrill Lynch wrote on the same date:

"I believe the plan was to keep 6 wholesale offices open and ride out the storm, but the volume is so low I think they will be forced to close all the branches and run the wholesale out of the Nation Point retail location. Last I heard Andy was running things, but for how long is anyone's guess."

Just a week earlier on 12-16-07, we, "Heard today that there were more layoffs (at least at corporate) and the entire team that ran National Sales Group is gone. The layoffs leave very few people at the corporate offices."

Forum participants and tipsters painted a grim picture for December '07 volume. For a lender who posted a record-breaking volume of $2.59 billion in May of '04, it's in sharp contrast to the poster that reported as of 12-20-07 "Less than a million wholesale MTD."

Problems have been mounting for months, with declining volumes and repeated downgrades of their portfolios by the ratings agencies. Parent company Merrill Lynch had huge write-downs for the 3rd quarter of '07, and predictions are for another $11+ billion 4th quarter loss.

On 11-29-07, an anonymous tipster wrote "Andy Pollock went up to meet with Merrill's Board on TUES to pitch our business model....yes that's right, to PITCH Merrill on the business model." Come on now... they KNOW the model... he's really requesting a lifeline!

Blogs are beginning to fill up with nightmare stories from current and former FF mortgage customers experiencing the industry-wide crisis of ARM resets. One poster on Mortgage Lenders Web claimed "I have a ARM Mortgage with FF and I wanted to refinance, I am told by their rep. that they are out of the Mortgage Business and that they can't refinance my Mortgage."

Original Ailing Post - 2007-12-03: We have every indication that First Franklin's (subsidiary of Merrill Lynch B&T Co.) operations have been drastically reduced, dozens of offices closed, and production is at a near standstill for one of the nation's remaining large subprime lenders.

Tipsters have indicated monthly production volumes nationwide dropping precipitously over the calendar year to the tens' of millions (and even below) in stark contrast to multi-billion dollar levels seen in past years.

The ouster of Merrill's Chairman and CEO Stan O'Neal headlined a rash of executives forced to step down following multi-billion dollar write-offs by some of the industry's largest players. Now nearing FF's 1 year anniversary since acquisition by the Wall Street giant, it remains to be seen if newly-appointed CEO and Chairman John Thain will decide to retain the unit in its fixed income division. O'Neal has received some harsh criticism for his support of the purchase last December, as seen in this article:

Merrill's own subprime warnings unheeded

Mon Oct 29, 2007 2:22pm EDT

NEW YORK (Reuters) - Merrill Lynch & Co Inc's own investment advice on subprime loans appears to have gone unheeded in its executive office.

"...O'Neal admitted the company underestimated its exposure to the subprime market. But he defended the rationale behind the First Franklin deal.

"...we believed we would be able to gain more quality control over the assets as opposed to purchasing from third party mortgage brokers..." he said."

The latest office closure was Tarrytown NY effective 12/3/07. As best we can determine, all but six of approximately 34 offices and a large majority of their employees (reported numbering 2800 at the beginning of the year) have been let go. Exact figures are not available. We shared this and more in our premium newsletter in October, "First Franklin'stein" (Premium Membership required). One contributor wrote:

"One more thing... on a RECORDED companywide conference call last week, Joe McKone openly stated that we "have no products for market."

Aside from tips, we gleaned a wealth of information from our Discussion Forum participants. Just before a second string of layoffs and branch closures occurred, a thread aptly entitled "ML's First Franklin ... Shock & Awe," was started with the following post:

"It looks like a big layoff tomorrow (Monday)... and I don't mean the big cheese.

Here'a a sad quote, "We were just soldiers following orders."

Don't be too harsh... a lot of families are going to be affected."

First Franklin had been changing its product offerings, incorporating Alt-A and increasing restrictions to (or eliminating altogether) some of it's subprime programs when the initial announcement of the layoffs came on September 17, 2007.

Dismal reports on losses and lawsuits have appeared in Reuters (Merrill Lynch's painful lesson in subprime) and (First Franklin Can Pay $3.4 Million to Settle Overtime Lawsuit).

Visit our forum to read more:

"ML's First Franklin — Shock & Awe" or First Franklin.


ricksgalsherry at 19:12 2008-09-29 said:
My question is this. When First Franklin "Imploded" how does this affect the loans it has on its books. I know that they are no longer financing any loans, however, when their adjustable rate loans come up for adjustment, what will happen? We were put into loans with this company when we bought our home in feb. 2007. The terms of the loan were kind of sketchy but we trusted our broker. When we got to the settlement table it was too late to back out as we had sold our previous property already. Now we are in a loan with an unscrupulous company that has now stopped all seeming business other than taking our money. How will this situation affect us? Thankyou Sherry and Rick Permalink
Robin at 11:09 2008-10-02 said:
First Franklin's loan servicing arm, Home Loan Services, is owned by Merrill Lynch - now owned by Bank of America (BofA). Servicing of your loan should follow that same chain of ownership, and you'll get a written notice if there's any change to the name or address for sending payments.

It's a good thing you are looking into this well ahead of that first adjustment. Assuming you have a 2/28 with a 3% first adjustment cap (check your Note), you need to decide whether or not you will be able to afford the increased payment beginning in March. Look also at the value of your property - has it increased, declined or remained relatively steady since you took out the loan? Has your financial position changed in that time frame?

You might be able to obtain a loan modification or refinance to a fixed-rate mortgage. Contact your servicer or a third-party intermediary such as Green Credit Services (GCS) who can help you explore the options. Home Loan Services can be reached at 1-800-622-5035 or online at You can contact GCS at 1-877-793-8634 or visit their web site at Permalink

wantout at 16:55 2008-11-06 said:
Merrill owns 2 mortgage servicers: Wilshire and Home Loan Services. With BofA buying Merrill, does anyone know that fate of Merrill's servicers? Wilshire has very good ratings from Moody's, but Home Loan services does not. Permalink

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Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.