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Merrill Lynch Discontinues First Franklin Mortgage Origination; Will Explore Sale of Home Loan Services
Global Wealth Management Mortgage Origination to Continue Through Merrill Lynch Credit Corporation
New York, March 5, 2008 — Merrill Lynch (NYSE: MER) said today that it is discontinuing mortgage origination at its First Franklin subsidiary in the United States and will explore the sale of Home Loan Services, a mortgage loan servicing unit for First Franklin.
The company said it made the decision to discontinue lending by First Franklin because of the deterioration of the subprime lending market.
“Since July, we have reduced staffing at First Franklin by nearly 70 percent, but after evaluating a number of strategies, we believe it is appropriate to discontinue mortgage origination,” said David Sobotka, head of Fixed Income, Currencies & Commodities at Merrill Lynch.
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.
The actions do not affect mortgage origination through the firm’s Global Wealth Management Group, including prime mortgages originated through Merrill Lynch Credit Corporation. Merrill Lynch’s international mortgage businesses are not affected by these actions.
Home Loan Services is a profitable mortgage servicer located in Pittsburgh, servicing First Franklin originated mortgage loans. Merrill Lynch will solicit bids for Home Loan Services in the coming weeks.
Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies, with offices in 40 countries and territories and total client assets of almost $2 trillion. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies, with more than $1 trillion in assets under management. For more information on Merrill Lynch, please visit www.ml.com.
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