Merrill Lynch finally came forward today and formally announced that it was halting all loan origination via its First Franklin and Lake Forest, CA-based NationPoint operations effective immediately.
According to the press release, the company based the decision on 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.
Merrill said about 650 employees would be affected by the decision, and that estimated charges related to the move will cost approximately $60 million, half of which will be recorded in the first quarter.
Here’s an excerpt from the company’s website, which is now just a one page exit message:
“Effective March 5 at 2 p.m. PST, 2008 First Franklin Financial Corporation will no longer accept mortgage loan applications.
Thank you for considering us as a source for your mortgage originations.? We realize that our 26 years of success and accomplishments would not have been possible without the people and businesses in the mortgage industry.”
The company also said it plans to sell its loan servicing unit, Home Loan Services, and will solicit bids in coming weeks.
Merrill Lynch will continue to originate prime mortgages via its Global Wealth Management Group unit and through Merrill Lynch Credit Corporation.