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First Franklin Financial Layoffs

Merrill Lynch said it will cut jobs at its First Franklin Financial Corp. unit, the subprime lender it acquired late last year for $1.3 billion from National City, which has seen problems ever since.

“First Franklin has been successful over 26 years because of its ability to adapt to changing market conditions,” Merrill said in a statement. “We have adjusted our staffing levels to be in line with current business requirements,” said Merrill spokesman Bill Halldin.

First Franklin had 2,800 employees at the beginning of the year, and word is the layoffs will be significant.

Although no official numbers have been released, I’ve heard that the company currently has roughly 500 AEs (loan officers), and plans to cut that number down to 150, either through layoffs or via production goal quotas.

See my bit about First Franklin firing employees who do not meet goal.

The mortgage lender also has about 28 regional offices, which it expects to reduce to 4 or 5 in the near future.

The Silicon Valley/San Jose Business Journal reported that First Franklin Financial Corp. is shutting its Campbell, CA office and cutting staff at its San Jose headquarters.

First Franklin was the No. 4 U.S. subprime originator in the first quarter, according to National Mortgage News.

Merrill was criticized for buying First Franklin at what many felt has an inflated price, especially so late in the game when problems in subprime were already beginning to surface.

Rivals Bear Stearns and Lehman Brothers have already announced similar layoffs related to their Alt-A and subprime mortgage divisions.

Shares of Merrill Lynch were down about two bucks, or 2.6% in early morning trading on Wall St.

See the latest list of mortgage layoffs and closed lenders.

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