The venture capital arm of Donaldson, Lufkin & Jenrette Securities Corp. has decided to cut its losses, signing a letter of intent to sell its controlling stake in First Franklin Financial Corp.

A source familiar with the deal said DLJ Merchant Banking is selling its 80% stake in the San Jose, Calif.-based mortgage lender to Bank America Corp.'s Continental Illinois Venture Corp. for $32 million. DLJ paid $36 million for the stake in 1994, and according to the source has lost about $15 million on the company.

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