BankAmerica Corp. is finding out that this is a tough time to exit the subprime lending business.

The sale of BankAmerica Housing Services, its manufactured-housing financing unit, hit a snag after Moody's Investors Service Inc. recently cut its rating on some of the unit's securitized loans.

Meanwhile, BankAmerica has reportedly hired UBS Securities LLC to help sell its majority stake in First Franklin Financial Corp., a subprime mortgage company based in San Jose, Calif. Both UBS and BankAmerica refused to comment on the matter.

BankAmerica last year said it would get out of the business of lending to consumers with tarnished credit records. It intended to shed noncore businesses and focus on its "prime-customer base."

Observers said that deteriorating credit quality and shrinking profits due to intense competition have pushed many subprime consumer finance companies to put themselves up for sale.

"There is a lot of stuff to choose from right now, and these guys aren't selling these units because they are making too much money," said Jeff Evanson, an analyst at Piper Jaffray Inc.

Since BankAmerica Housing Services went on the block in October, several subprime lending specialists have hired outside advisers to help them explore so-called strategic alternatives, including selling out. These companies include the Money Store Inc. of Union, N.J., and Beneficial Corp. of Wilmington, Del.

BankAmerica recently opened a second round of bidding for the unit, with the minimum price set at $500 million.

Lower ratings from Moody's on the unit's $24 million of securitized debt could mean lower bids for the subsidiary, said R. Jay Tejera, an analyst at Dain Rauscher, Minneapolis. Upon its downgrading, Moody's cited higher than expected loan losses, making the package less desirable to potential buyers, Mr. Tejera said.

"This will hurt the price BankAmerica gets," he said.

However, the debt downgrading is not enough to keep the $260.2 billion- asset company from cobbling together some kind of deal for the unit, according to Mike Zampa, a BankAmerica spokesman.

Mr. Tejera agreed. "While this isn't a buoyant market for specialty finance groups," he said. "I believe this unit will get sold by the end of the first quarter. It's a profitable business." It just doesn't clear BofA's equity hurdle, he added.

The San Francisco company could have a tougher time finding a buyer for First Franklin because it makes home loans through mortgage brokers. There is more demand for companies that lend directly to customers than for those that use intermediaries, analysts said.

BankAmerica acquired its 80% stake in First Franklin in 1996, through its acquisition of Chicago-based Continental Bank Corp. First Franklin was then owned by Continental's venture capital subsidiary.

First Franklin, which made more than $1 billion of loans last year, operates 21 offices in 15 states.

BankAmerica's housing services unit was acquired in 1992, when the company bought Security Pacific Corp.

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