CIT Exits Mortgage Business
July 1, 2008
CIT Group will sell its home lending business and manufactured housing portfolio in a move to reduce mortgage exposure as the global finance company redirects its focus on commercial finance.
The company’s home lending business will be sold to Lone Star Funds for $1.5 billion in cash. According to the agreement, the Dallas, Texas-based private equity firm will assume $4.4 billion of CIT’s secure debt.
CIT’s manufactured housing portfolio will be sold to Vanderbilt Mortgage and Finance for about $300 million.
Jeffrey M. Peek, chairman and chief executive officer of CIT, said, “These sales complete our exit from all home lending businesses, removing the uncertainty surrounding this asset class, and advances our strategic transformation into a company focused entirely on commercial finance,”.
During Tuesday’s conference call on the subject, Peek responded to a question about lingering risk by answering, “We are lock, stock, and barrel out of the [mortgage] business.”
The two agreements, which were announced Tuesday, will leave CIT with an heavily liquid balance sheet. The company will discuss potential solutions in its upcoming July 7 conference call options.
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