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CIT Sells Lending Business for $1.5B

LIVINGSTON, NJ-Lone Start Funds will pay $1.5 billion in cash and assume $4.4 billion of outstanding debt on the $9.3 billion portfolio.

By Brianne Harrison | Updated on July 01, 2008

LIVINGSTON, NJ-CIT Group Inc. is exiting the home lending business with the sale of $9.3 billion worth of assets and related servicing operations to Lone Star Funds. Lone Star will provide $1.5 billion in cash and will assume $4.4 billion of outstanding debt and other related liabilities. In addition, the company is selling its $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance Inc. for approximately $300 million.

As previously reported on GlobeSt.com, CIT has been working to cut expenses and reduce staff due to recent market conditions. The company took a heavy hit through subprime losses and reported a loss of $130.7 million in the fourth quarter of 2007, primarily related to charges on the home lending and student lending businesses.

“Over the past several quarters, the senior management and the board of CIT have been focused on ways to improve our performance in the current challenging environment,” said Jeffrey Peek, chairman and CEO of CIT during an investor conference call. “Much of this effort has been directed towards reducing the overhang of our mortgage exposure.”

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