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CIT Group Inc. plans to sell off two home-lending units for a total of
$6.2 billion to completely exit residential mortgages and become a pure
commercial-lending company. The New York-based finance company said in
a statement it will sell its home-lending unit to Dallas-based Lone
Star Funds for $5.9 billion, comprising a cash payment of $1.5 billion
and the assumption of $4.4 billion in debt.
The CIT statement also said the company agreed to sell its $470 million "manufactured housing portfolio" to Vanderbilt Mortgage and Finance Inc. for $300 million.
Having already recorded billions of dollars of write-downs and having had to raise capital from investors, CIT is now forecasting its home lending business will book a $2.5 billion second-quarter loss. It will also be designated in the income statement as a discontinued business. "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," said chairman and CEO Jeffrey Peek in the statement. - Peter Moreira See press release See full story shortly on TheDeal.com See related: Goldman provides $3B to CIT Categories Deal Video
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