CIT Sells Home Lending and Housing Units for $1.5 Billion

The CIT Group announced today it sold off its consumer housing related divisions, exiting the sector with bruises but some cash in the bank. CIT garnered about $1.8 billion on the sale of its home lending business and its manufactured housing division to separate buyers.

Lone Star Funds paid CIT $1.5 billion in cash for the home lending business and agreed to take on $4.4 billion in debt. The division reported $9.3 billion in assets and operations.

CIT (NYSE: CIT) said it would take a pretax loss in the second quarter of about $2.2 billion on the sale, and a $350 million loss from operations on the division. The portfolio sale is expected to be completed this month, and the servicing group will be transferred by the first quarter of 2009.

CIT took a loss on its manufactured housing group, selling the $470 million portfolio for $300 million to Vanderbilt Mortgage and Finance Inc.

Jeffrey M. Peek, CIT chairman and CEO, said in a statement that the sales mean the company will be out of the home lending business.

In the second quarter CIT said it had raised $1.6 billion in new capital, completed asset-backed financing of about $1.5 billion, sold more than $2 billion in assets, received $3 billion in long-term financing from Goldman Sachs, and retired $5.3 billion in debt.

CIT is a commercial finance firm that lends to the middle market, claiming one million customers in more than 50 countries. It has been active in the international factoring market.