CIT Group Inc. (NYSE: CIT) is going to be one of today’s winners in the financial services sectors. So it looks as of this morning. The company has sold two home lending units for roughly $1.8 Billion. Wall Street is glad to see the company get this off the books.
Lone Star Funds will pay $1.5 Billion and will take on $4.4 billion in CIT’s debt, and Vanderbilt Mortgage & Finance will buy CIT’s mobile home mortgage business for roughly $300 million.
Calling CIT a struggling financial services provider might be an understatement even if it is starting to feel like a norm on a system-wide basis. CIT had to drain $7.3 Billion from its credit line earlier this year. In its restructuring and shrinking efforts, it has also already closed its student loan business.
The company has noted that these sales complete CIT’s exit from all home lending businesses, removing the uncertainty surrounding this asset class, and advances its strategic transformation into a pureplay company focused entirely on commercial finance.
Unfortunately in all of these financial stocks, it has paid over and over to be a doubting Thomas. Every "last chapter" we read about keeps having new chapters appear. The market is scoring this as a win with shares up over 12% at $7.64 right after the open of trading. Its 52-week trading range is $6.45 to $57.97. Over a year ago this traded briefly over $60.00.
Jon C. Ogg
July 1, 2008
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