Commercial lender CIT Group Inc sells its home lending business to private equity firm Lone Star Funds for $1.5 billion in cash to increase liquidity, and will take a related second-quarter charge of $2 billion, Reuters reports.
CIT will also sell its $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance Inc for about $300 million.
“These sales complete our exit from all home lending businesses, removing the uncertainty surrounding this asset class,” says Jeffrey Peek, chief executive.
Lone Star will also be taking on $4.4 billion of outstanding debt and other related liabilities.
The sale of the portfolios is expected to close in July, while the transfer of the home lending servicing platform will be completed by the first quarter 2009, CIT says.
Net cash proceeds from the transactions are expected to be about $1.8 billion. JPMorgan Chase & Co and Morgan Stanley served as financial advisors to CIT.