CIT Home Lending - Subprime

Marketwatch has reported that CIT is taking a $35 million charge to "shutter" CIT Home Lending:

Financial services firm CIT Group said Tuesday it will take a $35 million pre-tax charge associated with its previously announced plans to shutter its home lending business. The company said it will take the charge in its third quarter, and that its loan collection and customer service activities are unaffected by the announcement.

A source wrote in with the following additional details:

i just got off the phone with my long time rep (ae) with the cit group--they are done--AE and some staff are around until sept 10th--brokers edge will not allow you to submit any new applications--all offices are to close by sept 27th--management will be in offices until oct. 10th to clean things up

The Grapevine at BrokerUniverse also has a thread on the closure.

Original Ailing/Watch:

Update, July 22nd: We have moved this operation to the ailing/watch list, as we have confirmed it is still operating. We will be watching to see if it is sold, and if so, what kind of price it fetches. Let us know if you see any relevant activity.

Update, July 19th: A number of people have written in to clarify that the CIT Home Lending unit is still operating and still taking business. CIT is apparently looking for a buyer for the division.

CIT Group, a major conglomerate lending and investment shop, is exiting the home lending business entirely, after taking an "unexpected" (hah!) loss of $127 million in the second quarter. The above Bloomberg article has more:

Chief Executive Officer Jeffrey Peek decided to quit the home-loan business, focused on subprime lending to borrowers with weak credit or heavy debts, after late payments rose and investor demand for mortgages waned. ....

The loss "blindsided the market," said a report by Royal Bank of Scotland credit analysts including Corinne Cunningham. "CIT has until now claimed to have a subprime book that was better than average."

CIT Home Lending operates the brokeredge.com portal.

CIT also has a major student lending business (Student Loan Xpress), which earlier had to pay a $3 million penalty to New York state for conflicts of interest. That unit may be the next to go, analysts quoted by Bloomberg say.

The company was spun off from Tyco International in 2002.