CIT Group closes mortgage unit, takes charge

By @ibtimes on

CIT Group Inc, the consumer and commercial finance company, on Tuesday said it has closed its mortgage lending operations, the latest to abandon the sector amid difficult market conditions.

The company said it will take a $35 million pretax charge in the third quarter for severance and exit costs. It said its loan collection and customer service activities are unaffected.

New York-based CIT announced plans to stop mortgage lending on July 18, when it reported a surprising second-quarter loss because of a $495.3 million after-tax charge to reduce the value of some home loan receivables.

Chief Executive Jeffrey Peek on a conference call that day said the mortgage business had a problematic outlook and CIT was not willing to spend more to add scale and boost returns.

CIT joins dozens of mortgage lenders to leave the industry after delinquencies and defaults soared, home prices fell and investors wary about risk stopped buying securities backed by many kinds of home loans.

It was not immediately clear how many jobs would be affected by CIT's closure of mortgage lending operations. The company did not immediately return a call seeking comment.

CIT shares fell 46 cents to $36.74 in morning trading.

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