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CIT Group to Sell Financial Freedom & Exit Reverse Mortgage

Zacks

In yet another step toward its initiatives to simplify operations and become a regional commercial banking institution, CIT Group Inc. CIT inked a deal to sell Financial Freedom and the reverse mortgage portfolio to an undisclosed buyer. The transaction will enable the company to exit reverse mortgage operations.

Financial Freedom became part of CIT Group when the latter acquired OneWest Bank in August 2015. The unit has been part of the company’s discontinued operation since then.

Transaction Details

The deal comprisessale of mortgage servicing rights and nearly $900 million worth of reverse mortgage whole loans (including other real estate loans) as of Jun 30, 2017. The financial terms of the transaction were not revealed.

CIT Group expected the deal, still subject to regulatory and investors approval, to close by mid-2018.

Road Ahead for CIT Group

The Chairwoman and Chief Executive Officer of CIT Group, Ellen R. Alemany said, “Throughout this year we have made continued progress in transforming the company and applying our focus toward maximizing the potential of our commercial banking and deposit franchises, which are the core of our go-forward strategy.”

CIT Group has come a long way since its emergence from bankruptcy in 2009. The company has been streamlining its operations with a goal to simplify operations and improve efficiency.

In June, CIT Group announced a deal to sell its European Rail business, while in April the company sold stakes in the joint ventures with Tokyo Century Corporation and divested its aircraft leasing business. Over the last few years, the company has divested its Canadian, Brazilian and Mexican businesses, among others.

Driven by such efforts, analysts seem to be bullish on the stock. The company’s to-be-reported quarter’s earnings estimates have been revised 6.4% upward over the last 60 days.

Nonetheless, investors look sceptical about CIT Group’s prospects. Shares of the company have gained 34.3% in a year’s time, outperforming 27.9% rally for the industry.



Currently, CIT Group sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Since the financial crisis of 2008, other financial institutions including Bank of America Corporation BAC, Morgan Stanley MS and Citigroup Inc. C have simplified their businesses and focused on core operations.

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