July 1, 2008 / 10:43 AM / 10 years ago

UPDATE 1-CIT to sell home lending business for $1.5 billion

(Recasts, adds details)

July 1 (Reuters) - Commercial lender CIT Group Inc (CIT.N) agreed to sell 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.

CIT also agreed to 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,” Chief Executive Jeffrey Peek said.

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 said.

    Net cash proceeds from the transactions are expected to be about $1.8 billion, the company said in a statement.

    JPMorgan Chase & Co and Morgan Stanley served as financial advisors to CIT. (Reporting by Sweta Singh in Bangalore; Editing by Anthony Kurian)

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