CIT Exits Mortgage Lending, Eliminates 550 Positions

CIT Group joined the growing number of companies to shutter its mortgagelending operations, a decision that will cost the jobs of 550 employees.The New York-based consumer and commercial finance company watched its stockplummet almost 40% after it announced plans to stop mortgage lending on July 18."We decided to exit home lending and construction enabling us to redeploy resources to higher returning businesses," said Chairman and CEO Jeffrey M. Peek at the time.The announcement came with the surprise report of a nearly $500 million after-tax charge to reduce the value of some home loan receivables.CIT was forced to write down the value of its mortgage portfolio by $765 million, resulting in a second quarter loss of $135 million.The company has now stopped originating new loans and has expressed no plans to renew the business.Approximately 7.5% of the company's workforce of 7,345 employees waseliminated with the announcement.The job cuts will occur in 25 U.S. offices, according to the company.CIT said it will incur a $35 million pre-tax charge in the third quarter for severance and exit costs.The company indicated that its loan collection and customer service activities will not be affected.Posted on Wednesday, August 29, 2007 by staff