CIT Exits Home Loan Business but Can They Survive in B2B

The CIT Group announced the sale of its home loan business including regular home mortgages as well as manufactured home mortgages.  The company by many analysis estimates came close to bankruptcy as they suffered through 4 quarters of losses after making too many bad mortgage loan calls.

After personally doing business with CIT in their core business, Business Loans, for several years, I have to wonder if the mortgage loan business exit surgery is more endemic of a larger problem at CIT.  There are aspects of their business that are very tight, when it comes to processing and collecting payments and other aspects.  However, they seem to have a collective short coming in my opinion when it comes to evaluating loan risk and underwriting loans.

So far business loan defaults have not made the headlines that mortgage defaults have, but as more businesses suffer the impact of inflation, higher fuel costs, and a slow down in the global economy, the CIT’s core business may suffer strains that may not fair any better than its mortgage business.  With many large office and processing areas around the country, some of which I have visited personally, I expect that cut backs will likely follow and this might even harm CIT’s real competency (running tight processes in transactions) which could destabilize the rest of the business.  The famous (some would call them infamous) debt collectors of business bad debt, might find themselves in the cross hairs of debt collectors if that happens and they do not have a large number of real assets to sell off to pay down their debt.  You sure can’t put out a financial fire by selling off the office furniture…

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