CIT Group (NYSE: CIT) achieved a $22 million gain on the sale of its Financial Freedom reverse mortgage portfolio at the end of May, according to the company’s most recent quarterly earnings report.
While the terms of the deal and the buyer were not disclosed at the time, CIT this week said the transaction was the primary driver behind $22 million in other non-interest income generated during the second quarter of 2018.
The loans, with a total of about $900 million in unpaid principal balance, are currently subserviced by Celink, with former Financial Freedom employees transferred to the reverse mortgaging subservicing firm.
CIT initially reached an agreement to sell off its Home Equity Conversion Mortgage business last fall, citing a desire to focus more on certain other core business lines.
“These efforts support our plan to simplify CIT and gain grater efficiency in our business,” CEO Ellen Alemany said in a statement announcing the closure of the deal. “We have addressed another legacy issue by exiting the reverse mortgage business, and we have created greater efficiency in our ongoing operation by partnering with an industry leader to service our portfolio.”
The Financial Freedom portfolio came to CIT in 2015, when the financial services company acquired OneWest Bank — which had inherited the Financial Freedom loans when it bought IndyMac in 2009. While under OneWest’s ownership in 2011, Financial Freedom exited the wholesale and retail reverse mortgage origination business.
Written by Alex Spanko