CIT Bank is getting out of the reverse mortgage business.
CIT announced late last week that it is selling Financial Freedom, the reverse mortgage company it acquired as part of its 2015 acquisition of OneWest Bank.
In the last few months, Financial Freedom’s supposed business practices became big topics of discussion in various parts of Washington, D.C., due to Department of the Treasury Secretary Steven Mnuchin’s relationship to OneWest Bank.
Mnuchin and his partners at Dune Capital Management formed OneWest in 2009 after buying the remains of IndyMac Federal Bank from the Federal Deposit Insurance Corp.
Dune Capital Management then sold OneWest and Financial Freedom, a reverse mortgage servicer owned by OneWest, to CIT Group in 2015 for a profit.
During the confirmation process for Mnuchin, Congressional Democrats attempted to use the mortgage practices that took place at OneWest Bank during Mnuchin’s time as chairman against him, claiming that Mnuchin oversaw a “foreclosure machine” during his time at OneWest.
One of the Democrats’ weapons of choice was the alleged practices of Financial Freedom. The Democrats claimed that Financial Freedom was responsible for a “disproportionately high” foreclosure rate on reverse mortgages from April 2009 through April 2016 and nicknamed Mnuchin the “foreclosure king.”
Then, the Department of Justice announced in May that Financial Freedom agreed to an $89 million settlement over reverse mortgage allegations, some of which allegedly took place while Mnuchin was chairman at OneWest.
The settlement is for Financial Freedom’s recovery of mortgage insurance payments from the Federal Housing Administration that the company was allegedly not entitled to.
And now, CIT is selling off Financial Freedom and exiting the reverse mortgage business.
CIT did not disclose much in the way of details of the deal. CIT did not disclose the buyer of Financial Freedom, nor any financial details on the deal.
CIT said that the deal includes Financial Freedom and its reverse mortgage portfolio, including the sale of mortgage servicing rights and approximately $900 million of reverse mortgage whole loans, including other real estate owned assets.
In a statement, CIT Group Chairwoman and Chief Executive Officer Ellen Alemany said the deal is another step in the company’s plan to simplify its operations going forward.
“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,” Alemany added. “We are pleased to have reached this agreement, which will enable CIT to exit the reverse mortgage business.”
CIT said that it expects the deal to close in the second quarter of 2018.
