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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (29144)12/3/2007 6:19:53 PM
From: rich evans  Read Replies (1) of 78747
 
Hey Paul, do you still own CIT. Time to average down.

CIT in its last 10Q lists all its mortgages, with loan to value, docs , prime, alt A , subprime etc. As the originator it knows it mortgages. CIT does not expect huge defaults and has kept 9.5 bill of its mortgages which are good loans primarily. The subprime stuff it sold. CIT's default rate in subprime is 10% and less then industry average which is about double that. At this point keeping the mortgage loans was the smart move. It put them in a trust and is servicing them. The beneficiary of the trust is Freddie Mac up to the 5 bill loan Freddie Mac made to CIT with interest. Thus CIT liquified the portfolio and as the mortgages pay off, Freddie Mac gets repaid and CIT gets the remainder. A very smart workout. Don't expect anymore chargoffs in this area.
Rich
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