Industry News

H&R Block to close branches at home lending unit

Subprime lender could be put up for sale

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H&R Block Inc. will close 12 branch offices of its home lending unit, Option One Mortgage Corp., and is considering putting the business up for sale. Irvine, Calif.-based Option One originates subprime residential mortgage loans through wholesale and national accounts and through H&R Block Mortgage Corp. offices. According to H&R Block, Option One was the fifth-largest originator of subprime mortgages in fiscal 2006, with $40 billion in originations.  But originations are down and defaults are up, and Option One has become a drag on H&R Block's earnings, the company said. Earnings per share for the year ending April 30, 2007, are now expected to be $1.20 to $1.45, down from previous forecasts of $1.60 to $1.85. The lower expectations are "entirely attributable to changes in the near-term outlook for the mortgage segment and does not include any impact from a sale or other transaction affecting the business," the company said. During the next four months, H&...