Industry News

Option One’s warehouse lenders can terminate obligations next month

H&R Block continues effort to sell subprime lending subsidiary

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Subprime lender Option One Mortgage Corp.'s eight warehouse lenders will have the legal right to terminate their obligations to fund future loans at the end of April, and take away Option One's right to service existing loans. Option One had an agreement with its creditors requiring it to generate income of at least $1 for four consecutive quarters, ending Jan. 31. Option One, which posted an estimated $60.3 million in losses for the quarter ending Jan. 31, said it obtained waivers from the warehouse lenders on Jan. 24 relieving it of the requirement to turn a profit. The waivers are set to expire April 27. In a Securities and Exchange Commission filing Wednesday, Option One parent company H&R Block Inc. said Option One is not expected to return to profitability before the waivers expire, but that it should be able to obtain new agreements "from a sufficient number of warehouse providers to allow Option One to continue its off-balance-sheet financing activities." Optio...