H&R Block Inc. said it will miss the deadline for filing its latest quarterly report to investors, but expects to post more than $500 million in losses largely attributed to its failed subprime lending subsidiary, Option One Mortgage Corp. 

H&R Block said Dec. 4 that was closing down Option One, laying off 620 employees and selling its loan servicing business after a deal to sell the company to Cerberus Capital Management fell through (see Inman News story).

In a regulatory filing today, H&R Block said it expects to post $502.3 million in net losses for the quarter ending Oct. 31, including $366.2 million in losses from discontinued operations at Option One, and $136.1 million on continuing operations.

Pretax losses from discontinued operations during the quarter totaled $551.2 million, H&R Block said, including $314 million in losses on sales of mortgage-backed assets, a $123 million charge on the value of remaining mortgage assets, and $61 million in costs related to shuttering Option One.

H&R Block said it would file a quarterly report by Friday, Dec. 14, blaming the delayed submission on a switch of accounting firms.

Founded in 1992, Irvine, Calif.-based Option One was the fifth-largest originator of subprime mortgages in fiscal 2006, with $40 billion in originations, H&R Block said in announcing an April 19 agreement to sell the company to an affiliate of Cerberus, a private investment firm.

Both sides agreed to cancel the deal after H&R Block said it was unable to meet some conditions of the original sale agreement and negotiations to restructure it were unsuccessful.


What’s your opinion? Send your Letter to the Editor to matt@inman.com.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
Inman Connect Black Friday Sale! Bundle our next two events or secure your 2021 All Access Pass.SEE THE DEALS×
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription