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.
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