Option One Morgtage, a part of H&R Block, is officially shutting down it's doors after a failed sale to Cerberus Capital Management. Option One Mortgage had been in talks with Cebrerus for quite some time. Back in April, H&R Block was celebrating the possibility of Cebrerus paying up to $800M for Option One Mortgage (Bloomberg story here). After a $193M loss in the quarter ending July 31 and another $150M to $200M in mortgage-related losses anticipated for the quarter ending October 31, it seems that buying Option One Mortage was no longer a good option for Cerberus.
An $800M sale to Cerberus is a far cry from today's announcement and the cost to H&R Block for doing so. The move to shut down operations of Option One Mortgage will cost H&R Block $75M plus up to $125M in additional asset impairments for the quarter ending October 31 related to the sale of it's loan servicing business.
Option One Mortgage will honor $30M worth of loans already in the pipeline, but has stopped accepting applications for new mortgage loans. They will lay off it's remaining 620 employees and sell their loan servicing business.
After doing $40B in loans last year and being one of the top 10 largest subprime lenders in 2006, Option One Mortgage joins the long list of lenders/banks that have been hit hard by the real estate market slowdown, the subprime mortgage meltdown and the ensuing credit crunch.
What does this mean to those of us fighting with them?
Posted by: Julia | January 30, 2008 at 04:26 PM
Julia - I can't answer that question with certainty because I don't know the specific details, but I'd have to say that it can't be too good for you.
Posted by: Danilo Bogdanovic | January 31, 2008 at 01:14 AM
Well all i can say is "Good" i am still fighting with them!!!
Posted by: Larry M. Locklear | March 10, 2008 at 03:58 PM
What do we do now? Option one just pulled our first mortage out of bankruptcy and is trying to foreclose on us. Any word on when they are shutting down?
Posted by: bonnie | April 08, 2008 at 03:32 PM
Not sure what the latest story with them is. I can do some digging to try and find out though.
Posted by: Danilo Bogdanovic | April 08, 2008 at 11:42 PM