H&R Block sells sub-prime lending unit

Source: Construction Digital

Date :6/5/2007 9:44:33 AM

H&R Block has announced the selling of its subsidiary Option One Mortgage, Corp. to newly formed OOMC Acquisition Corp.

The transaction excludes Option One subsidiary H&R Block Mortgage Corp.

According to a press release issued by H&R Block, the purchase price will be the value of the tangible net assets of the business at the date of closing, less $300 million. At January 31, 2007, the tangible net assets of Option One were $1.27 billion. H&R Block may also receive an additional cash payment in the form of an earn out, which would be contingent on Option One’s future net income from mortgage loan originations.

The closing is expected to take place on the close of H&R Block’s second quarter on October 31, 2007.

“Option One has developed into a leading provider of mortgage services for Americans whose financial needs have not been served by traditional lenders,” says Mark A. Ernst, chairman and CEO of H&R Block. “With the changes occurring and being discussed for the U.S. mortgage industry, Option One will be positioned to more effectively compete, while allowing H&R Block to focus on growing its core tax, accounting and aligned financial services businesses.”

The company will also cease operations of H&R Block Mortgage, a loan originator dealing directly with retail borrowers, before the transaction closes. H&R Block will continue to provide its retail tax and other clients with prime residential mortgage loans through H&R Block Bank, which began operations in May 2006.