KANSAS CITY, Mo. – H&R Block Inc. (NYSE: HRB) today announced that it closed the sale of the mortgage loan servicing business of its Option One Mortgage Corporation (“OOMC”) subsidiary effective April 30, 2008. As previously announced, the purchaser was American Home Mortgage Servicing, Inc. (“American Home”), an affiliate of WL Ross & Co. LLC. Proceeds of the transaction at closing were approximately $1.3 billion.
“The closing of the Option One sale is a significant milestone in the transformation and refocusing of H&R Block,” said Richard C. Breeden, H&R Block’s Chairman. “We are pleased to safely transfer the servicing responsibilities of Option One into the hands of a respected and responsible purchaser. More importantly, we delivered on the promise we made to shareholders to change the future course of our company. Today’s transaction reduces risks and distractions from doing what we do best, which is serving the tax preparation needs of tens of millions of clients.”
At closing, the Company utilized the proceeds in part to repay more than $980 million on its servicing advance facility, representing the entire outstanding balance of this facility. After repayment of servicing advances, the Company realized net cash proceeds of slightly more than $230 million, and also retained a receivable relating to certain servicing assets of approximately $100 million. The Company anticipates that it will realize approximately $57 million of this receivable over the next 60 days, with the balance representing a long-term receivable. As previously announced, the Company does not believe that the transaction will result in a significant increase or decrease in reported income, although the impact of the transaction on reported income will not be known definitively until the completion of all post-closing adjustments.
In addition, the Company also announced that it completed repayment of the entire outstanding balance under its revolving committed line of credit (“CLOC”) from a syndicate of lending banks. With the repayment of the entire outstanding balance of both its servicing advance facility and its CLOC, the Company’s outstanding short-term indebtedness has been reduced to zero.
H&R Block’s financial advisor in connection with the transaction was Lazard and legal advisors included the law firms of Jones Day and Manatt, Phelps & Phillips.
Forward Looking Statements
This announcement may contain forward-looking statements, which are any statements that are not historical facts. These forward-looking statements are based upon the current expectations of the company and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties and speak only as of the date on which they are made, the company’s actual results could differ materially from these statements. These risks and uncertainties relate to, among other things, uncertainties in the subprime mortgage industry and its impact on any operations of Option One Mortgage Corporation that continue to be operated by H&R Block; potential litigation and other contingent liabilities arising from Option One Mortgage Corporation’s historical and ongoing operations; uncertainties pertaining to the commercial debt market; competitive factors; regulatory capital requirements; the company’s effective income tax rate; litigation; uncertainties associated with engaging a new auditor; and changes in market, economic, political or regulatory conditions. Information concerning these risks and uncertainties is contained in Item 1A of the company’s 2007 annual report on Form 10-K and in other filings by the company with the Securities and Exchange Commission.
About H&R Block
H&R Block Inc. (NYSE: HRB) is the world’s preeminent tax services provider, having served more than 400 million clients since 1955 and generating annual revenues of $4 billion in fiscal year 2007. H&R Block provides income tax return preparation and related services and products via a nationwide network of approximately 13,000 company-owned and franchised offices and through TaxCut® online and software solutions. The company also provides business services through RSM McGladrey and certain consumer financial services. For more information visit our Online Press Center at www.hrblock.com.
These bailouts are severely flawed and should be avoided at all costs. The pain is widespread enough without further socializing the losses. Which in the long run will either raise taxes or further devalue our dollar.
Subprime is subprime no matter what it is called or who originates it. This fact has clearly been overlooked by those pushing for wider fha involvement. They are essentially making the U.S. taxpayer the subprime lender of choice by allowing fha to get involved with these loans.
For when the loans default, and they will, the taxpayer is left holding the bag.
I say no to bailouts. Not for homeowners, lenders, banks and investment banks. No interference means we hit bottom quicker and heal quicker. Interference means we prolong and spread the pain and the day of reckoning will be all the more severe.
the banks are not passing this help on to the consumer. The money being given to the banks is going in their pockets. I was approved for a modification 7 months ago.I never missed a payment. What is happening is my loan balance went up several thousand and the payments I make are sitting in a seperate account not being applied to my loan. There was pmi included in my loan. I think they are going to pocket my payments and collect on the mortgage insurance for the loan.The only way to do this is have fha oversee every loan modification. They are just finding new ways to screw us some more(the banks)
Is the sale of option one going to change anything for the homeowners who currently have a loan with option one. I am currently in the process of trying to get a loan mod with them. They want to take the balance that I am behind and add it to the loan??? advice??? Can you please let me know if you think things will be better or worse with this new company.
At this time, no one is sure how this will affect current clients. I will be following this closely.
Sign the petition to protest bailout of irresponsible lenders, banks, and homedebtors:
http://www.angryrenter.com/
what about short sales, i just got a new client 2day??? who do u call for that now???
I have a mortgage with option one and when I call them to see where i need to forward my payment this month i just get the run around with them, i am also in the process of loan modification. Now with the sale where does this leave us with option one? Which is the most fraudulent company out there. I can’t get any response from anyone.
I agree that they are the most fradulant company out there. I do not understand why anything cannot be done to stop this company.
option one stinks they were horrible to work for they had loyal employees that had been with them for years and they got screwed while bob dubrish is riding around in his Lexus……….what a jerk
Derek,
Can you say if there is any hope in the loan modification department? Or is it just a waste of time? Can you give any insider help??????
option one is BY FAR the worst company that i’ve ever had the misfortune of dealing with. Their lies and run arounds have cost me literally thousands of dollars for no good reason other than to steal everything I have worked extremely hard to get. After draining my 401k I am out of the forclosure and still holding my groung and my breath hoping for this company to burn in —-. If there is ever a group effort to sue this company I want in!!!! They should be ashamed of themselves…
option one is BY FAR the worst company that i’ve ever had the misfortune of dealing with. Their lies and run arounds have cost me literally thousands of dollars for no good reason other than to steal everything I have worked extremely hard to get. After draining my 401k I am out of the forclosure and still holding my ground and my breath hoping for this company to burn in —-. If there is ever a group effort to sue this company I want in!!!! They should be ashamed of themselves…
I have noticed that they closed their sale in April. In May they
refused my payment and started foreclosure, stating that I was behind which I am not. So what is going to happen now. Because I
had already filed bankruptcy because of them doing this to us last year. And I have to be in court for foreclosure in a couple days.
How will AHMSI be handling these situations? They always treated me like I was a imbicil (when I could actually get a hold of someone). We only want to keep the home that has been in the family for over 50 years. Not to mention they were charging us $266 more dollars then was stated to us when we started this mortgage only two years ago.
to: Anji from June 15th
This company almost cost me my health, both mental and physical. They started forclosure proceedings on my at the time of the sale and i was only 45 days past due. They refused my payments and i was just sent notice that AHMSI will take over servicing of accounts. contact: 877-304-3100 after 7/01/08
I can’t wait to send Wells Fargo attorney’s a piece of what’s left of my mind. Good Luck to all.
this is areply to Anji: Dear god I hope you have a good lawyer. Yes I can never find an american branch of the company to talk to when i call, which is always another country. You can lie to someane about info. in certain countries and not be able to sue the american company that runs them. Call their claims depo. they are the direct ones (in our country)that handle the actual acct. and make the decisions. And yes my rate is over double what it was 2.5 yrs ago and over $400.00 more per month without escro.