Option One Mortgage, a division of H&R Block declared a loss of $192 million, which impacted the deal between HRB and Cerberus Capital Management LP under the current mortgage market environment.
HRB announced that the companies decided to terminate the transaction because they couldn’t agree on how to modify agreement due to changes in mortgage market conditions and considerable decline in new lending by Option One.
Option One unit has been earning significant portion of HRB profits, as much as half few years ago. It was originally created to balance earnings as HRB is a tax preparation company and is affected by seasonal form of its business.
HRB tried to sell Option One six months ago. At that time subprime issues were only coming onto the surface.
While still trying to sell this division, HRB announced that it will close origination platform and will cut 620 jobs at a cost of about $72 million.