Hi Everyone,
Below is some news about Option One. Check it out.
Option One's loan servicing gets $1.1 billion buyout deal
March 17th, 2008 · Post a Comment · posted by Matt Padilla, Register Reporter and Blogger
H&R Block said today it inked a deal to sell the troubled loan servicing unit of Irvine-based Option One Mortgage Corp. to billionaire investor Wilbur Ross for a potential price of roughly $1.1 billion. The tax preparer said Ross has agreed to offer jobs to a "substantial number" of employees.
Loan servicing is all that is left of Option One - H&R Block shut down its loan making operation in December after a deal to sell it to Cerberus Capital Management fell through amid rising subprime mortgage delinquencies.
Option One currently services about $53 billion of subprime mortgages, ranking it the fourth-largest in the nation, reports the Associated Press.
As with the failed Cerberus deal, the sale price on this deal is based on a formula and could change. It is also contingent on certain things happening. You can read the company's description of the complicated deal by CLICKING HERE. Here are key points on delinquencies and jobs at Option One:
"In the event that 30+ day delinquencies of the mortgage loans serviced by the servicing business as of the closing date exceed a specified threshold, a purchase price deduction would occur. The Buyer has agreed to offer positions with comparable terms to a substantial number of the employees of the servicing business."
Richard Breeden, chairman of H&R Block, said in a statement: "In today's turbulent markets, the challenge is to complete a transaction, not simply announce an agreement. We have reached what we consider to be a good agreement with WL Ross & Co., whose reputation for completing transactions is excellent. However, there is still much work to be done until the business is safely transferred at closing. We believe that this servicing business can best be carried out by an organization like WL Ross & Co. that is committed to continuing and growing the business. At the same time, completing this transaction will allow our company to be more squarely focused on what we've done best since 1955 - preparing America's taxes."
As I write this, H&R Block's stock is up more than 2% at $17.84
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Now if we could just get a dang fair tax or flat tax passed, H&R Block wouldn't have anything left to do!
Seriously though, this is interesting for those who have loans serviced by OOMC. After the deal is done, how many loans will be sold off to other servicers and how much will OOMC end up shrinking to become leaner and more compettitive.