Option One ceases new originations as Cerberus backs away from deal with H&R Block

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Option One is no longer accepting loan applications following the termination of the deal by private equity company Cerberus to take over the ailing mortgage unit from H&R Block. The Ml-Implode.com web site has all the details.

Lots of media coverage from the sinking of the once-mighty subprime mortgage company. Option One had tried to restructure its origination unit to originate Fannie & Freddie eligible loans; but the space is so crowded that the late arriving subprime originator simply couldn’t compete with existing Fannie/Freddie conduit banks.
From the Option One Web site:

Dec. 4, 2007

Today, Option One?s parent company, H&R Block Inc., announced that effective immediately Option One will cease accepting new mortgage loan applications.

However, it will honor existing commitments on approved loans currently in the pipeline. (All commitment-state* loans must fund by the expiration date — we are unable to offer extensions. All non-commitment-state loans must fund by December 31, 2007.) If you have questions regarding a loan in the pipeline, please contact your local fulfillment branch:

Orlando (407) 618-5600

Houston (281) 203-6600

Irvine (949) 614-7400

As always, we are committed to providing you with a seamless transition and the same excellent customer service you?ve come to expect from our associates. Thank you for your loyalty and your contributions to Option One?s success during the past 15 years. We have appreciated the opportunity to work with you and to serve your business needs.

There was some speculation that Cerberus would only buy Option One’s massive servicing portfolio with out the origination arm; but in the end Cerberus wanted out. No wonder – as 51% owners of GMAC’s ResCap they are having plenty of exposure problems with out taking on Option One.

H&R Block will now attempt to find a buyer for the servicing unit and has hired Lazard to conduct the valuation and sale.