H & R; Block Inc. said Monday it’s considering a sale of its Irvine-based Option One Mortgage Corp. amid a slowdown in the mortgage business.
Kansas City-based H & R; Block, best known as a tax preparer, said it’s looking at a possible sale or other transaction through the public markets.
The news came as H & R; Block lowered its earnings guidance for the 12 months through April “to reflect continued pricing pressures in the mortgage market as well as lower-than-expected originations.”
“A potential separation of Option One would enable H & R; Block to further focus management resources on its core businesses and create long-term shareholder value,” Chief Executive Mark Ernst said.
Meanwhile, Option One plans to cut its loan operations by a third by closing 12 offices in the next four months. Business from the closing branches is set to transfer to other offices.
Option one is the fifth largest maker of subprime loans to borrowers with imperfect credit, with yearly originations of about $40 billion.
The unit is one of several Orange County companies that make home loans to borrowers with imperfect credit. Others include Orange-based ACC Capital Holdings Corp., parent of Ameriquest, and Irvine’s New Century Financial.
In August, H & R; Block warned investors about trouble at Option One. The lender is seeing more late payments, the company said.
