H & R; Block Inc. said it has a deal to sell what’s left of Irvine-based subprime mortgage company Option One Mortgage Corp. in a sale that could be worth about $1 billion.
The Kansas City-based tax preparer said it could sell Option One’s mortgage servicing business to distressed-asset investor Wilbur Ross.
A deal could close by May 30, according to H & R; Block.
The sale price is set to be determined by a formula applied to Option One’s balance sheet at the time of the deal’s closing.
The deal would have been worth $1 billion based on Option One’s balance sheet as of Jan. 31.
Most of the proceeds of the sale, or nearly $700 million, are expected to go to pay off Option One’s debt.
Last year, H & R; Block tried to sell Option One’s loan origination and servicing business in a deal with private equity firm Cerberus Capital Management LP.
After that deal fell through amid the mortgage downturn, H & R; Block shut down Option One’s loan making business. The unit has laid off workers and focused on servicing loans it made earlier.
Option One services about $53 billion of subprime mortgages, according to an Associated Press report.
Billionaire investor Ross is known for buying left-for-dead businesses such as steel mills, textile mills and Appalachian coal mines and restructuring them.
