Reserve Increase Seen at OOMC
Subprime giant Option One Mortgage Corp. here lost $69.7 million in its fiscal third quarter ending Jan. 31, reflecting a large increase in loan-loss reserves.
Option One's parent, H&R Block, was in the process of reporting its results as National Mortgage News went to press late last week.
H&R Block said it reported Option One's third-quarter results as "discontinued operations," saying the unit added $111 million to loan-loss reserves during the period.
The parent firm offered no real update on its effort to sell the nation's sixth largest subprime funder, except to say it will provide more information in March. H&R Block offered a ray of hope that conditions were improving at Option One, noting that "early payment default trends improved reflecting the company's efforts to tighten underwriting criteria."
It added that the 30-day first payment default rate at Jan. 31 was 3.13%, compared to 3.83% at Oct. 31. "First payment default rates are the best we've seen since June of last year," said company chairman and CEO Mark Ernst.
Among subprime servicers, Option One ranks fourth nationwide with $74.5 billion in receivables, according to the Quarterly Data Report.
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