Buyer Found for Option One?
H&R Block here has found a buyer for the $61 billion subprime servicing portfolio of its Option One Mortgage Corp. unit, according to investment banking sources.
At press time, it was unclear which bidder had won the deal. Investment bankers familiar with the transaction say Citadel Investment Group, Ken Griffin's $12 billion hedge fund firm, was among the lookers, as was a fund with ties to Citigroup.
The sale includes the servicing platform. Lazard Ltd. of New York is acting as H&R Block's advisor. Tim Dana, the investment banker in charge of the transaction, declined to comment.
Final bids were due about four weeks ago. "Not as many bidders showed up for this as they were hoping," said one advisor, requesting his name not be used.
The servicing rights, depending on prepayments and delinquencies, could be worth anywhere from 50 to 100 basis points, said bankers.
OOMC, as a servicer, also has advances to bond holders of about $700 million.
Last year, Citadel bought bankrupt subprime mortgage lender ResMAE Mortgage Corp. of Brea, Calif. ResMAE, though, has since stopped funding loans.
As MSN went to press, H&R Block's spokesman could not be reached for comment. In its last fiscal quarter, H&R Block lost $502 million, blaming the poor performance on OOMC's discontinued production division.
A wholesale originator, OOMC was bought by H&RB from Fleet Bank 15 years ago. It was a mostly profitable company until the subprime market began to implode 18 months ago.
Even though OOMC is no longer funding loans, it continues to service subprime and alt-A mortgages. Late last year, hedge fund giant Cerberus Capital officially backed out of a deal to buy OOMC. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/