Block Restates, Citing Option One Residuals

H&R Block says it has reduced by $29.2 million the carrying value of "residual interests" in its Option One Mortgage Corp. unit due to "volatility in the mortgage market."The tax services giant said it will provide an update on Option One's sale by the end of the month. The announcement came late Tuesday. Because of the hit on Option One, Block restated its fiscal third-quarter earnings downward by $15.5 million (after tax), resulting in a $60.3 million loss in the period. The Irvine, Calif.-based Option One lost $69.7 million in its most recent quarter (ending Jan. 31), reflecting a large increase in loan-loss reserves. Option One's earnings are reported as part of H&R Block's. According to the Quarterly Data Report, Option One ranked seventh among subprime funders in the fourth quarter, originating $6 billion, a 38% decline from the volume in the fourth quarter of 2005.