H&R Block Posts Huge Option One-Linked Loss

Tax preparation giant H&R Block lost $502 million in its fiscal second quarter, blaming the poor performance on its discontinued subprime unit, Option One Mortgage of Irvine, Calif.Block is now trying to sell Option One's $62.3 billion servicing business after a deal to sell the entire company to hedge fund giant Cerberus Capital fell apart. By discontinuing Option One's operations, Block took a total pretax loss of $551 million. Included in that number is a $252 million loss on the sale of $3 billion in whole loans. It also lost $123 million due to mortgage-related impairment charges tied to mortgage and servicing assets.