It's Official: Cerberus Buy of Option One Dead

Hedge fund giant Cerberus Capital Management will not purchase Option One Mortgage Corp. from H&R Block, a decision that will result in the death knell for Option One's 620-person production unit.The termination of the sale was announced Tuesday morning before the market opened. H&R Block has hired Lazard Asset Management to sell Option One's servicing division, which has $62 billion in subprime receivables, ranking fourth nationwide, according to the Quarterly Data Report. Earlier this year Cerberus -- which also controls GMAC Mortgage -- agreed to buy Option One for $1 billion, but as the subprime crisis worsened, most mortgage executives familiar with the deal expected Cerberus to back out. Block said Option One would stop funding loans immediately and dismiss 620 workers, taking a $75 million charge. Option One has $30 million of mortgages in its origination pipeline, most of which it will sell to Fannie Mae or Freddie Mac. Option One, based in Irvine, Calif., can be found online at http://www.optiononemortgage.com.