Option One, #6 B&C Lender, on Auction Block

H&R Block Inc., Kansas City, Mo., is considering selling Option One Mortgage Corp., Irvine, Calif., one of the nation's largest subprime lenders and servicers.The tax preparation company has also initiated cost-cutting measures at the lender and has hired Goldman Sachs & Co. as an adviser. The nation's sixth-largest subprime originator said it will "consolidate by one-third its loan fulfillment operations by closing 12 branches over the next four months." If Block cannot sell Option One, it might consider spinning it off through the public markets. According to the Quarterly Data Report, Option One services $74 billion in loans, ranking fourth among all subprime servicers. Subprime profit margins are extremely tight right now, and consolidation in the sector is picking up steam. On Monday, NetBank of Georgia said it would close its subprime division. Option One can be found online at http://www.optiononemortgage.com.