Option One Revenues Fall 44%

Revenues at Option One Mortgage, Irvine, Calif., fell 44% for the three-month period ending July 31 as its parent company, H&R Block, booked a $102 million hit to cover loan buybacks.The subprime lender posted revenues of $169 million for the quarter and lost $4.9 million. In the same quarter a year earlier, Option One earned $130 million. (The information was contained in Block's fiscal first-quarter earnings release, which came out July 31.) The company's spokesman had not returned a telephone call about the buybacks by MortgageWire's deadline. In response to the buyback requests -- which came from unnamed investors in the secondary market -- Option One has tightened its underwriting guidelines and pricing criteria. The company funded $7.8 billion in the quarter, compared with $8.0 billion in the previous quarter. Block lost $134 million in its first fiscal quarter, blaming the performance, in part, on the loan buybacks. However, Block's tax services unit lost $153 million. In fact, the mortgage group was H&R Block's best performer during the quarter.