Option One Sells Residual Assets

Option One Mortgage Corp., Irvine, Calif., has completed a sale of mortgage residual assets that netted the company $142.5 million, according to its parent company, H&R Block Inc., Kansas City, Mo.The net interest margin sale, which securitized future cash flows from past mortgage securitizations that have outperformed original expectations, will enable Option One to realize a $122.4 million pretax gain, Block said. The company said the gain is expected to contribute 32-34 cents per share in additional income in the quarter ending Jan. 31. "This transaction is consistent with our strategy to operate the mortgage business conservatively, with a goal to maximize cash flow," said Mark A. Ernst, Block's chairman and chief executive officer. ".... I know of very few companies that have been in the enviable position to write up mortgage residuals in the past few years. Our business model is conservative and risk-averse, which is why the bond market values our securities so highly." Block can be found on the Web at http://www.hrblock.com.