Wilbur Ross Buys H&R Block's Option One

NEW YORK -- Billionaire investor Wilbur Ross will pay $1.1 billion for H&R Block's troubled Option One mortgage servicing business, which has been rocked by the nationwide mortgage meltdown, The Associated Press reported.

Option One currently services about $53 billion of subprime mortgages, ranking it the fourth-largest in the nation. H&R Block shut down Option One's mortgage originations after an earlier agreement to sell the division to Cerberus Capital Management fell through, the AP reported.

WL Ross & Co. earlier agreed to acquire $42 billion mortgage servicing rights from American Home Mortgage Investment Corp., and the combined total of $95 billion will create the country's second-largest subprime servicing portfolio, after Countrywide Financial, the AP reported.

WL Ross is paying $41 million for the mortgage servicing rights, $942 million plus $100 million of retained receivable for the $1.1 billion of advances and $65 million for $85 million of other servicing related assets. The advances are expected to increase to about $1.2 billion and the increment will be purchased at a 3 percent discount as well, the AP reported.

-- NYSSCPA.org News Staff

Posted on 3/17/08