H&R Block May Delay Sale of Option One Mortgage Unit

H&R Block, eager to sell its money-losing Option One mortgage unit to Cerberus Capital Management, said yesterday that it might not complete the deal until the end of December.

Shares of Block, the largest tax-return preparation company in the United States, fell nearly 4 percent on the news. Block had said earlier that it expected the sale to close during its third quarter, which ends on Oct. 31. It is still working on closing the deal by then, it said in a regulatory filing yesterday.

Block also said in the filing that Option One, which is its subprime mortgage unit, now planned to cut more jobs this year than the 615 announced in May as it reduces costs to deal with diminished loan demand and lower prices in the secondary market.

Block did not estimate the cost of the revamping moves, and it declined to say why the deal closing might be delayed. Cerberus officials did not return calls seeking comment.

The company, based in Kansas City, Mo., bought Option One in 1997 for 0 million. It says the unit generated more than billion in pretax income through the end of 2007 from making loans to home buyers with weaker credit.

But the lender began bleeding money in the last year as subprime mortgage markets imploded, housing prices slumped and loan defaults climbed.

Under pressure from shareholders, Block announced in April an agreement to sell Option One to Cerberus, a buyout fund that has snapped up other lenders, for a price that changes with the underlying value of its assets.

That value fell to .1 billion as of April 30, compared with Block’s earlier expectations of over .3 billion. In June, Block’s chief executive, Mark Ernst, told analysts the deal was on track for completion by Oct. 31.

An H&R Block spokesman said the company was not disclosing a new valuation for Option One, but an update was likely to come on Aug. 30, when the company reports its first-quarter earnings.

Shares of Block closed down 79 cents, or 3.85 percent, at .73.