H&R Block will put up to 620 people out the door as their efforts to sell subprime unit Option One Mortgage Corp finally fell through. Block had hoped to sell Option One to Cerberus Capital Management LP , but the subrpime crisis suggested that there would be no deal at all. H&R Block finally faced the facts today. Block is now trying to sell the part of Option One that does mortgage servicing, or ‘billing and collections’ as they prefer to call it.
The last few years have not been kind to H&R Block as the company forged deals with Household International to offer high interest tax loans. Racketeering charges followed, and HSBC bought Household International in 2003. As the two companies competed for subprime mortgage business Block’s reputation began to suffer because of the tax loans.