H&R Block Sells Option One Mortgage

[Mike]

Hi everyone, I just found out on AOL News that H&R Block has signed an agreement to sell Option One to Wilbur Ross for $1.1 billion. Here's the full story below:

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KANSAS CITY, Mo. (AP) - H&R Block Inc. said Monday it has signed an agreement to sell its troubled mortgage servicing business for $1.1. billion to billionaire investor Wilbur Ross .

Option One Mortgage Corp., which has been rocked by the nationwide mortgage crisis, currently services about $53 billion of subprime mortgages, ranking it the fourth-largest in the nation. Kansas City-based H&R Block shut down Option One's mortgage originations after an earlier agreement to sell the division to Cerberus Capital Management fell through. H&R Block shares, which have traded in a 52-week range of $16.89 to $24.02, rose 35 cents to $17.82 in early trading Monday.

WL Ross & Co. earlier agreed to acquire $42 billion in 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. 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. WL Ross has agreed to offer comparable positions to a "substantial portion" of employees at Option One's servicing business. "Notwithstanding the problems of the subprime lending industry, we regard mortgage servicing as an attractive business and believe that there are considerable economies of scale attached to it," said Ross in a statement. "We shall therefore continue to seek acquisitions of prime, Alt-A and subprime servicing." The transaction is expected to close May 30, subject to regulatory approvals and completion of a $1.2 billion financing which has been committed by existing Option One financing providers.

"In today's turbulent markets, the challenge is to complete a transaction, not simply announce an agreement," said Richard C. Breeden, chairman of H&R Block. "We have reached what we consider to be a good agreement with WL Ross & Co., whose reputation for completing transactions is excellent. However, there is still much work to be done until the business is safely transferred at closing." Breeden was elected to H&R Block's board of directors last year after criticizing the nation's largest tax preparer for getting involved in non-tax areas, such as subprime lending, investment advising and banking.

Option One's problems contributed to the resignation in November of former Chief Executive Officer Mark Ernst. Ross has taken advantage of the crisis in the credit markets to buy up assets. In February, he agreed to make up to a $1 billion investment in Bermuda-based bond insurer Assured Guaranty, considered one of the strongest left in its sector.

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The question in my mind is this: I've got two attorneys on board now and am meeting with them next week to discuss my case. Is it too late to name H&R Block as a defendant in a class action suit?? The article states the sale will be completed on May 30th. Is it possible that any legal action would throw a big monkey wrench into the transaction?