H&R Block may sell Irvine's Option One Mortgage

H&R Block, the nation's largest preparer of tax returns, said Monday that it may sell Irvine-based Option One Mortgage, one of the nation's largest lenders to borrowers with risky credit profiles.

In addition, Option One will close 12 branch offices over the next four months, or about one-third of them, H&R Block said.

None of the branches targeted for closure are in Orange County, H&R Block spokesman Ron Iori said. He declined to say how many of Option One's 4,000 employees nationwide might be let go.

"A potential separation of Option One would enable H&R Block to further focus management resources on its core businesses and create long-term shareholder value," H&R Block's chief executive, Mark Ernst, said in a statement.

H&R Block, based in Kansas City, Mo., also lowered its earnings forecast by about 20 percent for the fiscal year, which ends in April.

During the mortgage industry's heyday, H&R Block made more money on mortgages than on tax returns.

Amid a housing slump, however, the unit's fortunes have changed. In August, H&R Block reported a loss of $131 million in its fiscal first quarter, largely due to missed payments on loans.

The company said it is evaluating a sale or "other transaction through public markets." Analysts said that could mean a spinoff, with Option One becoming an independent, publicly traded company.