Subprime Mortgage Woes Sink H&R Block into the Red

KANSAS CITY – Tax preparer H&R Block Inc. said yesterday expanding losses in its subprime mortgage operations pushed it into a large $885 million loss for its fiscal fourth quarter, normally its best quarter because of tax season. In comparison, the company reported a $587.5 million profit last year for the fourth quarter, ended April 30. Block, which has agreed to sell its troubled subprime mortgage lender, Option One Mortgage Corp., reported a $676.8 million loss on discontinued operations, which includes Option One, as well as several other mortgage businesses. Block has agreed to sell Option One to private equity giant Cerberus Capital Management LP. The subprime losses pushed the nation’s largest tax preparation company into the red for the year to the tune of $433.6 million, compared to a profit of $490.4 million for fiscal 2005.