H&R Block Inc. said it has saved about $20 million from a program in which it modified about a quarter of the mortgages in its thrift's portfolio that were originated by subsidiaries the company has shuttered.

During a conference call Monday to discuss results for the fiscal second quarter, which ended Oct. 31, Richard Breeden, H&R Block's chairman, said the program has been "encouraging, although it is too soon to see what our rate of redefault will be over the next six months."

The program involves converting adjustable-rate mortgages into fixed-rate ones with "an average interest rate of approximately 5%," Mr. Breeden said.

Russ Smyth, the Kansas City, Mo., company's president, said on the call that it "has been actively pursuing modification agreements with its borrowers" since December of last year.

H&R Block stopped funding mortgages in January as a part of its plan to quit the business. The portfolio of mortgages held by its thrift has been shrinking as borrowers have defaulted or paid them off.

During the quarter the portfolio declined 6.6%, to $811.7 million, about 70% of which was originated by the former subsidiaries Option One and H&R Block Mortgage.

The thrift's loss more than quadrupled from a year earlier, to $18.6 million. H&R Block attributed the increase primarily to falling home values.

Becky Shulman, the company's chief financial officer, said on the call that the thrift's delinquency rate, which increased 205 basis points from the previous quarter and almost sixfold from a year earlier, to 11.65%, "was relatively consistent with our previous assumption."

However, she also said H&R Block had increased the loss rate it anticipates upon the liquidation of collateral to 37.5%, from 30% at the end of July.

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