$9.3 billion quarterly production
By MortgageDaily.com staff
6/9/2005

Amidst milestone volume, the parent of Option One Mortgage Corp. said profitability from the segment has returned to more normalized levels.

H&R Block Inc. reported record mortgage fundings of $9.3 billion during its fiscal fourth quarter, of which $8.9 billion was nonprime. Originations, which are derived from Option One and H&R Block Mortgage Corp., were up from the prior quarter's fundings of $8.4 billion, and nearly 50% higher than a year ago.

"Increasing our mortgage sales staff resulted in a 33 percent increase to loan origination volume for the year," Block Chairman and CEO Mark A. Ernst said in the announcement

Wholesale production from Option One represented 87% of activity during the fiscal quarter -- which ends April 30 to correspond with the end of Block's busy tax season. The weighted average FICO score on loans originated was 618, Kansas City, Mo.-based Block said, while the weighted average loan-to-value and interest rate was 79.6% and 7.45%, respectively.

Irvine, Calif.-based Option One, which reports a network of 34,000 mortgage brokers, saw its servicing portfolio end the fiscal year at $68 billion, Block said.

Pretax income from mortgage services was $166 million, according to the report, while net earnings for the entire company was $616.5 million.

The mortgage business returned to more normalized levels of profitability during the latest quarter, Ernst added. "During the past quarter, we began to see moderation in the competitive environment along with the benefits of the actions that we have taken to better position ourselves in the market," he said in a transcript of a conference call -- noting that pricing remains reasonably aggressive.

"We have structured the business to compete more effectively both in the retail and non-prime markets."

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