Lenders have reduced or eliminated some credit lines to Option One Mortgage Corp. in Irvine, said parent H&R Block in a filing today.

• J.P. Morgan ended a $1 billion line.

• Citigroup and Wells Fargo ended a $1 billion line.

Here’s why:

The Terminated Facilities were terminated in light of (i) the pending expiration of waivers of “minimum net income” covenants contained in the Terminated Facilities (which generally required OOMC to maintain a cumulative minimum net income of at least $1 on a rolling basis for the most recently ended four fiscal quarters) and (ii) reduced mortgage origination volume and decreased warehouse financing availability in the current sub-prime mortgage environment.

And there’s more:

• Citigroup extended a credit line to the end of October but reduced it to $150 million from $1.5 billion.

• Greenwich Capital Financial Products decreased its line to $750 million from $3 billion. The line runs through April 2008.

If Option One sells loans far below cost, it could be required to pay Citigroup and Greenwich a total of $90 million.

To read the filing, CLICK HERE.

This entry was posted on Wednesday, October 3rd, 2007 at 6:07 pm and is filed under Company Watch, Option One. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.