Option One shuts down lending, Irvine cuts unknown
December 4th, 2007, 7:09 am · 23 Comments · posted by Mary Ann Milbourn
Register staff writer Mary Ann Milbourn reports:
Option One Mortgage Corp. will shut down its lending operations, close three offices and lay off 620 people nationwide after a deal to sell the subprime lender fell apart, parent company H&R Block announced today.
The company said it will not accept any new loans but will complete about $30 million in loan commitments already in the pipeline. Its loan-servicing operation will be sold once an estimated fair value can be determined, H&R Block said.
It was not immediately clear what impact the shutdown would have on Option One’s Irvine operations, which does both loan origination and servicing work.
“Obviously Irvine is affected, but as far as numbers, we’re not doing breakdowns,” said H&R Block spokesman Nick Iammartino from Block’s headquarters in Kansas City. He said affected employees are being notified today.
The Irvine office has already lost at least 350 jobs this year as the company slashed staff in the wake of major losses as subprime lending dried up. Option One and related businesses lost $193 million in the quarter ended July 31.
Option One’s closure was not unexpected. H&R Block has been trying to unload its mortgage unit for more than a year. Cerberus Capital Management L.P. looked like it was going to come to the rescue in a deal announced in April.
But as the mortgage market deteriorated, the deal became less certain. H&R Block scrambled to restructure the terms but in the end couldn’t make the numbers work. The handwriting was on the wall last month when H&R Block dumped chief executive Mark Ernst.
A last-minute infusion of $350 million in additional funding last month couldn’t change the outcome.
“The company is determined to complete our exit from subprime mortgage lending without further delay and today’s action largely completes that objective,” said Richard C. Breeden, H&R Block chairman. “The mortgage market today has undergone vast changes since last April when the original Cerberus deal was signed. Despite the hard work and good faith of both sides we could not find a way to restructure the original transaction to mutual satisfaction.”
The company said it would take a pretax restructuring charge of $75 million to close the operation.
December 4th, 2007 at 7:37 am
Are there any major lenders left now in Orange County??????
Crazy to think that in less then 1 year they are all gone
December 4th, 2007 at 9:09 am
There are plenty, A-paper!
December 4th, 2007 at 10:00 am
Ray is right. The ones that closed were the companies doing mostly or all subprime. Just about all subprime and even a lot of alt A will be gone during this “credit crunch”. Less people qualifying for loans = more foreclosures, less buyers, and lower prices for some time to come.
December 4th, 2007 at 10:13 am
all those people can say thxs for no more jobs to the people that put them there in the first place.
Liars, liar loans and fraudulant people that took out loans thats why this whole mess is upon everyone. No one else to blame but the buyers of these homes they could not afford.
PERIOD>>>>
December 4th, 2007 at 10:55 am
Chase bought Argent/Ameriquest and alot of my friends are still there at the City Drive building in Orange. So only the strong will survivie. Time will tell.
December 4th, 2007 at 11:26 am
The major question to ask is not only who will be left but what type of loans will be offered. I believe the sub-prime lending is dead for the forseeable future.
December 4th, 2007 at 11:29 am
Kim,
Citi bought Argent/AMC. Ameriquest was not included in the deal and is alone with the parent company ACC Capital.
December 4th, 2007 at 11:32 am
What about IMPAC? Their stock is currently at .59…don’ t they
get taken off the NYSE eventually?
December 4th, 2007 at 11:46 am
Come visit the Irvine Towers at the corner of Von Karman and Michelson if you want to see the ghost of bubbles past staring at you: all manner of office space sits vacant after umpteen New Century and related smaller offices were terminated. Don’t worry about parking spaces, you got acres available in the garages.
But there are plenty of lending layoffs still to come as this current story proves, OC office rents ain’t going anywhere but down.
December 4th, 2007 at 12:07 pm
>>No one else to blame but the buyers of these homes they could not afford.
December 4th, 2007 at 12:12 pm
Kim,
Argent was purchased by Citi not Chase. I don’t think they purchased the Ameriquest business…
December 4th, 2007 at 12:22 pm
How about all that mass construction going on there. Whos that for after the fact. I remember back when Ditech had a small office in one of those buildings in the late 90’s and New Century was a landmark.
December 4th, 2007 at 1:27 pm
i have a friend who work here. she was laid off a few weeks ago.
December 4th, 2007 at 1:34 pm
You may all be looking for work when this is over.
December 4th, 2007 at 2:42 pm
Does it matter if any are left? Sub prime lending has evaporated. Alta A is almost non existant and now A paper is being hand cuffed ( see Fannie Mae’s new guidlines for delivery fees based on fico scores). Whats worse is the government is trying to eliminate rebate and have hinted that they may lower the conforming limit in 2009. FHA is not going to raise thier limit 2008 so “turn out the lights the partys over”
Whatever you were doing before you got into this business you may need to go back to. For me it will not be that hard because I use to deal with the same type of people in my prior job…….. I was a proctologist
December 4th, 2007 at 2:46 pm
Forum
We can sit here all day and debate this issue. It is what it is…market forces are taking place everyday.
Let’s just hope that the overall collateral damage is not too extensive.
We can all come across like Monday Morning Quarterbacks; the bottom line is we have No control over this and must let the market and industry play out.
Peace and Merry Christmas
December 4th, 2007 at 3:04 pm
I almost got a job there - Thank God I opted for another stable one.
December 4th, 2007 at 5:43 pm
Good I’m glad that was one of the worst companies I’ve ever worked for
Option One was run like a Nazi Death Camp but what would you expect from a company that uses red black and white for their company colors there was another organization that used those as their colors too. why was I not surprised to have a train station just a couple of blocks away .
A company with “CULTure”
December 4th, 2007 at 6:52 pm
AStr8Arrow: “we have No control over this ”
Not entirely true. People have control over their own lives and have every right in the world to wield it. That includes being able to plan for those setbacks and ensure the financial health of your family.
If a potential problem is looming on the horizon, don’t wait for it to occur to decide what to do. Act decidedly and follow through. Set several goals for yourself, plan and work backwards from there, and consider risks you will need contingents for. Become inspired for your future.
December 4th, 2007 at 9:14 pm
OOMC started as one of the best companies I ever worked for. This companies president believed in giving back to the employee’s NOT buying planes for himself. The perks with the OOMC dollars, the incentive program to get healthy and stay healthy, the work we did for charity organizations etc…
This is the stuff seldom talked about. OOMC was once a great company and kudo’s to the upper management. OOMC jumped the shark at year 10 trying to change too much too fast with new management with selfish motives.
Maybe one day they can rebuild a new company w/ old OOMC values and regain the employee’s trust and the communities respect.
Sign forever greatful former employee
December 4th, 2007 at 10:23 pm
fourth generation Says:
December 4th, 2007 at 11:26 am
The major question to ask is not only who will be left but what type of loans will be offered. I believe the sub-prime lending is dead for the forseeable future.
The last time the subprime existed as we knew it from the last five years was in the 1920’s.
December 20th, 2007 at 1:59 pm
Please feel free to visit http://www.oomcindia.com for a quick peek at the future of Option One…thank you come again.