Mortgage crisis chips away at H&R Block

H&R Block Inc., the provider of tax and accounting services, reported a first-quarter consolidated net loss of $302.86 million, or $0.93 per share. A year ago, the loss was $131.4 million, or $0.41. H&R Block’s revenue from continuing operations rose 11%, reaching $381.2 million. The firm also narrowed its outlook for fiscal 2008, predicting an earnings range of $1.30 to $1.45 per share, compared to the prior projection of $1.25 to $1.45 per share. Mortgage problems plagued the Kansas City, Mo.-based tax preparer during the quarter. Losses include a $49.6 million impairment of residual interests, a $57.4 loss on sale and $157.3 million in loan loss and repurchase preserves. Option One Mortgage Corp., which sells loans for H&R Block, tightened its underwriting criteria and cut back on loan commitment activity. Cerberus Capital Management L.P. is slated to buy the discontinued mortgage unit, but a number of closing requirements stand in the way—including one that calls for H&R Block to have $2 billion in loans funded within 60 days of the closing and the ability to warehouse at least $8 billion in loans. The company is trying to waive these requirements to speed up the purchase.