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Option One Consolidating

Option One Consolidating

600 jobs being cut

February 28, 2006

By COCO SALAZAR

photo of Coco Salazar
Option One Mortgage Corp.’s consolidation will result in hundreds of layoffs.

As part of their continuing efforts to improve cost structures and streamline processes, Option One and its subsidiary H&R Block Mortgage are consolidating a number of operations “to better compete in the aggressive operating environment that has developed over the past year,” according to an announcement Thursday.

By May 31, the company will reportedly close or merge 34 mortgage locations and cut approximately 600 positions, which is about 13 percent of its current workforce of 5,103 associates.

“The changes we’re making today will help to ensure the long-term success of our mortgage businesses,” said Bob Dubrish, Option One president and chief executive, in the written statement. “We’ve already taken steps to streamline our processes, utilize new technologies, and aggressively reduce our costs.”

Last spring, realignment united Option One’s wholesale and national sales groups under one umbrella to gain productivity and operating efficiencies. Then, late last year, an office shutdown in Richardson, Texas, resulted in a reduction of 89 employees, spokeswoman Christine Sullivan said in e-mailed statements.

“Like other companies within our industry, we’re facing challenges created by rising interest rates, which have led to shrinking margins,” Sullivan added. “For the last six months, our focus has been on improving our cost structure.”

Tax-preparing parent company H&R Block Inc. said the mortgage operations’ originations of $9.0 billion for the quarter ended Jan. 31 fell 29 percent from record volume posted in the previous fiscal quarter. Earnings, however, improved to $28.8 million from a net loss of $72.2 million in the prior quarter.

While the recently-announced plans call for offices in close proximity to merge, the lenders will not exit any markets, Sullivan noted.

The number of Option One branches will reduce to 44 from 56. The 12 branch offices to be merged are located in Atlanta; Bellevue, Wash.; Columbus, Ohio; Plano, Texas; Detroit; Lake Forest, Calif.; Mt. Laurel, N.J.; and Tampa, Fla, she said in an e-mailed statement.

H&R Block will consolidate to eight regional call centers by closing two call centers currently located in Atlanta and Philadelphia, the statement said.

The shutdown of the center in Trevose, Penn., in the Philadelphia area, will result in 97 layoffs by April 24, H&R Block said Tuesday in a WARN filing with the state’s Bureau of Workforce Development.

In addition, H&R Block will close 20 small financial centers and continue to operate these in four locations only, according to an e-mailed statement.

“Consistent with company values, we’re doing everything possible to assist those affected by layoffs,” including severance pay and outplacement assistance, Sullivan told MortgageDaily.com.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.e-mail: MortgageWriter@aol.com

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