More Mortgage Unit Woes for Block

Option One Mortgage, the beleaguered subprime lending unit of tax-prep giant H&R Block, has mired its parent company deeper into financial malaise, losing a $1 billion warehouse credit line from Lehman Bros. Holdings. In a federal filing, Lehman indicated that it did not renew the credit line after it expired late last month. The mortgage unit was one of the primary drivers behind the company posting a year-end loss of $434 million. Block has agreed to sell the arm to private equity concern Cerberus Capital Management, a deal that is supposed to close October 31. Cerberus stipulated that the division needs $8 billion of borrowing capacity in order for the sale to proceed. Block said that despite the non-renewal from Lehman, the company had the requisite borrowing capacity.