Written by anthonyrosania

Saturday, 16 October 2010

image for H&R Block is Finished! Bad Debt from Subprime Loans Will Bite Them in the Ass.

News that shocked no one was released today that will catch H&R Block right on the chin, with the company on the balls of its feet: The cost to protect debt issued by Option One, the subprime arm of Block that hrmmorhaged $2 billion in its last year of operation, which soared to record-levels as home foreclosures threaten to push losses back onto lenders.

"How could this have happened," whined Block's CEO, whose name is not relevant because he'll be replaced within the next month. "Who knew that giving loans to anyone that could scribble their name onto a loan application could bite us in the ass."

H&R Block, the biggest U.S. tax preparer, originated mortgages through January 2008, with some sold to become part of mortgage-backed securities. GMAC wrote down $2 billion in Residential Capital mortgage assets in preparation for selling them and set up a $500 million reserve tied to the servicing unit that does billing and record-keeping for home loans.

"This was absolutely expected," continued the CEO. "Which is why we put aside tens of dollars to offset the bad debt we created when we exploited the rampant growth in the housing market, and the working-poor.

Even if hundreds of millions of dollars of bad debt is charged back to the company, Block says its ready to deal with it.

"The company is growing by about 9.5% a year," said the CEO. "At that rate, we can pay off the bad debt by... What?... That's a LOSS of 9.5% a year?! Jesus Christ, we're f--ked."

The story above is a satire or parody. It is entirely fictitious.

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Topics: HR block

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