NEW YORK (AFP) — Tax firm H&R Block said Monday it had agreed to sell the mortgage loan servicing business of its Option One Mortgage Corp. unit to an affiliate of private equity firm WL Ross & Co. LLC.
The purchase price in the deal will be based on a formula to be applied to the balance sheet of the servicing business on the closing date.
WL Ross is headed by billionaire investor Wilbur Ross, who is known for buying and restructuring troubled firms, such as in the steel industry.
Ross estimates the value of the transaction at 1.1 billion dollars.
Among other stipulations and conditions, the deal provides for a purchase price deduction if the number of 30-plus day delinquencies of mortgage loans serviced by the business as of the closing exceeds a specified threshold.
H&R Block last year had tried to sell the unit to private equity firm Cerberus, but they terminated the agreement in December after failing to agree on the price in view of the turmoil in subprime real estate loans to people with weak credit histories.
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