A former H&R Block Inc. (HRB) unit has agreed
to pay $28.2 million to settle charges it misled investors by failing to
disclose that its financial condition was significantly deteriorating, the
Securities and Exchange Commission said.
The SEC alleges that Option One Mortgage Corp., now known as Sand Canyon Corp., promised investors in more than $4 billion worth of residential mortgage-backed securities that it sponsored in early 2007 that it would repurchase or replace mortgages that breached representations and warranties. However, the company didn't tell investors that it could not meet its repurchase obligations on its own, the SEC said.
Option One didn't admit or deny the SEC's allegations.
According to the SEC's complaint filed in a U.S. District Court in California, Option One was one of the nation's largest subprime-mortgage lenders with originations of $40 billion in fiscal 2006.
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