File this one under "no surprise there." After months of wrangling for a better deal, Cerberus Capital has finally gotten out of its deal to purchase the ailing mortgage unit of battered tax-prepper H&R Block
Block's Option One Mortgage Corporation is, in fact, not making more loans. And, true to the model adopted by such other mortgage-lender losers as Novastar Financial
Remember, Cerberus knows very well what it's like to consume a sickened mortgage lender. It's the lead dog in the consortium -- which included multiple credit-crunch clod Citigroup
Much of that was a $455 million "impairment" charge to goodwill at ResCap, which is simply an admission that the biz is worth half a billion bucks less than they thought previously. Well, half a billion and then some. The quarter also had a much larger, much murkier, $840 million write-off for "... our Commercial Finance business, equity interest in Capmark, certain corporate activities related to mortgage activities, and reclassifications and eliminations between the reporting segments."
That's a lot of billions down the drain, with only about a year since Cerberus made the buy. You can see why the hound would be a little shy about gobbling up another lender in a mortgage market that's virtually dead. (GM's auto sales haven't been breaking any records lately, either.) Foolish investors looking at banks and lenders as "value" plays might consider themselves warned.
