Option One, the mortgage subsidiary of H & R Block said in a corporate bulletin on Aug. 3 that it will not accept mortgage submissions secured by condominiums in Florida.

It cut a break to some existing mortgage holders, while tightening regulations and requirements for new borrowers in other states.

Any three-year adjustable-rate mortgages (ARMs) that are in its pipeline will automatically be transitioned into five-year ARMs, thus giving the borrowers a fixed-rate payment for a longer time. The three-year ARM will no longer be offered.

Irvine Calif.-based Option One also tightened eligibility, processing and underwriting requirements:

* It will only originate full document loans for owner-occupied, primary premises - no second homes.
* No refinance submissions will be accepted if a property is vacant or has been listed for sale for the last three months.
* Appraisals must be less than 90 days old and must include one comparable sale less than three months old and one current listing. All other comparables must be less than six months old.

Effective immediately, Option One will begin calling the borrower directly to confirm critical contact information and review loan terms on all wholesale loans before proceeding to closing.

In April, H & R Block (NYSE: HRB) agreed to sell Option One to an affiliate of Cerberus Capital at its net asset value at the time of closing, less a discount of $300 million. The company said the closing could be delayed until Dec. 31.

Source

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