H&R Block said the subprime mortgage unit it is selling has lost a credit line, lowering its borrowing capacity closer to the minimum needed for the sale to go through, reports Reuters. In a filing with the Securities and Exchange Commission, the company said Lehman Brothers did not renew a “warehouse” facility with the subprime unit, Option One Mortgage, after it expired June 28. The facility provided at least $1 billion of borrowing capacity, according to Reuters.
Cerberus Capital Management, the private equity firm that agreed in April to buy Option One, required the unit to maintain at least $8 billion of warehouse capacity through the closing date, expected in October. Separately, Bank of America agreed to boost its ware house credit facility to $2.25 billion from $2 billion until the sale of Option One is completed.