OPTION ONE MORTGAGE CORPORATION ANNOUNCES UPDATED BEST PRACTICES

For Immediate Release

        IRVINE, Calif., Feb. 17, 2004 – Option One Mortgage Corporation, one of the nation’s leading residential mortgage lenders, today announced updated best practices for its wholesale and retail loan origination businesses, including H&R Block Mortgage Corp., and its mortgage servicing operation. The best practices are designed to help borrowers make beneficial borrowing decisions.

        "Our best practices in non-prime lending and servicing are in keeping with our company’s core values of doing what is ethical and treating others as we want to be treated," said Bob Dubrish, president and CEO of Option One. "Best practices reflect our commitment to be open and fair in our lending, so people can achieve the dream of homeownership, or use their home equity to improve their lives by sending their children to college, remodeling their homes or consolidating high interest-rate debt."

        Option One has had best practices for many years, but the company updated and revised them to make the information even more accessible to borrowers. They are written in easy-to-understand language and presented from the borrower’s perspective in the home-buying process.

        This is in keeping with the company’s practice of clear disclosure and making its materials understandable to borrowers. Within three days of applying for a loan, a borrower receives educational information from Option One on loan options, the lending process, definitions of key terms and information on HUD-approved credit counseling agencies.

Benefiting Borrowers

        Option One’s best practices were developed to help borrowers get loans they are able to repay and that benefit them. For example, the company sets up escrow accounts into which borrowers can put aside money each month to pay real-estate tax and homeowner’s insurance. This helps them avoid large lump-sum payments.

        "Option One’s best practices policy is clear, concise, and most importantly, consumer friendly," said Ricardo Byrd, executive director, National Association of Neighborhoods. "We are especially pleased with the company’s significant emphasis on the importance of escrow accounts. Sub-prime borrowers need escrow accounts as much as, if not more than, any other borrower."

        In addition, Option One does not charge for many standard services. This includes: free automatic payment withdrawals, free copies of payment histories, free copies of loan documents, free payoff statements, free verifications of mortgages, and free change of title/owner.

        "Option One's enhanced set of best practices is a commendable step forward in fair lending and responsible servicing" said John Taylor, president and CEO of the National Community Reinvestment Coalition. "In particular, the prohibition on mandatory arbitration serves as a model for where the whole industry needs to go. Regarding servicing practices, Option One's commitment to support post origination loan counseling and to use escrow accounts should be applauded. Escrow accounts help prevent loan delinquency for cash-strapped borrowers and avoid sometimes very expensive force-placed insurance."

Borrower’s Best Interest

        The company wants to make loans that offer clear benefits to borrowers. For this reason, there are some loans the company does not make at all. These include: loans based solely on equity; loans with balloon payments; negative amortization loans, in which the principal is not reduced as payments are made; and loans that contain single-premium credit life or disability insurance. In addition, the company does not offer loans on which interest rates increase due to default.

        Also, Option One pays the full initial cost for borrowers it refers to independent credit counseling.

        To be sure all of the borrower’s funds are allocated appropriately, Option One does not disburse funds directly to home-improvement contractors or pay yield-spread premiums to brokers.

        "We appreciate the steps Option One has taken to affirmatively prevent unfair lending practices and its commitment to ensuring its broadest possible compliance with local, state, and federal laws," said Shanna Smith, president and CEO of the National Fair Housing Alliance. "The company’s best practices for both the origination and servicing of loans set an example we hope the rest of the mortgage lending industry will follow."

        Focused on ongoing improvement, Option One has recently contracted with a national, independent polling organization to survey its customers. The company intends to use that feedback to better its operations.

Other Best Practices Highlights

        Option One has more than $42 billion in assets under management at Jan. 31, 2004, and consistently ranks in the top-five originators of non-prime residential mortgage loans by volume. The company has received top ratings for its servicing operations from Fitch Ratings, Standard & Poor’s and Moody’s.

Other highlights of Option One’s servicing best practices include:

1. Welcoming new borrowers with a personal phone call from an Option One associate who can answer questions the borrower may have about their loan.
2. Providing extended phone service hours, multiple languages and online help so customers can get information they need, day or night.
3. Providing several ways to make monthly mortgage payments.
4. Helping customers build and maintain a strong credit record by posting payments monthly to the three major credit bureaus.
5. Paying the full initial cost for borrowers it refers to independent credit counseling.

Other highlights of Option One’s origination best practices include:

1. Offering a variety of products to meet borrower needs.
2. Determining in advance that the borrower is able to repay the loan.
3. Providing clear and frequent disclosures.
4. Providing borrower credits to assist with closing costs, a program that Option One pioneered in 1996 and that adds transparency to the lending process.