HR Block 2008 Annual Report Download - page 29

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OOMC originated non-prime mortgage loans, which are those not offered through government-sponsored loan
agencies and typically involve borrowers with limited or no income documentation, high levels of consumer debt
or past credit problems.
In the current year, OOMC incurred $119.2 million in restructuring charges related to the closure of its mortgage
origination activities. See additional discussion of restructuring charges in Item 8, note 19 to the consolidated
financial statements.
Sale and Securitization of Loans. Substantially all non-prime mortgage loans originated were sold daily to
qualifying special purpose entities (QSPEs or Trusts). OOMC funded its last loan in January 2008. Loan sales from
January to April 2008 consisted primarily of loans repurchased due to contractual obligations.
Loans meeting certain specified criteria were sold to HRB Bank during fiscal years 2008 and 2007. HRB Bank
holds the loans for investment purposes.
Servicing. Loan servicing involves collecting and remitting mortgage loan payments, making required
advances, accounting for principal and interest, holding escrow for payment of taxes and insurance and
contacting delinquent borrowers. OOMC historically serviced non-prime mortgage loans and received loan
servicing fees monthly over the life of the mortgage loans. As of April 30, 2008, in connection with the sale of
its loan servicing operations, OOMC ceased providing loan servicing.
GOVERNMENT REGULATION – Mortgage loans previously purchased, originated and/or serviced are subject to
federal laws and regulations, including:
쐍The federal Truth-in-Lending Act, as amended and Regulation Z promulgated thereunder;
쐍The Equal Credit Opportunity Act, as amended and Regulation B promulgated thereunder;
쐍The Fair Credit Reporting Act, as amended;
쐍The Fair Debt Collection Practices Act;
쐍The federal Real Estate Settlement Procedures Act, as amended and Regulation X promulgated thereunder;
쐍The Home Ownership Equity Protection Act (HOEPA);
쐍The Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended;
쐍The Home Mortgage Disclosure Act (HMDA) and Regulation C promulgated thereunder;
쐍The federal Fair Housing Act;
쐍The Telephone Consumer Protection Act;
쐍The Gramm-Leach-Bliley Act and regulations adopted thereunder;
쐍The Fair and Accurate Credit Transactions Act;
쐍Regulation AB; and
쐍Certain other laws and regulations.
Applicable state laws generally regulate interest rates and other charges pertaining to non-prime loans. These
states also require certain disclosures and require originators of certain mortgage loans to be licensed unless an
exemption is available. In addition, most states have other laws, public policies and general principles of equity
relating to consumer protection, unfair and deceptive practices, and practices that may apply to the origination,
servicing and collection of mortgage loans.
See discussion in Item 1A, “Risk Factors” for additional information.
SERVICE MARKS, TRADEMARKS AND PATENTS
We have made a practice of selling our services and products under service marks and trademarks and of obtaining
protection for these by all available means. Our service marks and trademarks are protected by registration in the
U.S. and other countries where our services and products are marketed. We consider these service marks and
trademarks, in the aggregate, to be of material importance to our business, particularly our business segments
providing services and products under the “H&R Block” brand.
We have no registered patents material to our business.
EMPLOYEES
We have approximately 9,700 regular full-time employees as of April 30, 2008. The highest number of persons we
employed during the fiscal year ended April 30, 2008, including seasonal employees, was approximately 137,200.
AVAILABILITY OF REPORTS AND OTHER INFORMATION
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments
to those reports filed with or furnished to the SEC are available, free of charge, through our website at
www.hrblock.com as soon as reasonably practicable after such reports are electronically filed with or
furnished to the SEC. The public may read and copy any materials we file with the SEC at the SEC’s Public
Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of
H&R BLOCK 2008 Form 10K 9