H&R Block announced that it will need to set aside $61.3 million, or 19 cents a share, to protect against loan liabilities related to rising mortgage delinquencies at its Option One Mortgage unit. HRB also said it will need to boost its loan-liability cash reserves owing to recent increases in loan repurchases, “which have been noted industrywide.”

Subprime lender Fremont General repurchased and re-priced $238.4 million in home loans in the second quarter, up from $67.7 million in the year-ago quarter and $107.7 million in the first quarter of this year. The company said it had cut back on “certain higher loan-to-value products and lower FICO” loans during the second quarter to reduce early payment defaults and thereby loan repurchases from investors.

Due to a spike in the buybacks of loans previously sold to investors, NetBank added $13.2 million to its provision expense in the second quarter, which in turn ate into its mortgage gain-on-sale income.

These repurchases occur when loans that have been sold default during their “warranty” period - usually the first 30 to 90 days. One can imagine that either folks are being put into loans where they can’t even afford the first payment, or that speculators are just walking away from units that they just closed on. Either way, it paints a grim picture.