H&R Block

(HRB) - Get Report

said late Thursday that it will likely 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.

The nation's largest tax preparer also said it will need to boost its loan-liability cash reserves owing to recent increases in loan repurchases, "which have been noted industrywide."

The stock plunged on the news and was lately down $1.98, or 8.7%, to $20.81. Volume was much heavier than normal.

Other mortgage lenders, including

Countrywide Financial

( CFC),

Downey Financial

(DSL) - Get Report


New Century Financial

(NEW) - Get Report



( NDE), were weaker in morning trading.


KBW Mortgage Finance Index

, which has lost about 10% since May, edged lower.

H&R Block believes it will need to repurchase a pretax total of $102.1 million in loans. The company said $46.1 million of the loans were sold during the quarter ended July 31, and $56 million were sold in previous quarters.

The company attributed the rising level of loan repurchases primarily to a higher level of repurchase requests from loan buyers and an increase in mortgage customers who have fallen behind on loan payments.

The announcement prompted UBS to downgrade H&R Block's shares to neutral. The loss will be recorded in the company's fiscal first-quarter results due out Aug. 31, and more details will be announced during the earnings conference call.