H&R Block Inc. (NYSE: HRB) Chief Executive Mark Ernst today resigned as his efforts to unloaded the company's money-losing subprime mortgage business Option One Mortgage Corp. to Cereberus Capital Management LP nears collapse, according to Bloomberg News.

Former SEC Chairman and hedge fund manager Richard Breeden, who had long complained about losses at Option One and lead a proxy battle against the company, was named chairman and Alan. M. Bennett, a former CFO of Aetna Inc. (NYSE: AET), interim chief executive. H&R Block is conducting a search for a new CEO. Bennett has told the company he doesn't wish to be considered as a candidate, the company said in a press release.

Cerebeus agreed to pay H&R Block $800 million for Option One in April, well under the $1.3 billion the company had hoped to get. Cereberus may scuttle the deal entirely now given the continued uncertainty of the credit markets. It's unclear what's going to happen to Option One which Ernst had said H&R Block may close if it couldn't find a buyer, Bloomberg said.

Shares of Kansas City-based H&R Block, which have slumped more than 17% this year, rose in pre-market trading. It will be interesting to see if Breeden will be able to help turn around H&R Block now that he's become an insider.