Modified benzyl ether-containing resole polyols derived from a phenolic component, a non-aqueous aldehyde, and a halogen-containing aliphatic hydroxyl component are prepared using a metal derivative as a catalyst. These polyols react with organic polyisocyanates to yield closed cell, low friability, low combustibility, rigid polyurethane foams without the need for post curing at elevated temperature. They are also useful in the preparation of modified rigid polyisocyanurate foams.