Nationstar named opening bidder for ResCap mortgage unit

Tue Jun 19, 2012 4:35pm EDT
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By Rick Rothacker

(Reuters) - A judge on Tuesday approved Nationstar Mortgage Holdings Inc (NSM.N: Quote) as the opening bidder for Residential Capital LLC's mortgage origination and servicing business, beating out an offer from Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote).

Berkshire will be the opening bidder for a ResCap loan portfolio, eclipsing an initial offer by ResCap's parent company, Ally Financial, a ResCap spokeswoman said after a U.S. Bankruptcy Court hearing in New York.

ResCap, the mortgage unit of Ally Financial GKM.N, the former in-house financing arm of General Motors Co (GM.N: Quote), filed for bankruptcy last month with a plan to sell assets to Nationstar and Ally for about $4 billion.

After Berkshire emerged as a bidder for the mortgage business, Nationstar, a unit of Fortress Investment Group LLC (FIG.N: Quote), increased its initial bid by $125 million to $2.45 billion, ResCap said. Berkshire bid $1.44 billion for the loan portfolio, $50 million more than Ally, ResCap said.

ResCap spokeswoman Susan Fitzpatrick said the company was encouraged that there was significant interest in the opening bidding for its assets. Other potential buyers will be able to bid as part of the Chapter 11 bankruptcy process.

ResCap filed for bankruptcy last month as it faced looming bond payments and a possible loss of financing from its parent. Ally is eager to shed mortgage liabilities that have left it limping in the wake of the financial crisis. The auto lender is 74 percent-owned by the U.S. Treasury after a series of government bailouts.

Ally spokeswoman Gina Proia said its initial "stalking horse" bid for Rescap's loan portfolio aimed to generate value for ResCap's bankruptcy estates as part of a settlement that gave Ally legal releases to claims over mortgage-backed securities.

"We are pleased to have fulfilled Ally's role regarding ResCap's legacy loan portfolio," Proia said.   Continued...