A group led by Ocwen Financial won the race for Residential Capital's loan servicing platform on Wednesday, bidding $3 billion for the bankrupt mortgage lender's assets.
The Ocwen-led group, which also included Walter Investment, trumped Nationstar Mortgage Holdings, a loan servicing company that is controlled by the Fortress Investment Group. The two competed in an auction at the Sheraton New York hotel in Manhattan that began on Tuesday.
Nationstar had been designated the “stalking-horse bidder†for the assets, meaning that its bid had set the baseline for the auction. It is now eligible for a break-up fee if the bankrupt lender's board and a bankruptcy court judge approve the Ocwen bid.
If completed, the proposed sale would help raise money to pay off creditors of Residential Capital, known as ResCap. The lender, which is part of Ally Financial, filed for bankruptcy earlier this year in an effort to better separate itself from its parent.
The transaction must still be approved by the federal judge overseeing Residential Capital's Chapter 11 case; a hearing is set for Nov. 19.
“We will continue to work with all parties involved to ensure the best possible outcome for its creditors and other stakeholders,†Susan Fitzpatrick, a spokeswoman for ResCap, said in an e-mailed statement. “The board would like to thank the management and staff of ResCap for their incredibly hard and dedicated work in reaching this milestone in the Chapter 11 cases of ResCap.â€
