Residential Capital LLC won court approval to sell its mortgage servicing unit to Ocwen Financial Corp. for $3 billion after putting off a fight with loan investors and resolving other objections.
U.S. Bankruptcy Judge Martin Glenn in Manhattan said he will sign an order as early as tomorrow approving the sale after the company works out the final wording with creditors.
“The sale of these very significant assets is important to the successful outcome” of the bankruptcy, Glenn said today in court.
The ruling comes after ResCap resolved the main objections from the servicing unit’s biggest customers, including mortgage-owners Fannie Mae and Freddie Mac. ResCap will continue negotiating with Fannie Mae and other mortgage holders over their demands for so-called cure payments, cash payments that compensate creditors for actual and potential losses caused by a bankruptcy filing.
Should ResCap and the mortgage owners fail to reach an agreement on the size of the payments, they would return to court in January, company attorney Gary Lee said today in court.
Ocwen financial won an Oct. 24 auction for the loan servicing unit with a bid of $3 billion. The next day, Berkshire Hathaway Inc. won an auction for a portfolio of ResCap’s loans with a $1.5 billion offer. Glenn also approved the portfolio sale.
New York-based ResCap filed bankruptcy in May to with plans to sell its major assets and resolve legal claims related to mortgage loans. The company is owned by Ally Financial Inc., a Detroit-based auto lender majority owned by U.S. taxpayers.
The case is In re Residential Capital LLC, 12-12020, U.S. Bankruptcy Court, Southern District of New York (Manhattan).