ResCap Wins Approval to Try to Sell Defaulted Loans
Residential Capital LLC, the bankrupt mortgage company whose parent is owned by the U.S. government, won court approval to try to sell a pool of defaulted loans with a balance of about $130 million.
The mortgages are the best of about $1 billion in bad loans that ResCap was forced to repurchase after borrowers quit paying, according to papers the company filed earlier this month in U.S. Bankruptcy Court in Manhattan.
ResCap “identified those loans that will be attractive to a number of prospective bidders, which are expected to result in the highest average market price for the loans sold,” the company said in the filing. ResCap picked about 650 loans that have the best information about the value of the homes.
ResCap, based in New York, filed for bankruptcy in May with plans to sell its major assets and resolve legal claims related to mortgage loans. The company is owned by Ally Financial Inc. (ALLY), a Detroit-based auto lender majority owned by U.S. taxpayers.
Last year, the company held auctions for the most valuable ResCap assets -- its loan-servicing business and a separate portfolio of mortgages.
Ocwen Financial Corp. (OCN) won the Oct. 24 auction for the loan- servicing unit with a bid of $3 billion. The next day, Berkshire Hathaway Inc. (BRK/A) won the auction for a portfolio of ResCap’s loans with a $1.5 billion offer.
ReCap’s 6.5 percent bonds that mature in April climbed 1.7 percent to 29.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The case is In re Residential Capital LLC, 12-12020, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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