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ResCap expects more bidders for assets-CEO
(Reuters) - Several bidders for Residential Capital LLC's assets are likely to emerge in coming weeks as a bankruptcy court judge sets a sale process, the chief executive of the mortgage company said on Thursday.
"There clearly appears to be some real interest out there from other bidders," CEO Tom Marano told Reuters in an interview. He declined to name prospective buyers.
ResCap, the mortgage unit of Ally Financial, filed for Chapter 11 bankruptcy protection in New York last month. The bankruptcy gives Ally, the former in-house lending arm of General Motors Co (GM.N), a way to shed its mortgage liabilities to clear a path for repaying U.S. taxpayers after a series of bailouts during the financial crisis.
ResCap has agreed to sell its mortgage origination and servicing business to Nationstar Mortgage LLC (NSM.N) and a portfolio of loans to Ally for total proceeds of about $4 billion. But other bidders for the mortgage business and loan portfolio could emerge after the bankruptcy court approves a sale process, expected at a June 18 hearing.
"The exciting thing will be to see how many people show up for the bids, because this really could be a turning point for the mortgage market where you see significant interest in the private sector coming back in," Marano said.
While some banks have been backing away from the mortgage business, bidders have emerged for some of their assets. In the past year, mortgage servicer Ocwen Financial Corp (OCN.N) has bought Goldman Sachs Group Inc's (GM.N) Litton Loan Servicing and Morgan Stanley's (MS.N) Saxon Mortgage Services unit. And this week Nationstar agreed to buy $10.4 billion in mortgage servicing rights - the right to collect payments from borrowers - from Bank of America Corp (BAC.N).
Before ResCap's May 14 bankruptcy filing, Warren Buffett's Berkshire Hathaway Inc (BRKa.N), a major ResCap creditor, made a last-minute offer to buy ResCap assets for $1 in return for taking on its liabilities, according to a source familiar with the situation, who was not authorized to speak publicly about the talks. Ally turned down the offer, the source said.
Marano said there were discussions between Berkshire and Ally but he was not a party to them.
"My sense is that Ally definitely tried to engage with Berkshire, but obviously they couldn't come up with something that was mutually satisfactory," he said.
Neither Ally nor Berkshire immediately responded to a request for comment.
On Monday, Berkshire asked the bankruptcy court to appoint an independent examiner to investigate transactions between ResCap and its parent. In a bankruptcy case, an examiner investigates allegations such as dishonesty, fraud, incompetence and mismanagement.
A decision on that request is expected June 18, Marano said.
"If a judge feels that's appropriate, I'm fine with it," he said. "I think there's nothing here that we have to worry about."
ResCap has other assets - mostly loans backed by government insurance - that it could sell, Marano said. But it may be best for the ResCap estate to keep those loans because they could collect insurance payments over the next 18 months, producing a better return for creditors, he said.
ResCap has continued to service existing loans and make new ones in bankruptcy, he said. Customers are expected to keep making their payments. ResCap has said it is hopeful its restructuring plan will be approved by the fourth quarter of 2012.
Under the Nationstar deal, ResCap's more than 3,600 employees would join the Lewisville, Texas-based company. Marano's future is unclear. The former Bear Stearns executive is committed to guiding ResCap through the bankruptcy process, ResCap spokeswoman Susan Fitzpatrick said.
Ally has been besieged in the past few years by losses at ResCap, once a major subprime lender and its profit engine. Ally said in May that it plans to sell its international operations to help repay $12 billion in U.S. government bailouts.
The case is In re: Residential Capital LLC, U.S. Bankruptcy Court, Southern District of New York, No. 12-12020
(Reporting By Rick Rothacker in Charlotte, North Carolina; Additional reporting by Soyoung Kim in New York; editing by John Wallace)
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