Ally mortgage servicing unit OKs $3B buyout offer
NEW YORK (AP) — Ally Financial Inc.'s mortgage lending and servicing subsidiary has given preliminary approval to a $3 billion buyout offer from a unit of Ocwen Financial Corp.
The board of Residential Capital, or ResCap, said Wednesday that the offer by Ocwen Loan Servicing LLC represents the highest and best bid it received under a bankruptcy auction for its mortgage servicing and loan origination assets.
Mortgage servicer Nationstar Mortgage Holdings Inc. was also vying to land the ResCap assets, but issued a statement Wednesday saying it would not boost its bid further.
Final approval of the sale will be determined in a bankruptcy court hearing scheduled for Nov. 19, ResCap said.
Shares of Atlanta-based Ocwen jumped 5.5 percent in afternoon trading, while Nationstar shares tumbled nearly 12 percent.
ResCap filed for Chapter 11 bankruptcy protection in May and is in the process of auctioning off its assets, which include a portfolio of weak subprime mortgages.
As of March 31, ResCap was servicing more than 2.4 million mortgage loans with a combined unpaid principal balance of roughly $374 billion.
Nationstar submitted an initial offer — a step known as a "stalking-horse bid" — in the court-supervised auction of ResCap's assets. But its offer fell short of Ocwen's bid.
"Obviously we are disappointed in the outcome of the auction, but in the end our judgment was that the price of the assets would not represent a compelling investment opportunity for us," Nationstar CEO Jay Bray said in a statement.
Ocwen did not have an immediate comment Wednesday.
Its shares were up $1.98 to $38.18 in afternoon trading. The stock has more than doubled so far this year.
Shares of Lewisville, Texas-based Nationstar fell $4.12 to $30.74.
Detroit-based Ally Financial was General Motors' financial arm until the banking industry meltdown in 2008. It received a government bailout to survive and now operates as an auto lender and bank holding company.