Billionaire Warren Buffett sought to buy Residential Capital from Ally Financial Inc. before the government-owned company put the home lender into bankruptcy, Bloomberg reported.

Buffett assigned former hedge-fund manager Ted Weschler to negotiate an offer with Ally, said the unnamed sources. Buffett’s Berkshire Hathaway Inc. ($169,400.00 2097%) would have paid almost nothing upfront for the assets, while taking on potential liabilities.

Ally turned down the proposal, filed for bankruptcy protection and announced a sale to Fortress Investment Group ($7.45 0.09%) and Nationstar Mortgage Holdings Inc. ($45.32 0.83%) for about $2.3 billion. Buffett could still bid on the firm during the bankruptcy process.

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kcurry@housingwire.com