Nationstar Mortgage Holdings (NSM) raised its bid last week to buy mortgage servicing rights from bankrupt Residential Capital by $125 million, according to a financial filing Thursday.
After Ally Financial put its separate mortgage unit into bankruptcy in May, Nationstar agreed to become the initial stalking-horse bidder on the servicing rights. The Texas mortgage servicer owned mostly by Fortress Investment Group (FIG), offered to buy roughly $201 billion in servicing unpaid principal for $700 million, and $173 billion in subservicing UPB for $180 million.
Warren Buffett's Berkshire Hathaway offered higher bid in June and said a bankruptcy court would consider both options.
If Ally sells the ResCap rights to service home loans guaranteed by Ginnie Mae – meaning mostly Federal Housing Administration mortgages – to someone else, Nationstar would raise its bid on the remaining assets by $85 million.
Nationstar also offered to lower its break-up fee Ally would have to pay to $24 million from $72 million originally planned. It will also extend deadlines for a bankruptcy court to approve a deal before Nationstar can withdraw its offer. The original deadline was set in December. The latest filing did not specify the new deadline.
Nationstar planned to fund $450 million of the original offer, and have investment partner Newcastle Investment Corp. supply the rest. According to the filing Thursday, Nationstar said Newcastle would pay a portion of the $125 million increase.