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.

But Nationstar increased its bid on June 28, according to the latest Securities and Exchange Commission filing. Reports surfaced in early June that Nationstar was planning to make a new bid.

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.