[Update 1: Ocwen Financial, Walter Investment confirm winning bid]
Ocwen Financial (OCN) won the bid for the mortgage servicing rights to Residential Capital, a subsidiary of Ally Financial. Ocwen also received a little help from Walter Investment (WAC). Sources tell HousingWire the two firms submitted a joint, winning bid last night.
The purchase price is $3 billion.
ResCap, a wholly-owned subsidiary of Ally Financial Inc., services more than 2.4 million loans with an aggregate unpaid principal balance of approximately $374 billion. Of these, approximately 68% of the loans are owned, insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. ResCap has operations in Ft. Washington, PA, Waterloo, IA, Dallas, TX, Burbank and Costa Mesa, CA and Minneapolis, MN.
Walter Investment will acquire the Fannie Mae mortgage servicing rights portion of ResCap's servicing portfolio, representing approximately $50.4 billion in unpaid principal balance.
Compass Point Research & Trading reported over the weekend that Walter Investment teamed up with Ocwen on the bid. The same report suggested no other bidders surfaced even though it was widely reported Warren Buffett's Berkshire Hathaway would throw out a line and try to snatch up the mortgage business.
Competing bids from Nationstar Mortgage Holdings (NSM) apparently lost out to Ocwen's final bid.
Lewisville-based Nationstar Mortgage Holdings released a statement confirming it's decision to stop the bidding process after the price reached a certain threshold. The three firms were the finalists in bidding.
"Price matters," said Jay Bray, CEO of Nationstar. "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." The deal, if successful, would have made Nationstar the largest non-bank mortgage servicer in the nation. Ocwen remains the largest non-bank subprime servicer.
Since Nationstar was the designated stalking horse bidder, it's entitled to a break-up fee, the servicing firm said.
The ResCap assets, which were put into bankruptcy, became the subject of a heated bidding war as firms sensing opportunity in servicing rights began scoping out MSRs tied to the ResCap bankruptcy.