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Obama, and the ‘Political Angle’ on the ResCap Auction

OCT 22, 2012 12:28pm ET
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President Obama has been touting the fact that the government bailout of General Motors saved thousands of jobs, not to mention the economies of (swing) states like Michigan and Ohio. But mortgage bankers may’ve noticed that the government rescue of Ally Financial has been missing from the political debate. After all, Uncle Sam has $17 billion invested in Ally and Residential Capital Corp. If Ally/ResCap had gone bust would it have been an economic ‘event’ equal to GM? I would guess not. ResCap has a servicing market share of just under 4%, according to the Quarterly Data Report. Meanwhile, the auction of ResCap takes place Tuesday  with firms the likes of Ocwen Financial and Nationstar vying for their assets. One wag suggested that Ocwen’s outsourcing of mortgage jobs to India could hurt its chances because it would be selling the government-owned ResCap to a buyer who very well could send jobs overseas. If Ocwen wins the bid will Mitt Romney seize the day on this political factoid?

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Bankruptcy Auctions do not consider any "social" impact, the "highest and best" bidder as per the official court dockets simply means that this is about the debtors, not who will be sending jobs overseas. Granted, Fannie Mae has been very vocal of not "liking" Ocwen for a variety of reasons, their business practices of oursourcing work to India will not play a part in this auction decision. Ocwen partnering with another company will not do much either, the facts are the facts, they have a poor reputation with their customers as far as service and loans being restructured, period. They are not much more than a collection agency for default loans. However, since Fannie Mae owns over 70% of the loans up for auction, they have final say in approving the winner and it could be dragged out in the courts for months if Ocwen ends up outbidding Nationstar. FannieMae can also approve Ocwen but put clauses in that they cannot sevice the loans outside off the usa - like they have in the past. This is long from over as it is not expected to be signed, sealed and approved on November 30th.
Posted by | Tuesday, October 23 2012 at 1:19PM ET
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