The ResCap Bid: Is Warren Buffett on the Fence?

Berkshire Hathaway’s interest in Residential Capital Corp. is beginning to waver, according to advisors and others close to the transaction.

One source, requesting his name not be used because of the sensitivity of the matter, said Berkshire is worried that if it buys ResCap and its $365 billion servicing portfolio it will not have a strong production arm to capture refinancings and new business.

ResCap’s originations plunged 52% in the second quarter while the rest of the nation’s top 20 lenders experienced double-digit growth rates. ResCap’s bank affiliate is exiting warehouse lending and the lender halted wholesale production several quarters ago.

At press time a spokesman for Berkshire had not returned a telephone call about the matter.

Berkshire, at this time, is still considered a potential investor but investment bankers believe that the two leading bidders continue to be Nationstar Mortgage and Ocwen Financial.

Even though Ocwen is spending $750 million to buy Homeward Residential, it still has ample financial backing from its bankers to buy ResCap as well, sources said.

ResCap is controlled by Ally Financial, which threw its mortgage division into Chapter 11 back in May. Ally is majority controlled by the U.S. Treasury.

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Originations Servicing
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