Warren Buffett’s Berkshire Hathaway is seeking to buy mortgage assets of Residential Capital LLC, also known as ResCap — a subsidiary of Ally Financial Inc., the former auto lending arm of General Motors.
Berkshire, a conglomerate based in Omaha, Neb., has significant interests in the insurance business as well as in a variety of other companies ranging from railroads to clothing, furniture and jewelry companies.
Berkshire offered to be the “stalking horse” bidder for a $374 billion mortgage-servicing portfolio that ResCap already has a proposed agreement to sell to Nationstar Mortgage Holdings Inc., a monoline mortgage servicer majority owned by Fortress Investment Group LLC.
ResCap filed for bankruptcy May 14 with plans to sell most of its assets to Fortress. Ally, a Detroit-based bank that specializes in car loans, owns ResCap.
While Ally — once known as GMAC, the onetime financing arm of General Motors — has made some progress in rebuilding itself from the collapse of the housing market, its mortgage unit contributed to the lender’s failing of government stress tests this year.
Ally supported the bankruptcy filing as a way to resolve legal claims related to mortgage-backed securities.
Before the bankruptcy filing, Berkshire made a last-minute offer to buy ResCap assets for $1 in return for taking on its liabilities, according to a source familiar with the situation, who was not authorized to speak publicly about the talks. Ally turned down the offer, the source said.