Residential Capital LLC, the
mortgage company liquidating assets in bankruptcy, agreed to pay
$297.6 million to end opposition by government-run loan investor
Fannie Mae to the sale of ResCap’s main business.
The Federal National Mortgage Association (FNMA) agreed to drop
its objection to the $3 billion sale of ResCap’s mortgage
servicing unit to Ocwen Financial Corp. (OCN), according to a court
filing last night in U.S. Bankruptcy Court in Manhattan.
Fannie Mae, as Federal National is known, is the biggest
owner of loans generated by ResCap. Fannie Mae had demanded the
so-called cure payment as compensation for any losses that may
be caused by ResCap’s bankruptcy filing.
Other investors that bought ResCap-generated mortgages are
still negotiating with the company on the size of their
potential cure payments. The sale to Ocwen can’t close until
those objections are either overruled by the court or settled.
Once Fannie Mae gets the money, its objections “shall be
deemed to be fully and finally resolved and/or satisfied,”
lawyers Todd Goren for ResCap and David Neier for Fannie Mae
said in the filing.
The payment has two parts, according to the filing: $265
million will be considered a cure payment and $32.6 million will
cover a debt owed to Fannie Mae under its agreements with
Ocwen Financial won an Oct. 24 auction for the loan
servicing unit with a bid of $3 billion. The next day, Berkshire
Hathaway Inc. (BRK/A) won an auction for a portfolio of ResCap’s loans
with a $1.5 billion offer.
New York-based ResCap filed bankruptcy in May to with plans
to sell its major assets and resolve legal claims related to
mortgage loans. The company is owned by Ally Financial Inc. (ALLY), a
Detroit-based auto lender majority owned by U.S. taxpayers.
The case is In re Residential Capital LLC, 12-12020, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).
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