With the planned acquisition of assets from bankrupt Residential Capital LLC, Nationstar Mortgage Holdings Inc. expects to become one of the industry’s biggest non-bank mortgage firms.
ResCap and 27 affiliates disclosed Monday that voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code were filed Monday.
Lewisville, Texas-based Nationstar announced separately that it has signed a definitive agreement to acquire mortgage servicing and other assets from ResCap and its affiliates as a “stalking horse” bidder.
Nationstar already services $107 billion in residential loans. The ResCap acquisition will add $201 billion in primary residential mortgage servicing rights, based on the unpaid principal balance as of Feb. 29, and $173 billion in sub-servicing contracts.
Around $1.8 billion in related servicing advance receivables and other related assets are also being acquired by Nationstar.
Nationstar will fork over around $700 million in cash for the mortgage servicing rights and sub-servicing contracts and another $180 million for related servicing advance receivables.
Roughly 68 percent of the servicing portfolio being acquired is agency.
The acquisition is expected to be completed later this year. An auction by ResCap is expected to be approved by the bankruptcy court in mid-June, and the auction process is expected to take 90 days.
“Upon closing, the acquisition will make Nationstar the largest non-bank residential mortgage loan servicer and one of the largest residential mortgage loan originators in the United States,” the statement said. “With this transaction, Nationstar anticipates adding more than 2.4 million customers to a customer base of over 1 million, and growing its total servicing and sub-servicing book to approximately $550 billion.”
Approximately $450 million of the acquisition will be funded directly by Nationstar, while the rest will be funded through deals with affiliates of majority-owner Fortress Investment Group LLC including Newcastle Investment Corp. — which has agreed to acquire up to a 65 percent in excess servicing rights and other assets.
The agreement includes a $72 million break-up fee and reimbursement of as much as around $10 million paid to Nationstar if it is not the successful bidder in the auction process.
Nationstar, which closed on an initial public offering on March 8, disclosed in March that it had reached an agreement to acquire around $63 billion in mortgage servicing rights from Aurora Bank FSB for $268 million. That deal is expected to close by next month.
Related:
ResCap Lands in Bankruptcy
Ally Financial Inc. has been considering the possibility of throwing Residential Capital LLC into bankruptcy for three years. Today, the auto-finance giant made the plunge. Joining ResCap in bankruptcy court were several other former big names in mortgage lending.
