Billionaire investor Warren Buffett is beginning to overtake hedge-fund maestro Wesley Edens in a heated bidding war to scoop up bankrupt mortgage lender ResCap.
The Oracle of Omaha, who had been named as the lead bidder for part of ResCap — a portfolio of mortgage loans being auctioned as a part the company’s reorganization — is now emerging as a front-runner for the entire operation, sources tell The Post.
That’s a stark turn of events for Buffett, who earlier had been rejected by ResCap.
The bankrupt arm of Ally Financial had expressed support for Edens’ publicly traded mortgage arm, Nationstar Mortgage Holdings, prior to government-owned Ally placing it into bankruptcy two months ago.
However, Buffett is starting to surface as the man to beat for the entire ResCap operation, according to sources following the mortgage entity’s bankruptcy.
Buffett may be willing to pony up nearly $4 billion to complete a purchase.
A formal court auction isn’t scheduled to take place until sometime in October and close by April 15.
To be sure, any final winner will be determined by Bankruptcy Judge Martin Glenn.
Last month, Glenn named Buffett’s $1.45 billion offer the lead bid for a ResCap mortgage portfolio.
Meanwhile, Edens, who offered to pay $2.4 billion to purchase ResCap’s mortgage platform, has been appointed by the court as the stalking horse bidder for that auction.
However, Buffett has expressed to bankers and other officials a strong appetite for owning both the loan business and its assets, sources said.
Buffett’s team believes that the economics for a deal for the portfolio of loans may only make financial sense if combined with the mortgage servicing platform, sources say.
Over the past several months, Buffett has developed respect for ResCap Chief Executive Thomas Marano, one source told The Post.
And Marano is said to favor Buffett as a winner for the entire entity — based on the notion that the men are more simpatico and Buffett is less likely to carve up ResCap’s mortgage operation since he doesn’t own a mortgage servicer, as Edens does.
That said, Edens’ team believes that it has the inside track on the servicing platform — the main operation of the ResCap mortgage business.
Fortress has so far raised $750 million via its publicly traded mortgage entities to help finance its ResCap purchase, said a source.
In a bidding war, the deep-pocketed Buffett should able to outspend Edens, sources said.