Ocwen Financial’s $750 million deal for Wilbur Ross’ mortgage-servicing business is a prelude to a much bigger fight for Rescap, The Post has learned.
Ocwen, which has been buying assets from banks to bulk up its loan servicing business, has teamed with Walter Investment Corp. on a planned $2.5 billion bid for Rescap’s mortgage-servicing rights, a source familiar with the matter said.
Ocwen is expected to go up against rival bidders including Fortress Investment Group, Warren Buffett’s Berkshire Hathaway and a team of IBM and Bayview Financial.
Ocwen is becoming a big player in the mortgage-servicing space — collecting mortgage payments and passing them along to investors — as banks exit the business in the wake of the mortgage meltdown.
Last year Ocwen bought loan-servicing assets from Morgan Stanley and Goldman Sachs. It is paying $588 million in cash and $162 million in convertible preferred stock for Ross’ Homeward Residential Holdings.
Despite its mortgage-servicing spree, Ocwen is expected to be a competitive bidder for ResCap.
When it closes the Homeward deal, Ocwen will manage $200 billion in mortgage-servicing rights, said one analyst. ResCap’s servicing portfolio is roughly equal in size, or about $190 billion in mortgage servicing rights.
In another sign that Ocwen is gearing up to make a Rescap bid, its partner, Walter Investment, last month named former Ally CEO Alvaro De Molina to its nine-member board.
The duo faces plenty of competition, however. Fortress Investment Group’s Nationstar Mortgage has the standing offer for the servicing business. Last week, Fortress’ Nationstar raised $400 million in high-yield debt, giving its more firepower.
All suitors will have a chance at the Oct. 23 bankruptcy auction to top Fortress’ offer.
Buffett’s Berkshire Hathaway, which is working with a small, unknown mortgage servicer, is in the hunt as well, several sources said.
Ocwen shares rose 20 percent yesterday, to $34.88, on the Homeward deal, which is expected to boost earnings.
ResCap and IBM declined comment. Ocwen, Walter Investment and Bayview did not return calls.