(Bloomberg)
Wes Edens’ Fortress Investment Group is poised to strike a $3 billion deal to buy assets from taxpayer-owned Ally Financial along with its troubled mortgage unit, Residential Capital, The Post has learned.
While most of Ally’s mortgage operations, which include servicing loans and originating home mortgages, are housed within ResCap, the parent firm still holds some mortgage assets.
Fortress’ “stalking horse” bid earmarks $2 billion for ResCap, which is expected to file for Chapter 11 bankruptcy protection within days, and another $1 billion for purchasing a $130 billion mortgage-servicing rights portfolio held by Ally, sources close to the negotiations said. Those rights allow Fortress to collect fees from servicing existing mortgages, considered a more stable business than originating home loans.
The sale to Fortress would be part of a prepackaged bankruptcy plan and would need the court’s approval.
Ally Chief Executive Michael Carpenter has been setting the stage for placing ResCap into bankruptcy after determining that he had few legitimate options for repaying some of the $17 billion it borrowed from the government during the financial crisis, sources said. Ally owes $12 billion to the Treasury, which holds a 74 percent stake in the business.
In recent days, ResCap has been inching closer to Chapter 11, and yesterday Treasury signaled its conditional support of a filing.
Meanwhile, Carpenter has been drawing clear corporate lines between Ally’s business and ResCap. Last week, the firm shifted a number of Ally employees, who mostly performed duties for ResCap, to the troubled mortgage unit.
Because Fortress would be buying the assets out of bankruptcy, the hedge fund likely does not need to pay severance to any workers it does not plan to keep, noted Jones Day lawyer John Cornell.
Ally and Fortress declined to comment.