Nationstar Mortgage Holdings Inc. (NYSE:NSM) signed an agreement to acquire mortgage servicing assets from Residential Capital, LLC, Executive Trustee Services, LLC, GMAC Mortgage, LLC, GMAC ResCap, Inc. and other investors for $2.4 billion on May 13, 2012. The cash purchase price of the mortgage servicing rights and subservicing contracts would be approximately $700 million based on unpaid principal balances as of February 29, 2012. The cash purchase price of the related servicing advance receivables would be approximately $180 million, net of financing, based on advance balances as of February 29, 2012. Pursuant to the terms of the agreement, Nationstar has agreed to serve as the stalking horse bidder for the auction of the Mortgage Servicing Assets. Nationstar expects to enter into approximately $1.6 billion of advance financing facilities to fund the balance of the related servicing advance receivables. Nationstar will fund up to approximately $450 million of purchase price and cash purchase price for advances, remaining funding is expected from proceeds of a co-investment by Newcastle Investment Corp. and other Fortress-affiliated entities, whereby Nationstar will sell the right to receive approximately 65% of the excess mortgage servicing rights after receipt of a fixed basic servicing fee per loan and will retain approximately 35% of the excess mortgage servicing rights and all ancillary income associated with servicing the loans. The agreement includes $72 million break-up fee and reimbursement of up to approximately $10 million of transaction-related expenses to be paid to Nationstar.

Under the terms of the investment, to the extent that any loans in this portfolio are refinanced by Nationstar, the resulting mortgage servicing right will be included in the portfolio, subject to certain limitations. Nationstar's bid is subject to superior offers solicited as part of the auction process as well as court and other approvals and conditions. The transaction is subject to antitrust approval, regulatory approvals, third party approval and auction process and expected to close in late 2012.

Berkshire Hathaway Inc. made an offer to be a stalking horse bidder for the assets of Residential Capital LLC on June 11, 2012. Berkshire Hathaway Inc. has offered a total of $3.75 billion for ResCap's mortgage loan origination and servicing business and legacy portfolio, consisting of mortgage loans and other residual financial assets. Residential Capital has sought to start an auction for the assets with separate bids from Nationstar Mortgage LLC and ResCap parent Ally Financial Inc. totaling up to $3.9 billion. The bankruptcy court will consider the bidding procedures and Berkshire Hathaway's offer on June 18, 2012.

The asset purchase agreement has been amended on June 28, 2012. According to the amended agreement, the purchase price shall be increased by $125 million, reduce the cash break-up fee from $72 million to $24 million that sellers are required to pay to Nationstar under certain circumstances and eliminate Nationstar's right to be reimbursed for up to $10 million of its expenses under certain circumstances, extend certain deadlines related to the bankruptcy case, past which Nationstar would be entitled to terminate the amended purchase agreement and subject to certain conditions, permit sellers to terminate the amended purchase agreement in the event sellers' respective boards of directors determine in good faith that a failure to do so would constitute a breach of their fiduciary duties, provided they pay Nationstar the $24 million break-up fee. Nationstar Mortgage Holdings Inc. submitted $2.67 billion bid on October 23, 2012.

Gary S. Lee, Lorenzo Marinuzzi and Larren M. Nashelsky of Morrison & Foerster LLP acted as legal advisors to Residential Capital, LLC and Chris E. Abbinante, Jessica C.K. Boelter and Larry J. Nyhan of Sidley Austin LLP acted as legal advisors to Nationstar Mortgage LLC. JPMorgan Chase Bank acted as escrow agent in the transaction. Samuel M. Greene and Marc D. Puntus of Centerview Partners LLC acted as financial advisors to Residential Capital, LLC. Thomas B. Walper, Seth Goldman and Bradley R. Schneider at Munger, Tolles & Olson LLP acted as legal advisors to Berkshire Hathaway. Richard M. Cieri, Ray C. Schrock and Stephen E. Hessler of Kirkland & Ellis LLP acted as legal advisors for Ally Financial Inc. Kenneth H. Eckstein, Philip Bentley, Douglas H. Mannal and Joshua K. Brody of Kramer Levin Naftalis & Frankel LLP acted as the legal advisors to the creditors' committee. Fredric Sosnick of Shearman & Sterling LLP acted as legal advisor to Citigroup Global Markets Inc. in connection with the financing for the transaction.

Nationstar Mortgage Holdings Inc. (NYSE:NSM) cancelled the acquisition of mortgage servicing assets from Residential Capital, LLC, Executive Trustee Services, LLC, GMAC Mortgage, LLC, GMAC ResCap, Inc. and other investors on October 24, 2012. Walter Investment Management Corp. and Ocwen Loan Servicing, LLC won an auction to acquire mortgage servicing assets from Residential Capital, LLC and others for $3 billion on October 24, 2012.