Advisors representing the bankrupt Residential Capital Corp. will auction off the firm's massive residential servicing portfolio and what's left of its origination arm on Oct. 23, according to court documents.

Investment banking sources told National Mortgage News that Nationstar Mortgage Holdings (NSM) remains the "stalking-horse" bidder and that Ocwen Financial (OCN) and Berkshire Hathaway are also in the running.

A fourth bidder, believed to be a large hedge fund, has also emerged, sources said.

One source said that Fannie Mae, Freddie Mac and the Government National Mortgage Association must all approve the transfer of servicing rights tied to loans they guarantee.

ResCap, a subsidiary of the government owned Ally Financial, services roughly $365 billion of home mortgages, according to figures compiled by MortgageStats.com.

The lender/servicer filed for Chapter 11 bankruptcy protection in early May, leaving behind a trail of unsecured creditors with claims totaling well over $1 billion, according to court documents.

In the second quarter, ResCap funded just $6 billion in home mortgages, a 50% decline from the same period a year earlier.

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