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UPDATE 3-Ocwen, Walter win bankruptcy auction for ResCap unit

Oct 24 (Reuters) - A team of Ocwen Financial Corp and Walter Investment Management Corp won a $3 billion bankruptcy auction for a unit of Residential Capital LLC that collects mortgage payments from customers, ResCap said on Wednesday.

The sale will raise money for bankrupt ResCap which is looking to repay creditors including its parent, auto lender Ally Financial Inc.

Ocwen has been serially acquiring companies that collect payments on subprime mortgages, known as servicers, as banks and private equity firms look to shed them. The businesses can bring legal headaches, but can also bring profits as the housing market recovers.

Ocwen and Walter competed against Nationstar Mortgage Holdings Inc in a bidding process that began Tuesday. Nationstar said in a statement that it decided not to further increase its bid.

``Obviously we are disappointed in the outcome of the auction, but in the end our judgment was that the price of the assets would not represent a compelling investment opportunity for us,'' Nationstar Chief Executive Jay Bray said in the statement.

Nationstar's $2.45 billion offer was the opening bid in the auction. It said it was now entitled to a breakup fee.

Ocwen and Walter could not immediately be reached for comment.

The auction is subject to bankruptcy court approval. A hearing on the auction will begin on Nov. 19.

ResCap, the mortgage unit of Ally Financial Inc, filed for bankruptcy in May in an effort to wipe out legal liabilities from mortgage-backed securities it sold during the housing boom.

Nationstar and Ocwen have been buying operations shed by larger banks such as Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp.

One of the biggest winners in the auction is Berkshire Hathaway, which bid for the mortgage assets at one point even though most observers were certain Warren Buffett's conglomerate did not actually want them.

Berkshire held nearly $1 billion in ResCap junior secured debt as of this summer, and Nationstar's initial $2.4 billion bid was thought to be worth 93 cents on the dollar to bondholders like Berkshire.

If Ocwen paid $3 billion, that increases the likelihood that Buffett will have made close to a full recovery on the debt - which perhaps was the whole point of his bid, some investors speculated.