Bankrupt Residential Capital LLC should be barred from selling its mortgage servicing unit to Ocwen Financial Corp. unless Ocwen agrees to honor ResCap’s portion of a $25 billion legal settlement with the U.S. and 49 states, government lawyers said in court papers, Bloomberg News reported yesterday. Ocwen and its partner in the proposed $3 billion purchase must take over ResCap's part in the settlement, which ended a lawsuit against banks accused of helping cause the housing crisis, the U.S. Justice Department said in an objection filed yesterday. ResCap filed for bankruptcy in May with plans to sell its servicing unit, the fifth-biggest in the U.S. ResCap is a unit of Ally, a Detroit-based auto lender that is majority-owned by U.S. taxpayers. Ocwen and Walter Investment Management Corp. won an auction for the unit last month with a bid worth about $3 billion.
