Berkshire Hathaway offers to buy ResCap unit Warren Buffett's Berkshire Hathaway Inc. is offering to buy the mortgage division and loan portfolio of Residential Capital LLC. Residential Capital, also known as ResCap, is a subsidiary of Ally Financial Inc., the former auto lending arm of General Motors. ResCap filed for bankruptcy protection in May, hobbled by payments on debt taken out to finance soured home mortgages. Berkshire, a conglomerate based in Omaha, Neb., has significant interests in the insurance business as well as in a variety of other companies ranging from railroads to clothing, furniture and jewelry companies. Ally, which is 74 percent owned by the U.S. government, makes loans to GM and Chrysler customers and finances dealer inventories. The government first bailed out the company, then known as GMAC Inc., in late 2008 as part of the Bush administration's aid to the auto industry. The Obama administration provided additional funding in May and December 2009. ResCap had been a drain on Ally's finances for years, struggling to make payments on its heavy debt ever since the bottom fell out of the U.S. housing market in 2007. In regulatory filings before the bankruptcy, Ally said that deterioration in the U.S. housing market had led to fewer sources of money for ResCap, which was highly leveraged due to mortgage defaults. In papers filed with the bankruptcy court for the Southern District of New York on Monday, Berkshire Hathaway said it will offer more favorable terms for ResCap's mortgage business than Fortress Investment Group LLC has. ResCap agreed last month to sell most of its assets to a group that includes Fortress and NationStar Mortgage LLC, which is majority owned by Fortress Berkshire said it will match Fortress' $2.4 billion bid for the mortgage unit, but will offer a lower breakup fee of $24 million. Fortress' breakup fee is $72 million if its deal doesn't go through. Berkshire also said in the filing that it will not require any expense reimbursement. Fortress may get up to $10 million in expense reimbursement if it loses the auction for ResCap's assets. Berkshire also says it will offer better terms for ResCap's loan portfolio, which Ally wants to purchase. Berkshire said it will pay $1.45 billion for the portfolio, compared with Ally's $1.4 billion offer. But Ally could pay $1.6 billion if a deal is made under ResCap's Chapter 11 bankruptcy and reorganization plan. Berkshire wants to replace Fortress and Ally as the "stalking horse," or initial bidder, for the ResCap assets. The company says its offers will stay open until June 19 for the court to approve.