By Rick Rothacker and Jochelle Mendonca

Nov 21 (Reuters) - A U.S. bankruptcy court judge on Wednesday approved the sale of Residential Capital LLC's mortgage business to Ocwen Financial Corp and Walter Investment Management Corp, which agreed to pay $3 billion in an auction last month.

ResCap, the mortgage subsidiary of auto lender Ally Financial, filed for bankruptcy in May in a bid to protect its parent from mortgage liabilities that threatened to swamp the company. Ally is 74 percent-owned by the U.S. government after a series of bailouts.

U.S. Judge Martin Glenn also approved the sale of a ResCap loan portfolio to Warren Buffett's Berkshire Hathaway Inc, which agreed to pay $1.5 billion last month for a package of 50,000 loans.

ResCap said the sale is expected to close in the first quarter.

Ally, the former finance arm of General Motors Co and once known as GMAC, is trying to refocus its business on U.S. auto lending and banking. In May, it announced plans to sell its international operations in an effort to speed up repayment to taxpayers.

Earlier this month, sources familiar with the matter said Ally was nearing a deal to sell its auto financing operations in Europe and Latin America for around $4 billion, with GM emerging as the lead bidder.

Last month, Detroit-based Ally agreed to sell its Canadian auto finance and deposit business to Royal Bank of Canada for $4.1 billion, and its Mexican insurance unit to ACE Ltd for $865 million.

Ally received $17 billion in bailouts from the U.S. government during the financial crisis. Including dividend payments, it has paid back $5.8 billion.

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