HousingWireHousingWire
It’s been a while since there were any substantive updates to the lawsuit playing out between Texas Capital Bank (TCB), the U.S. Department of Housing and Urban Development (HUD) and Ginnie Mae over a dispute involving Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS).
A judge has approved a delay to give the bank time to respond to a request for summary judgment being sought by the government. This is according to court documents reviewed by HousingWire’s Reverse Mortgage Daily (RMD).
Government attorneys filed a motion for summary judgment — a decision made by the judge instead of a jury — on Jan. 10 for “all remaining claims in this case.” They said in their filings to Magistrate Judge Lee Ann Reno in the U.S. District Court for the Northern District of Texas that the court “has now ruled on the merits that GNMA acted within its lawful authority when it extinguished the mortgage interests of Reverse Mortgage Funding (RMF).”
Because of that, TCB “no longer has any remaining rights or interests in the property at issue in this case,” the government said. This stems from an October decision by Judge Matthew Kacsmaryk, in which TCB alleges that Ginnie Mae violated the Administrative Procedures Act (APA) by extinguishing its first-priority liens over certain reverse mortgage collateral.
Kacsmaryk found the argument unconvincing, according to a court filing that denied TCB’s request. Ginnie Mae “was within its rights to extinguish and terminate RMF and take absolute ownership of [the] mortgage portfolio,” Kacsmaryk said in the October filing.
That decision by Kacsmaryk proves “fatal to TCB’s two remaining counts,” the government contended, making it “entitled to summary judgment.” The government believes that other elements of the bank’s complaint are invalid since “TCB cannot prove it had any property rights that were interfered with,” and any potential claim that the government did not pay required draws on the loans is refuted by the official record, according to government attorneys.
In a motion filed jointly with the government, TCB has asked for additional time to respond to the summary judgment request in light of Kacsmaryk’s October decision. The original deadline was Jan. 31, but TCB requested a 21-day extension. Reno approved the request, extending the response deadline to Feb 21, 2025.
The government will have to reply to TCB’s response by March 14, 2025, according to Reno’s most recent decision filed in court on Wednesday.
If a summary judgment is denied and the case proceeds, Reno previously ordered the parties to be ready for trial by Sept. 19, 2025. This is not the date for the start of a trial but the cutoff point at which everything else laid out in a scheduling order must be finalized. After that point, the district judge will issue a separate order regarding the actual date on which a trial would commence.
This is the latest in a lawsuit that was initially filed in October 2023. TCB originally alleged that Ginnie Mae had “extinguished, in return for no consideration, TCB’s first priority lien on tens of millions of dollars in collateral stemming from the [FHA]-sponsored [HECM] program.”
TCB contends this was after Ginnie Mae allegedly turned to TCB to avoid “a catastrophic disruption of the HECM program.” In return for lending money to RMF, TCB alleged it received a first priority lien “on certain HECM collateral.” The bank described it as “critically important” since without it, the only collateral TCB could rely on was a bankrupt company.
