An effort seeking summary judgment in a case brought by Texas Capital Bank (TCB) against Ginnie Mae over reverse mortgage-related collateral has been denied by presiding Judge Matthew Kacsmaryk, according to a court filing reviewed by HousingWire’s Reverse Mortgage Daily (RMD).
TCB sought summary judgment in a court filing this past summer, which would have allowed the presiding judge to decide part of the case prior to a trial. TCB sought this outcome in the first count of its original court complaint, which 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.
In its initial complaint, TCB 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 Federal Housing Administration (FHA)-sponsored Home Equity Conversion Mortgage (HECM) program.”
This occurred when Ginnie Mae eliminated bankrupt lender Reverse Mortgage Funding (RMF) from its HECM-backed Securities (HMBS) program and assumed control of the former lender’s servicing portfolio in December 2022.
Ginnie Mae “was within its rights to extinguish and terminate RMF and take absolute ownership of [the] mortgage portfolio,” Kacsmaryk said in the filing.
Instead, Ginnie Mae chose to seek an alternative resolution that would not require assumption of the distressed lender’s portfolio. By so doing, Ginnie Mae extinguished the interest of TCB in reverse mortgage “tails,” or extra amounts that can be added to a HECM loan after its initial securitization.
“GNMA and TCB signed no contract explicitly acknowledging GNMA’s rights in the tails,” the judge wrote, later adding that “a contract providing for the power to extinguish did exist. The contract that satisfies the statute is the Guaranty Agreement between RMF and GNMA. GNMA never claims to have directly extinguished TCB’s rights. Instead, GNMA extinguished RMF’s rights — some of which RMF granted to TCB. TCB’s interests in the tails derive only from RMF.”
He added that TCB “fully understood” that Ginnie Mae could extinguish its interest in the tails, which he added fulfills the requirements of the APA as laid out by Congress.
“TCB retains its other claims for relief,” the judge said. “But summary judgment is not appropriate on its APA claim against GNMA because TCB has not demonstrated it is entitled to judgment as a matter of law.”
A timeline of 2025 has been narrowed down in recent weeks, with a magistrate judge recently ruling that the parties should be ready for a trial by September 2025.
