Attorneys for both Ginnie Mae and Texas Capital Bank (TCB) are seeking a stay before the magistrate judge presiding over the HECM tail collateral litigation in the U.S. District Court for the Northern District of Texas to decide separate motions filed by the parties, one seeking a change of venue to another court and the other seeking partial summary judgment.
The move marks a rare agreement reached by the two parties in this litigation, each with different points of view. TCB is seeking partial summary judgment on the first paragraph of its original complaint, which alleges that Ginnie Mae violated the Administrative Procedure Act (APA) by extinguishing its first lien interest in certain reverse mortgage collateral.
Ginnie Mae, meanwhile, argues that by filing the lawsuit in Amarillo, TCB violated a “forum selection clause” in its tail agreement with Reverse Mortgage Funding (RMF), the company at the center of the dispute, and is seeking to have the case moved to court in Dallas.
The current deadline for TCB to respond to the change of venue motion is July 8, while Ginnie Mae has until July 18 to respond to the partial summary judgment ruling, meaning neither side has enough time to fully respond to the other’s claims, according to court documents reviewed by HousingWire’s Reverse Mortgage Daily (RMD).
“The parties respectfully request an extension of 14 days to respond to the motion for transfer of venue and the motion for partial summary judgment, respectively,” the filing states. “The parties have requested this extension to allow sufficient time to consider and respond to the motions, and have not filed this request for any improper purpose or delay.”
If the magistrate judge grants it, TCB has until July 22 to respond to the change of venue motion, and government lawyers have until Aug. 1 to respond to the summary judgment motion. The application also includes a sample order granting the request, which the judge can choose to enforce.
“The TCB seeks to identify and protect tens of millions of dollars of first lien secured interests, [Ginnie Mae is] Without any legally recognized rights, they continue to misappropriate and squander the money. [Ginnie Mae’s] The motion to dismiss denied all merit. [they] “They applied for the positions,” court filings previously seen by RMD said.
Meanwhile, the government said, “The TCB case[s]' Both the tail contract and the loan document […]”TCB was obligated to file this lawsuit in Dallas County. TCB has ignored this obligation and instead elected to file the lawsuit in Amarillo, an unrelated location to the lawsuit,” the government said in a change of venue motion last month.
The U.S. Supreme Court has previously held that forum selection clauses must be enforced, and government lawyers argue that the fact that the bank's dispute with the government involves a tail agreement means that the clause is enforceable in this case, even though the agreement was between TCB and RMF.
TCB initially filed suit against Ginnie Mae in October 2023, alleging that the government-owned company “extinguished TCB's first-lien security interest in tens of millions of dollars of collateral without anything in return.” [FHA]-sponsor [HECM] program.”
This came after Ginnie Mae allegedly turned to TCB to avoid a “catastrophic disruption to the HECM program.” In return for lending to RMF, TCB said it obtained a first-lien security interest in “certain HECM collateral,” which the bank described as “critical” because without it, the only collateral TCB could rely on would be RMF's bankrupt companies.
In its subsequent motion, Ginnie Mae denied the allegations, other than material facts relating to the agreements entered into between all of the parties and the regulations governing the HMBS program. Ginnie Mae sought to have the lawsuit dismissed, but the presiding judge allowed most of the lawsuit to continue and dismissed only a small portion of the original complaint.
Previously, Magistrate Judge Lee Ann Reno granted a prior extension request without objection to allow for a smoother discovery process in the case.