Ginnie
Mae
has
filed
a
point-by-point
response
to
the

initial
complaint
of
the
case
brought
against
it
by

Texas
Capital
Bank
(TCB),
which
alleges
that
the
government-owned
company
“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.

Attorneys
for
the


U.S.
Department
of
Housing
and
Urban
Development
(HUD)
and
Ginnie
Mae
largely
deny
any
allegations
made
against
the
company
in
the
original
complaint.
They
have
admitted
only
to
material
facts
of
policy,
procedure
and,
in
some
instance,
the
standing
of
each
entity’s
participation
in
the
HECM
and
HECM-backed
Securities
(HMBS)
programs.
This
is
according
to
court
documents
reviewed
by
RMD.

Government
attorneys
deny
that
TCB
“is
entitled
to
any
of
the
relief
sought
in
the
complaint,”
adding
that
they
deny
“[e]ach
and
every
allegation,
as
well
as
all
inferences,
arguments,
and
legal
conclusions
based
on
them.”

Ginnie
Mae
also
includes
a
series
of
additional
defenses
based
on
the
claims
in
the
complaint,
particularly
related
to
TCB’s
claims
that
Ginnie
Mae
violated
the
Administrative
Procedures
Act
(APA),
as
well
as
assertions
that
the
court
in
which
the
case
is
filed
“lacks
subject-matter
jurisdiction”
over
the
allegations
that
the
government
committed
a
wrongful
act
or
infringed
on
the
rights
of
TCB.

Ginnie
Mae
also
claims
that
TCB
has
not
exhausted
all
available
“administrative
remedies,”
that
the
bank
lacks
standing
“because
the
claimed
injury
is
not
redressable
by
the
powers”
of
the
court,
and
that
the
“extinguishment
of
the
collateral
is
committed
to
agency
discretion.”

Government
attorneys
also
claim
that
TCB
“consented
to
its
lien
being
subject
to
[Ginnie
Mae’s]
power
to
extinguish
the
collateral,”
assumed
the
risk
that
Ginnie
Mae
would
exercise
its
authority
to
do
so,
and
that
its
recoverable
damages
are
limited
“by
[TCB’s]
failure
to
mitigate
damages.”

Ultimately,
Ginnie
Mae
is
again
seeking
to
have
the
bulk
of
the
claims
made
by
the
bank
dismissed,
but
presiding
Judge
Matthew
Kacsmaryk
of
the

U.S.
District
Court
for
the
Northern
District
of
Texas
previously
considered
—
and

largely
denied
—
prior
motions
to
dismiss
the
complaint
in
its
entirety.

TCB
attorneys
claim
that
Ginnie
Mae’s
positions
are
not
supported
by
previously
approved
agreements,
nor
are
they
supported
by
law.
On
top
of
this,
TCB
claims
that
in
March
2023,
“the
FHA’s
current
Commissioner,
who
also
holds
the
title
of
Assistant
Secretary
of
Housing
and
Federal
Housing
Commissioner
at
HUD,
stated
that
FHA
disagrees
with
Ginnie
Mae’s
position.”

Ginnie
Mae

originally
sought
to
have
the
case
dismissed
in
January,
saying
then
that
TCB
lacks
standing
and
discounts
the
authority
the
government
has
to
extinguish
a
lender
from
its
reverse
mortgage-backed
securities
program.
The
judge
largely
disagreed.

Pretrial
deadlines
were
set
in
January
by
a
magistrate
judge,
but
with
deadlines
extending
into
2025,
government
officials
currently
in
leadership
positions
at
Ginnie
Mae
and
HUD
may
not
be
in
office
should
the
suit
progress
to
trial
sometime
next
year.

Recent
resignations,
including
those
of

HUD
Secretary
Marcia
Fudge
last
month
and

Ginnie
Mae
President
Alanna
McCargo
on
Friday,
are
changing
the
scope
of
HUD
and
Ginnie
Mae
leadership
before
the
expiration
of
President
Joe
Biden’s
term
in
office
in
January.

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