New
filings

The
filing,
posted
to
the
court
docket
on
Thursday,
shows
the
immediate
bankruptcy
concern
of
leaders
at
RMF
and
the
lack
of
willingness
from
other
reverse
mortgage
industry
participants
to
assume
control
of
the
full
loan
portfolio.

Leaders
appealed
to
Ginnie
Mae,
who
were
initially
resistant
to
providing
the
relief
sought
by
the
company.
Ginnie
Mae
suggested
that
RMF’s
January
2022

purchase
of
a
loan
portfolio
from


American
Advisors
Group
(AAG)
may
have
contributed
to
its
financial
instability.

Ginnie
Mae
understood
that
“the
interest
rate
environment
is
not
the
only
driver
of
the
RMF
liquidity
situation,”
then-Ginnie
Mae
President
Alanna
McCargo
said
in
a
letter
to
RMF
on
Nov.
26,
2022.
“For
example,
RMF
made
the
business
decision
to
purchase
American
Advisors
Group’s
portfolio
and
determined,
at
that
time,
it
was
aware
of
the
loan
characteristics
and
capable
of
managing
this
type
of
portfolio.

“RMF
agreed
that
it
would
handle
and
meet
the
obligations
for
the
entire
portfolio,
not
just
a
subset
of
it.
It
is
RMF’s
responsibility
to
find
an
orderly
solution
to
its
upcoming
purchase
obligations.
There
is
no
government
assistance
program
that
is
readily
available
to
step
in
and
take
on
issuer
responsibilities
under
the
current
circumstances.”

In
early
December
2022,
Ginnie
Mae
issued
a
letter
to
RMF,
saying
that
its
failure
to
secure
bankruptcy
authorization
to
fund
borrower
draws
constituted
an
event
of
immediate
default,
leading
RMF
to
seek
to
transfer
its
portfolio
to
another
lender.

Road
to
seizure

What
followed
was
a
back-and-forth
between
Ginnie
Mae,
RMF’s
creditors
(including
TCB)
and
other
lenders
that
ultimately
culminated
in
the
seizure
by
Ginnie
Mae
in
late
December
2022.
Many
of
these
events
were
previously
reported
by

HousingWire’s
Reverse
Mortgage
Daily
in

an
extensive
story
that
documented
the
circumstances
leading
to
the
collapse
of
RMF.

Ginnie
Mae
ultimately

seized
the
RMF
servicing
portfolio
on
or
about
Dec.
20,
2022.
The
filing
reveals
that
on
that
day,
HUD
and
Ginnie
Mae
sent
staffers
to
RMF’s
offices
to
facilitate
the
takeover
of
loans
in
Ginnie
Maes
Home
Equity
Conversion
Mortgage
(HECM)-backed
Securities
(HMBS)
pools.
This
marked
the
first
default
of
a
Ginnie
Mae-guaranteed
HMBS
issuer
in
the
program’s
history.

Subsequently,
Ginnie
Mae
detailed
in
its
public
budget
requests
that
the
assumption
of
the
portfolio

placed
significant
strain
on
its
resources.
Although
it
holds
a
large
HMBS
portfolio,
Ginnie
Mae
does
not
issue
any
HMBS
pools.

Borrower
draws

Ginnie
Mae
also
submitted
a
separate
administrative
record
in
the
case
that
included
the


Federal
Housing
Administration
(FHA)’s
similar
record,
which
showed
that
HUD
and
FHA
officials
were
fielding
inbound
communications
from
concerned
borrowers
whose
scheduled
and
unscheduled
reverse
mortgage
payments
had
gone
unfulfilled.

Ultimately,
this
matter
was
settled
for
borrowers
when
RMF
secured
additional
financing
that
went
toward
funding
these
outstanding
draws.
The
funds
were
forwarded
to
subservicer


Celink,
who
then
fulfilled
borrower
payments.
Funds
from
TCB
are
at
the
heart
of
the
dispute
between
the
bank
and
the
government.

TCB
would
ultimately

bring
its
suit
against
Ginnie
Mae
in
October
2023,
alleging
the
government-owned
company
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.”

This
was
after
Ginnie
Mae
allegedly
turned
to
TCB
in
an
effort
to
avoid
“a
catastrophic
disruption
of
the
HECM
program.”
In
return
for
lending
money
to
RMF,
TCB
said
it
received
a
first
priority
lien
“on
certain
HECM
collateral,”
which
the
bank
described
as
“critically
important”
since
without
it,
the
only
collateral
TCB
could
rely
on
was
a
bankrupt
company
in
RMF.

Extension
granted

In
subsequent
filings,
Ginnie
Mae

denied
the
accusations
outside
of
material
facts
related
to
executed
agreements
between
all
parties
and
the
regulations
governing
the
HMBS
program.
While
Ginnie
Mae
sought
to
have
the
case
dismissed,
the
presiding
judge

allowed
the
bulk
of
the
case
to
continue
and
dismissed
only
small
portions
of
the
initial
complaint. 

Earlier
this
week,
government
attorneys

requested
an
extension
of
the
deadline
to
submit
discovery
materials
relevant
to
the
TCB
case
from
mid-June
to
mid-July,
saying
that
an

ongoing
audit
from
the
HUD
Office
of
the
Inspector
General
(OIG)
and
confidentiality
concerns
necessitated
more
time
to
submit
documents
to
the
court
record.

The
extension
request
was
unopposed
and
Magistrate
Judge
Lee
Ann
Reno
approved
it
on
June
13.