Attorneys for Ginnie Mae have responded to Texas Capital Bank (TBC) over the government’s motion to move the case to a different venue. They say that the bank’s own filing on the matter avoids the key issues that the government sought to raise regarding the original clause that specifies where any related legal actions should take place.
Separately, the government has been granted additional time in court to respond to the bank’s motion for a partial summary judgment in favor of TCB, according to court documents reviewed by HousingWire’s Reverse Mortgage Daily (RMD).
“TCB seeks to avoid its agreement to the forum selection clause by arguing that Ginnie Mae cannot enforce it and that it does not apply to the claims in this litigation,” government attorneys said in a filing. “Both arguments are incorrect.”
TCB previously contended that Ginnie Mae is unable to enforce the forum selection clause in the agreement at the heart of the dispute. The bank says that clause is a portion of an executed agreement between TCB and Reverse Mortgage Funding (RMF), the bankrupt reverse mortgage lender at the center of the situation.
Since the government was not a party to that agreement, its terms — and by extension, the forum selection clause — are not enforceable by the government.
Ginnie Mae disagrees.
“Ginnie Mae held the title to the assets underlying the agreement, TCB’s rights under the contract ultimately derived from Ginnie Mae, TCB’s rights under the contract were subject to Ginnie Mae’s rights, and TCB avers that ‘Ginnie Mae was heavily involved with’ negotiating the contract,” the filing reads.
This amounts to the bank contending that “a different standard” is being argued by TCB to further separate the disputed tail agreement and the collateral in question, the government asserts. They go on to argue that the oft-cited tail agreement “expressly preserves Ginnie Mae’s enforcement rights over the tails,” reiterating that the agreement required any resulting litigation to take place in Dallas County as opposed to the current venue in Amarillo, Texas.
“This case has nothing to do with Amarillo,” government lawyers said. “The court should hold TCB to its word and transfer this case to the Dallas division, where TCB is headquartered.”
The bank’s interest in the collateral “derives from Ginnie Mae,” the government contended, and “TCB’s rights and remedies were subject to Ginnie Mae’s rights.”
The U.S. Supreme Court has previously established that forum selection clauses must be enforced. Despite the agreement being between TCB and RMF, the fact that the bank’s dispute with the government has to do with the tail agreement means that the clause is enforceable in this instance, government attorneys argued in the initial forum change filing in June.
Separately, Ginnie Mae’s previously granted request for more time to respond to the bank’s motion for a partial summary judgment — which has already been granted once — was permitted once again by Magistrate Judge Lee Ann Reno. Ginnie Mae now has until Aug. 8 to respond to the motion.
TCB brought 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.
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.
The case is being closely watched by the reverse mortgage industry. Ginnie Mae’s Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) program is a key liquidity and investment driver for the entire industry, since it allows the pooling of reverse mortgages for sale to investors. The litigation is taking place in the midst of the development of a new HMBS program by Ginnie Mae.