Government requests more time in Ginnie Mae/TCB lawsuit

“Certain Ginnie Mae documents have been flagged as potentially subject to the federal Defend Trade Secrets Act,” the filing reads. “To administer its programs, Ginnie Mae requires program participants to submit proprietary, business sensitive, and other competitively advantageous non-public information.”

A portion of this information belongs to non-parties described as direct competitors of TCB, and Ginnie Mae is consulting with attorneys to determine if such information could qualify as providing a business advantage.

Other regulations require that government agencies preserve “government contract pricing structures and other details of competitively bid contracts,” the filing reads. “Some of the Ginnie Mae documents may show confidential pricing information, which may need to be designated attorneys’ eyes only. Review was delayed by an unexpected vacancy in the office that consults on compliance with these regulations.”

The OIG inquiry has also complicated the government’s ability to comply with the current deadline, government attorneys contend.

“The Office of Inspector General is reviewing documents to determine whether the law enforcement privilege, confidentiality concerns, or any other privileges are implicated,” they wrote.

And there are other concerns about potentially bringing other non-public information to light, the filing asserts.

“Certain documents involve Ginnie Mae’s responsibility to monitor program participants for regulatory compliance using both public and non-public methods,” the filing reads. “The law enforcement privilege protects against the disclosure of such non-public methods. To determine whether the privilege is implicated, reviewers are consulting with the relevant persons within Ginnie Mae with knowledge of their oversight and monitoring techniques.”

So far, government officials have spent “approximately 1,000 hours” to review documents related to the case, including “considerable overtime,” but these considerations have made it impossible to meet the existing deadlines, the government said in requesting the discovery deadline be pushed to July 15.

As of Wednesday afternoon, the presiding judge has not yet responded to the filing.

This is the latest development in the lawsuit between TCB and Ginnie Mae, which was originally brought by the bank in October 2023 in the U.S. District Court for the Northern District of Texas. TCB 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.

While the government pushed back on the majority of TCB’s claims and sought to have the case dismissed, the presiding judge permitted the bulk of the case to proceed while dismissing only a small portion of the claims against the government. Judge Matthew Kacsmaryk determined that the majority of the arguments laid out by TCB against Ginnie Mae have merit worthy of the trial process.

Following the judge’s ruling, Ginnie Mae soon after filed a point-by-point response to the initial complaint filed by TCB. It denied the majority of the claims against it and admitted only to material facts of policy, procedure and — in some instances — the standing of each entity’s participation in the HECM and HECM-backed Securities (HMBS) programs.