Judge zeroes in on trial timeline in TCB-Ginnie Mae lawsuit

The parties involved in a lawsuit between Texas Capital Bank (TCB), the U.S. Department of Housing and Urban Development (HUD) and Ginnie Mae over a dispute involving Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) have been advised to be ready for a trial in September 2025. This is according to court filings reviewed by HousingWire’s Reverse Mortgage Daily (RMD).

Magistrate Judge Lee Ann Reno of the U.S. District Court for the Northern District of Texas in Amarillo advised the litigants of the revised scheduling timetable for the potential trial, assuming that it is not settled prior to that point.

Pretrial scheduling has also been modified, with the earliest deadline arriving in December 2024 for each side to establish a bench of experts to call upon for testimony. Final deadlines for expert witnesses arrive within the first two months of 2025. Any filings each party would seek to make regarding the qualifications of any expert witnesses or summary judgment motions must be submitted by May 12, 2025.

All factual discovery — the process through which attorneys for each side gather evidence through civil procedures, interviews, document submissions and other means — must be completed by March 14, 2025. The parties will have an opportunity to mediate the case no later than April 25, 2025, with representatives who have “final settlement authority” and can meet in person to discuss any potential settlement prior to going to trial.

Mediation must be “private, confidential and privileged from process and discovery,” and no witness in the case can participate, the judge said. The mediation deadline is noteworthy because it will arrive just over three months into the next president’s term of office, when it’s possible that a different leadership team at HUD and Ginnie Mae will be in place.

It remains unclear whether a second Donald Trump-led administration will have installed a Ginnie Mae president by this point — something the first Trump administration failed to do during its term — or whether a Kamala Harris administration would keep or replace current Biden administration leaders at HUD or Ginnie Mae.

Reno has ordered the parties to be ready for trial by Sept. 19, 2025. This is not the date for the start of a trial but the cutoff point at which everything else laid out in the scheduling order must be finalized. After that point, the district judge will issue a separate order regarding the actual date on which a trial would commence.

Earlier this month, a government-led effort to change the venue in in the suit was denied by presiding Judge Matthew Kacsmaryk, who disagreed with the government’s contention that a clause allowing for a venue change — executed between TCB and a now-bankrupt reverse mortgage lender — applied to the details of the case.

TCB brought its suit against Ginnie Mae in October 2023, alleging that 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.”

TCB contends this was after Ginnie Mae allegedly turned to TCB to avoid “a catastrophic disruption of the HECM program.” In return for lending money to RMF, TCB alleged 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.

Ginnie Mae previously sought to have the case dismissed, but the presiding judge allowed the bulk of the case to continue and dismissed only small portions of the initial complaint.

Filing deadlines initially extended into early 2025 prior to the amended scheduling order, but it remains unclear whether current leaders at HUD and Ginnie Mae will still be in office by the time these dates arrive. Outside of career officials, other leaders are appointed by the President of the United States. Some positions, including HUD leadership and the Ginnie Mae president, must be approved by the U.S. Senate before taking office.

But following President Joe Biden’s decision not to run for reelection, a new president is now guaranteed to be in office in early 2025. This could bring new leaders to HUD and Ginnie Mae regardless of the ultimate victor. If elected, Vice President Harris would have the latitude to keep current HUD leaders on board, or she could choose to establish a new slate of housing leaders. She has not signaled any intentions related to cabinet officials or other positions requiring a presidential nomination.

Should former President Trump win the election, it becomes far more likely that he would choose to install wholly new leadership teams across any appointed government positions.

The case is being closely watched by the reverse mortgage industry. Ginnie Mae’s HMBS program is a key liquidity and investment driver for the entire industry, since it allows for the pooling of reverse mortgages to be sold to investors. The litigation is taking place in the midst of the development of a new HMBS program by Ginnie Mae.