Judge zooms in on the trial timeline in the 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 Ginny Mae over a dispute involving Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) has been advised to be ready for trial in September 2025, according to court filings reviewed by HousingWire‘s Reverse Mortgage Daily (RMD).

Magistrate Judge Lee Ann Reno of the United States District Court for the Northern District of Texas in Amarillo has notified litigants of the revised timetable for the potential trial, assuming it is not settled before then.

The pre-trial schedule has also changed, with the earliest deadline set for each side in December 2024 to establish a group of experts to call on testimony. The final deadlines for expert witnesses arrive in the first two months of 2025. Any submissions that either party would like to file regarding expert witness qualifications or summary judgment motions must be filed by May 12, 2025.

All factual discovery – the process by which attorneys for both sides gather evidence through civil proceedings, interviews, filings and other means – must be completed by March 14, 2025. The parties will have the opportunity to mediate the case no later than April 25. , 2025, with representatives who have the authority to make a final settlement and who can meet in person to discuss a possible settlement before appearing in court.

Mediation must be “private, confidential and privileged with respect to process and discovery,” and no witness in the case can participate, the judge said. The mediation deadline is notable because it falls just over three months into the next president’s term, while it is possible that there will be a different leadership team at HUD and Ginnie Mae.

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 time in office — or whether a Kamala Harris administration will replace the current Biden leadership. government at HUD would retain or replace. or Ginnie Mae.

Reno ordered the parties to be ready for trial by September 19, 2025. This is not the date for the start of a process, but the ultimate point at which everything else established in the planning sequence must be completed. The subdistrict court judge will then decide separately about the actual date on which a trial would start.

Earlier this month, a government-led effort to change the venue in the lawsuit was rejected by chairman Matthew Kacsmaryk, who disagreed with the government’s claim that a clause allowing a change of venue would be enforced between TCB and a now bankrupt reverse mortgage. lender – applied to the details of the case.

TCB filed a lawsuit against Ginnie Mae in October 2023, alleging that the public company “without consideration, TCB’s first priority lien on tens of millions of dollars of collateral derived from the [FHA]-sponsored [HECM] program.”

TCB claims this was after Ginnie Mae allegedly turned to TCB to prevent “a catastrophic disruption of the HECM program.” In exchange for lending money to RMF, TCB claimed it received a first priority lien “on certain HECM collateral,” which the bank described as “critically important” because without it the only collateral TCB could rely on trust was a bankrupt company.

Ginnie Mae previously tried to have the case dismissed, but the chairman allowed most of the case to proceed and dismissed only small portions of the original complaint.

Filing deadlines were initially extended to early 2025 ahead of the change in 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. Beyond career officers, other leaders are appointed by the President of the United States. Some positions, including HUD leadership and Ginnie Mae’s president, must be approved by the US Senate before taking office.

But following President Joe Biden’s decision not to run for re-election, a new president is now guaranteed to take office in early 2025. This could bring new leaders to HUD and Ginnie Mae, regardless of the ultimate winner. If elected, Vice President Harris would have the leeway to keep current HUD leaders on board, or she could choose to create a new set of housing leaders. She has not signaled any intentions regarding cabinet positions or other positions that require a presidential nomination.

Should former President Trump win the election, it becomes much more likely that he will choose to install entirely new leadership teams in all 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 because it provides the ability to bundle reverse mortgages that can be sold to investors. The lawsuit comes in the midst of Ginnie Mae’s development of a new HMBS program.