Federal Court Allows Bank’s Case Against Ginnie Mae to Move Forward
The U.S. District Court for the Northern District of Texas recently denied in part Ginnie Mae’s motion to dismiss a bank’s claims stemming from Ginnie Mae’s nullification of the bank’s first priority lien in connection with the HECM program.
The bank alleged that Ginnie Mae induced it to lend millions of dollars to a HECM lender facing bankruptcy, consented to its “first priority, perfected lien” on certain HECM collateral, and then declared the promised lien null when the HECM lender defaulted and was extinguished from the HECM program, effectively seizing the bank’s property interest in the HECM collateral. The court ruled as follows on each of the bank’s claims:
- The court allowed the bank’s Administrative Procedure Act (APA) claim that Ginnie Mae exceeded its statutory authority by extinguishing the bank’s interest in the HECM collateral. The bank’s surviving claim alleges that neither the governing statute nor regulation permits Ginnie may to extinguish 1) the rights of a non-issuer, 2) in property interests that are separate and distinct from those at issue, and 3) without a contract between the non-issuer and Ginnie Mae.
- The court refused to consider the bank’s other APA claim, that Ginnie Mae acted arbitrarily and capriciously, on the procedural ground that the bank only raised it for the first time in response to Ginnie Mae’s motion to dismiss.
- The court dismissed the bank’s promissory estoppel claim, on the basis that the Federal Tort Claims Act (FTCA), which provides a limited waiver of sovereign immunity for certain tortious government conduct, does not apply to the bank’s claim arising out of the alleged misrepresentation, and the claim is barred by sovereign immunity.
- The court found that the bank had sufficiently pled allegations to state a claim for tortious interference with the bank’s property rights, and that this claim is not barred by sovereign immunity, as it falls within the scope of the FTCA’s waiver provisions.
