Appeals court sides with Ginnie Mae in Texas Capital Bank's reverse mortgage lawsuit

The Fifth Circuit Court of Appeals has affirmed a lower court's ruling that allows Ginnie Mae to extinguish Texas Capital Bank's lien on collateral related to reverse mortgages. The lawsuit stemmed from Ginnie Mae's acquisition of Home Equity Conversion Mortgages (HECMs) after the 2022 bankruptcy of Reverse Mortgage Funding (RMF).

Texas Capital Bank had sued Ginnie Mae in October 2023, claiming the government entity unlawfully seized its first-priority lien on tens of millions of dollars in collateral. In April 2025, Judge Matthew Kacsmaryk ruled in favor of Ginnie Mae, stating that Congress granted extinguishment power over mortgages without consideration for tail pools.

TCB appealed the decision, arguing that the ruling would harm seniors relying on reverse mortgages. The case's roots lie in RMF's collapse, after which Texas Capital Bank provided over $28 million in financing secured by incremental balances on HECM loans, known as tails. Ginnie Mae disputed TCB's claims of oral assurances regarding the security interest.