The suit alleges defendants moved forward while borrower requests remained unresolved
A Georgia state housing authority, a loan originator, and a foreclosure law firm are accused of proceeding with a foreclosure sale despite unresolved borrower inquiries.
Paula Clark filed suit on December 29, 2025, in the United States District Court for the Northern District of Georgia, naming State Home Mortgage, the Georgia Housing and Finance Authority, Southeast Mortgage of Georgia, Inc., and Aldridge Pite, LLP, among the defendants.
The case centers on a property in Fairburn, Georgia, that Clark purchased in March 2018. She financed the home through Southeast Mortgage of Georgia, and the loan was later pooled into a Ginnie Mae mortgage-backed security. State Home Mortgage took over servicing duties.
Here's where things get complicated for mortgage professionals watching this case.
Clark claims State Home Mortgage issued a foreclosure notice in December 2022 even though it only serviced the loan and did not hold the note. She sent Qualified Written Requests and billing error notices to the defendants in February 2023. According to the lawsuit, defendants failed to acknowledge or adequately respond within the timeframes required under the Real Estate Settlement Procedures Act.
The timeline raises eyebrows. One day after Clark submitted a mortgage audit, Southeast Mortgage executed what the lawsuit describes as a "corrective assignment" transferring the security deed to the Georgia Housing and Finance Authority. The filing suggests no valid assignment existed before foreclosure proceedings began.
Despite the pending borrower inquiries, Aldridge Pite, LLP moved forward. The firm sent Clark a Notice of Sale Under Power in early March 2023, and the property sold at auction on April 4, 2023, to Realistry Acquisitions, LLC.
The lawsuit also takes aim at how surplus proceeds were handled after the sale. Clark alleges that nearly two years later, in February 2025, an Aldridge Pite attorney emailed her demanding two forms of government identification, a W-9, her Social Security Number, her address, and a signed agreement before releasing excess funds from the sale. The suit characterizes this as an improper attempt to extract fees before returning her own equity.
Clark is pursuing claims for wrongful foreclosure under Georgia law, RESPA violations, and Fair Debt Collection Practices Act violations. She seeks more than $75,000 in compensatory damages, along with statutory damages, punitive damages, and a court order declaring the foreclosure void.
No determination has been made on the merits. The defendants have not yet responded to the allegations.
For servicers and foreclosure professionals, the case offers a reminder about the risks of moving forward with enforcement actions while borrower disputes remain open, and the importance of maintaining clean assignment records before initiating foreclosure.
