The lender's $23.75m DOJ settlement history makes this one to watch
Movement Mortgage is back in court — this time facing allegations of foreclosure fraud tied to MERS and FHA insurance.
A newly filed federal lawsuit in Massachusetts is putting fresh heat on Movement Mortgage, LLC, reviving industry concerns about MERS assignment validity, foreclosure standing, and FHA lending practices that mortgage professionals know all too well.
The case was filed on March 17, 2026 in the United States District Court for the District of Massachusetts under Case No. 3:26-cv-30040-MGM. It names Movement Mortgage alongside its servicer ServiceMac, LLC, the Mortgage Electronic Registration Systems, Inc. (MERS), foreclosure counsel Marinosci Law Group, P.C., and Movement Mortgage President and CEO/CFO Steve Smith, among others. Two public officials — Berkshire County Register of Deeds Patricia M. Harris and Massachusetts Land Court Recorder Deborah J. Patterson — are also named.
At the center of the dispute is a property at 14 Goodman Lane, Pittsfield, Massachusetts. The borrower took out a $195,395.00 FHA-insured mortgage recorded on May 3, 2021 in the Berkshire County (Middle District) Registry of Deeds. According to the filing, a March 10, 2025 assignment transferred the mortgage from MERS to Movement Mortgage — but the borrower argues that assignment is legally void.
The reasoning leans on two well-known Massachusetts Supreme Judicial Court rulings that have shaped foreclosure practice across the state. Under Eaton v. Federal National Mortgage Ass'n, 462 Mass. 569 (2012), MERS, when acting solely as a nominee with no beneficial interest, has no authority to assign a mortgage. Under U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 (2011), a party seeking to foreclose must hold and possess the original promissory note with proper endorsements at the time of the foreclosure notice. The filing alleges Movement Mortgage has done neither.
The lawsuit also raises RESPA and FDCPA issues that servicers should take note of. According to the filing, Movement Mortgage and ServiceMac failed to respond to qualified written requests sent on October 17, 2025 and November 25, 2025 within the thirty-business-day window required under federal law. The filing further alleges that foreclosure activity continued without proper debt validation.
What makes this case particularly notable for the industry is the backstory. The filing points to Movement Mortgage's $23,750,000.00 settlement with the Department of Justice on June 29, 2023, which resolved allegations that the lender systematically submitted false certifications on FHA-insured and VA-guaranteed loans between July 2008 and 2018. Movement Mortgage admitted at the time that a material percentage of those loans did not meet applicable requirements.
The current filing alleges a similar pattern: that Movement Mortgage steered the borrower into manufactured default by falsely advising that more than ninety days of delinquency was needed to qualify for loss mitigation, then filed for FHA insurance proceeds while simultaneously pursuing foreclosure — effectively profiting twice from the same alleged default.
The borrower, appearing without counsel as executor of an ecclesiastical trust, has brought eighteen counts seeking declaratory judgment, injunctive relief, and damages. A foreclosure sale had been scheduled for March 31, 2026.
No court has ruled on any of the claims, and Movement Mortgage and the other defendants have not yet responded. All assertions remain untested allegations at this early stage of the proceedings.
