Movement Mortgage Fraud Case: Certifying Loans the Government Would Have Rejected

In the Movement Mortgage fraud case, the lender agreed to pay $23.75 million to resolve False Claims Act allegations involving ineligible FHA-insured and VA-backed mortgages. Movement admitted certifying loans that did not qualify for federal backing and failing to follow the programs’ self-reporting requirements. For someone who worked in underwriting or quality control, the case reaches familiar decisions: what the file showed, what the lender certified, and what happened when deficiencies surfaced.

The Justice Department announced the settlement on June 29, 2023. Movement Mortgage, LLC, headquartered in Indian Land, South Carolina, underwrote loans across the country, including upstate New York. Two former employees brought the qui tam case that triggered the investigation.

This page follows Movement’s admissions about eligibility certifications and reporting to the Department of Housing and Urban Development and Veterans Affairs. Our mortgage fraud reporting page covers the broader question of how we connect what you saw to the program and payment involved.

Movement Admitted Certifying Ineligible Loans

According to the Justice Department’s announcement, Movement admitted that a material percentage of the loans it certified for FHA insurance and VA home loan guaranties failed to meet the applicable requirements. The company acknowledged that the agencies would not have backed those loans without its false certifications. We see the absurdity: the certification did the qualifying.

The covered conduct reached back as far as July 2008, including a period of rapid expansion. The Justice Department also described allegations concerning the safeguards around those certifications: quality control to prevent and correct underwriting deficiencies, reporting of materially deficient loans, and an underwriting process free from conflicts of interest.

How Movement’s Certifications Put Public Money Behind the Loans

The Federal Housing Administration insures eligible mortgages, while the Department of Veterans Affairs backs qualifying loans. Participating lenders such as Movement can originate and underwrite mortgages without first having the government review each loan for compliance. As the Justice Department explained, the holder of a federally backed loan that defaults may claim certain losses from the United States.

For an ordinary FHA mortgage, the work moves from application and verification through underwriting, closing, lender certification and endorsement for insurance. When the lender submits the loan for insurance, it adopts an eligibility decision already made inside the lending operation. Servicing and a later insurance claim follow their own steps, connecting the original certification to the dollars sought from the government.

The April 2023 FHA certification form illustrates the separation between the borrower’s statements and the lender’s underwriting and endorsement certifications. Veterans Affairs’ October 2022 loan certification form likewise separates the veteran’s statements from the lender’s certifications. For an insider who saw false information pass through those decisions, we connect what you know to the actual certification used for the loan and the later insurance or guaranty claim.

Movement’s Reporting Admission Reaches Beyond the Original Approval

Movement further admitted that it failed to follow HUD and VA’s applicable self-reporting requirements. The settlement also resolved allegations about maintaining quality-control programs that would prevent and correct underwriting deficiencies. Those are decisions that reach beyond the employee who first assembled or approved the loan file.

Inside a lender, quality control creates a sequence: a concern, an investigation, a final finding, management’s receipt of that finding, and the response. For an insider, the important connection is what happened between finding a deficiency and telling the agency about it. We examine that sequence alongside the certification and any later claim, so a review finding stays connected to the government money it affected.

Freedom Mortgage’s separate case shows why the movement of those findings matters. In the Justice Department’s account of Freedom’s admissions, completed early-payment-default reviews were not circulated to production and underwriting management during 2006 through 2008. Freedom also admitted staffing failures that impaired timely, complete reviews, and that it reported no improperly originated loan to HUD during 2006 through 2011.

The Justice Department credited Movement for significant measures to stop the practices, taken both before and after it learned of the investigation. We see the odd bargain: credit for stopping practices the lender had admitted.

Movement’s Underwriting Safeguards Included Independent Review

The Justice Department’s Movement announcement identified an underwriting process free from conflicts of interest as one of the program safeguards at issue. For someone inside production or underwriting, that puts the independence of the review alongside the accuracy of the final certification. Who could influence the decision to approve a loan is part of the story we examine with you.

A separate case against Guaranteed Rate shows how that concern can become concrete. Guaranteed Rate admitted commissions and gifts to FHA underwriters, instances in which government-loan underwriters were told not to review relevant documents, and failures to self-report. It also acknowledged that the government backed loans that would not otherwise have qualified.

What Movement’s Admissions Mean for Mortgage Fraud Evidence

Mortgage fraud evidence follows information from the loan file through the lender’s certification to the claim and payment. The person who knows how a condition was cleared may see a different part of that chain from the person handling a later insurance claim. Our answers to mortgage whistleblowers’ evidence questions develop those connections across the field.

The Justice Department’s announcement of its Guild Mortgage lawsuit described its allegations against the lender. The complaint alleged underwriting defects, unauthorized waivers of conditions and failures to convey or act on quality-control findings. It connected particular alleged file defects and certifications to particular HUD insurance payments.

For someone who recognizes Movement’s admitted conduct in another lending operation, the useful account includes what the lender knew when it certified the loan and what it later learned through review. We work with the insider to connect that history to the insurance or guaranty claim and the reason for the loss. The work inside underwriting and the money paid later belong in the same account.

Movement’s Former Employees Had a Combined Whistleblower Share

The Justice Department announced that the two former employees would receive a combined $4 million as their mortgage whistleblower reward from the settlement proceeds. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess the case with you around the decisions you know, the certifications they affected and the government money behind them.

You Know Who Made the Certification

If you saw a loan certified despite unresolved deficiencies, or a review finding that never reached HUD or VA, talk with our whistleblower experts about the decision you witnessed. We bring underwriting, quality-control and payment evidence together with you, and bring in mortgage fraud whistleblower lawyers who understand federal insurance and guaranty cases. We stay beside you as your inside knowledge becomes the foundation of the case.