MOVEMENT MORTGAGE LLC v. DEVIN AIR HAYMON AND UNITED STATES OF AMERICA ON BEHALF OF THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT (2025)

ORDER

Before the Court is the Joint Motion to Approve Consent Judgment filed by Plaintiff and Defendant United States. (“Motion,” Doc. 12).

Background 1

Devin D-Air Haymon executed a Security Deed in favor of Plaintiff Movement Mortgage, LLC, dated March 18, 2024, with respect to certain real property located in Locust Grove, Georgia (the “Property.”). (Doc. 1-1 at 6–7). The Security Deed secured performance of a Note dated the same day in the amount of $191,468. (Id. at 1). The Security Deed contained a provision granting Plaintiff a non-judicial power of sale to foreclose on the property in the event of a default. (Id. at 17). The transaction was insured under the Federal Housing Administration's (“FHA”) mortgage insurance program. (Id. at 6).² See 12 U.S.C. § 1709.

At some point prior to July 2024, it appears Mr. Haymon defaulted under the terms of the Note. (Doc. 1-1 at 34). Under the National Housing Act, as amended, the Secretary of Housing and Urban Development (“HUD”) is required to engage in “loss mitigation actions for the purpose of providing an alternative to foreclosure” upon default or imminent default of an FHA-insured mortgage. 12 U.S.C. § 1715u(a). The Act provides that one such option is “payment of a partial claim [on the FHA insurance] to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence that is in default or faces imminent default.” 12 U.S.C. § 1715u(b)(1). HUD regulations provide that in connection with a partial claim, “[t]he mortgagor must execute a mortgage in favor of HUD with terms and conditions acceptable to HUD for the amount of the partial claim.” 24 CFR § 203.371(c).

Mr. Haymon executed a Partial Claims Mortgage security instrument in favor of the Secretary of HUD on July 17, 2024 in the amount of $6,401.72. (Doc. 1-1 at 34). However, around September 2024, it appears that Mr. Haymon fell behind on his mortgage payments again, and Plaintiff provided notice of default. (Doc. 1-1 at 26). Plaintiff filed this judicial foreclosure action on July 24, 2025. (Doc. 1).

Discussion

I. Foreclosure Law Background

Georgia is a non-judicial foreclosure state. Alexander, et al., Ga. Real Estate Finance and Foreclosure Law § 8:1 (2025 ed.). This means foreclosures in Georgia do not typically involve a court. See id.

While the primary purpose of a foreclosure is to enforce a debt obligation, it also serves as a method of providing clear title to a foreclosure sale purchaser. Alexander, supra § 8:9. In general, “[t]he foreclosure of a senior security deed with notice to a junior creditor terminates the interest of the junior creditor in the underlying property.” Alexander, supra § 11:1. While some jurists have historically expressed the view that a non-judicial foreclosure sale was sufficient to terminate the interest of a federal junior lienholder, see Metro. Life Ins. Co. v. United States, 107 F.2d 311, 315 (6th Cir. 1939) (Arant, J., dissenting), a recent Eighth Circuit case has placed some doubt on this principle. Show Me State Premium Homes, LLC v. McDonnell, 74 F.4th 911, 913 (8th Cir. 2023).

In Show Me State, like here, HUD held security interests on a home as a result of a mortgage transaction. Id. The homeowners “fell behind on their property taxes,” and as a result, “the county tax collector put the house up for auction.” Id. After the home was sold at auction and then resold, the new owner brought a quiet title action in state court to confirm “that all other interests in the home, including those belonging to the United States, had been extinguished through foreclosure.” Id. The United States removed the case to federal court and moved to dismiss on the grounds that its interest could not be extinguished by a non-judicial foreclosure sale. Id.

The basis of this argument was 28 U.S.C. § 2410, which waives the United States's sovereign immunity for certain property-related actions, including one “to foreclose a mortgage ․ upon ․ real or personal property on which the United States has or claims a mortgage or other lien.” 28 U.S.C. § 2410(2). The statute sets forth conditions for naming the United States in a foreclosure action, most importantly that “an action to foreclose a mortgage or other lien, naming the United States as a party under this section, must seek judicial sale.” 28 U.S.C. § 2410(c). The Eighth Circuit held that a judicial sale must be “made under the process of a court.” Id. at 914 (quoting Williamson v. Berry, 49 U.S. (8 How.) 495, 547 (1850)). Consequently, the court found that a district court action to quiet title following the non-judicial sale used by the tax collector was not permissible under the statute; the interests held by the United States had “never been foreclosed.” Id.

As a result of this holding, the Court has seen a flurry of judicial foreclosure actions being commenced in this district seeking the imprimatur of a judicial sale. This is the first that has neared judgment, and the Court takes this opportunity to lay down some general principles for these cases.

II. Procedures for Judicial Foreclosure Actions

First, it goes without saying that a judicial foreclosure is a civil action in all respects and the ordinary rules of civil actions apply. For example, Rule 19 requires joining all necessary parties, and under Georgia law, the borrower and all junior lienholders are necessary parties. Alexander, supra § 7:2 (“Regardless of whether a creditor seeks to establish personal liability of the debtor, the debtor must be named as a party in the foreclosure proceeding in order to terminate the equity of redemption ․ In addition, the rights of any and all other parties which are sought to be terminated by the foreclosure proceeding, such as the holders of subordinate interests, must be parties.”). The borrower and junior lienholders must be served with process as provided by Rule 4.

Immediate legal consequences arise from a completed foreclosure sale, and an order directing a sale must carry the formalities of a judgment. For parties that have not answered, the plaintiff must therefore seek default judgment under Rule 54. For parties who have answered, the plaintiff must seek judgment on the pleadings under Rule 12(c) or summary judgment under Rule 56.³ Or, as here, a consent judgment may be reached.⁴

Once a foreclosure judgment has been entered, the sale must be conducted. Plaintiff and the United States jointly request that the Court direct the parties to follow Georgia's non-judicial foreclosure procedures. The Court agrees that this course of action is warranted and finds that it has the authority to order that those procedures be used.

Rule 69(a)(1) provides that “The procedure ․ in proceedings supplementary to and in aid of judgment ․ must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.” Here, a federal statute does apply: 28 U.S.C. § 2001(a). That statute provides:

Any realty or interest therein sold under any order or decree of any court of the United States shall be sold as a whole or in separate parcels at public sale at the courthouse of the county, parish, or city in which the greater part of the property is located, or upon the premises or some parcel thereof located therein, as the court directs. Such sale shall be upon such terms and conditions as the court directs.

28 U.S.C. § 2001(a). Notably, the statute provides the Court with authority to set “terms and conditions” on the sale. Id. The statute's provisions map neatly onto Georgia's requirements for non-judicial foreclosures:

A foreclosure sale conducted pursuant to a power of sale must be held on the date, time and place which is required of sheriff's sales. Such sales may occur only on the first Tuesday of a month, must be between the hours of 10:00 A. M. and 4:00 P. M. local time, and are to take place at the county courthouse in which the property is located.

Alexander, supra § 8:5 (citing O.C.G.A. §§ 9-13-160(b); 9-13-161; § 44-14-162) (notes omitted). Both provisions require public sales to take place at the county courthouse, and the more restrictive timing provisions of Georgia law can be ordered pursuant to the Court's authority to set terms and conditions on the sale.

A companion statute requires published notice of the sale to be given:

A public sale of realty or interest therein under any order, judgment or decree of any court of the United States shall not be made without notice published once a week for at least four weeks prior to the sale in at least one newspaper regularly issued and of general circulation in the county, state, or judicial district of the United States wherein the realty is situated.

28 U.S.C. § 2002. This maps neatly to the requirement under Georgia law that “[t]he advertisement must be published in a newspaper which is published in the county in which the property is located ․ [and] [t]he basic requirement is that the advertisement be published “weekly for four weeks.” Alexander, supra § 8:5 (citing O.C.G.A. §§ 9-13-140; 9-13-142).⁵

Utilizing an existing procedure will facilitate compliance and encourage bidding, maximizing value to creditors. Accordingly, the Court will grant the United States and Plaintiff's joint request to use Georgia's state law procedures to conduct the judicial sale in this case.

Finally, the United States and Plaintiff request that the Court permit the parties to follow state law for all post-sale aspects of the foreclosure, “including the conduct [of] the sale, the form and content of all notices to required parties, the distribution of excess proceeds, if any, and the method for seeking a deficiency judgment, if applicable.” Because the jurisdiction of this Court is founded on the presence of the United States as defendant under 28 U.S.C. § 2410(c), the Court may properly decline supplemental jurisdiction of any state law disputes between Plaintiff and Mr. Haymon over collateral issues such as confirmation and distribution of proceeds once the Court has finally adjudicated all rights of Plaintiff vis-a-vis the United States.⁶ Hamilton v. Mississippi, No. 4:23-CV-46-SA-DAS, 2023 WL 4246066, at *4 (N.D. Miss. June 28, 2023). Therefore, the Court will grant this request as well.

III. Application to the Facts

Plaintiff has served Mr. Haymon with the summons and complaint and asserts that “Plaintiff has properly served any other holders of any security interest, mortgage, or lien in the Subject Property with the complaint and summons.” (Doc. 12 at 4). But the Motion was not served on Mr. Haymon and does not clearly specify that it is seeking a default foreclosure judgment against Mr. Haymon. Accordingly, Plaintiff and the United States should revise their motion to clarify the relief they seek against Mr. Haymon (including that Plaintiff will not seek a personal liability judgment in this case, but will instead comply with Georgia law on deficiency judgments, if necessary) and serve the revised motion on Mr. Haymon and any other interested parties. Otherwise, the Court is willing to grant the requested relief in the Motion.

Conclusion

The Joint Motion to Approve Consent Judgment filed by Plaintiff and Defendant United States (Doc. 12) is DENIED WITHOUT PREJUDICE.

SO ORDERED this 26th day of November, 2025.

FOOTNOTES

2.   Nat'l Consumer L. Ctr., Home Foreclosures § 6.2.8 (2d ed. 2023) (“It is often simple to determine if a loan is FHA-insured. In many cases ․ there is an FHA-case number at the top.”).

3.   Federal mortgage service regulations dictate certain circumstances where a servicer must not move for foreclosure judgment pending the completion of loss mitigation determinations. 12 C.F.R. § 1024.41(g). Therefore, it is crucial that the servicer, not the United States, move for entry of judgment. The instant Motion is a joint motion filed by the United States, but in the future to avoid doubt, the servicer should file the motion.

4.   Where a borrower has made an appearance pro se, the magistrate judges of the district are available to mediate cases without charge.

5.   Georgia law also requires notice to the borrower, which the Court finds it has authority to require under Section 2001(a):Notice of the initiation of proceedings to exercise a power of sale in a mortgage, security deed, or other lien contract shall be given to the debtor by the secured creditor no later than 30 days before the date of the proposed foreclosure. Such notice shall be in writing, shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor, and shall be sent by registered or certified mail or statutory overnight delivery, return receipt requested, to the property address or to such other address as the debtor may designate by written notice to the secured creditor.O.C.G.A. § 44-14-162.2(a).

6.   It does not appear that the United States has a right to redeem following a foreclosure of a lien arising from the issuance of FHA insurance. 12 U.S.C. § 1701k. For liens arising from other federal programs, this may be an issue that the parties must work out in advance of the sale.

Victoria Marie Calvert United States District Judge