Small Lender Takes on Movement Mortgage in Bold Legal Showdown!

In a dramatic courtroom showdown, Southern Trust Mortgage is taking legal action against a former loan officer and her new employer, Movement Mortgage, alleging they engaged in dubious tactics that compromised the company’s integrity and client trust.

At the heart of the matter is Grace White, who made the jump to Movement Mortgage after working with Southern Trust from 2022 to 2024. The lawsuit claims she blatantly violated her non-compete agreement and pilfered sensitive trade secrets, leaving a trail of questionable ethics in her wake. Movement Mortgage isn’t off the hook either; they’re accused of colluding with White, benefitting from her indiscretions.

According to the complaint, before her transition to Movement on October 16, 2024, White allegedly copied over 5,100 confidential files onto a thumb drive, snatching customer leads and critical information. But that’s not all—Southern Trust’s investigation revealed that she was actively coaxing her clients to follow her to Movement long before her official exit.

“During her final days at Southern Trust, White actively solicited at least seven prospective customers to apply for loans with Movement, all while still on the clock,” the lawsuit asserts. “In a stunning breach of ethics, she even used her Southern Trust email account to send these communications.”

As of now, neither Southern Trust nor Movement Mortgage has commented publicly on the unfolding drama.

Southern Trust, a prominent lender based in Virginia, highlighted in its complaint that White benefited from a comprehensive mentoring program when she joined in 2022, which played a pivotal role in her successful career trajectory. By the time she left, White had closed a staggering 76 loans, amassing a volume of $13.2 million.

In exchange for the training she received, White signed a non-compete agreement prohibiting her from joining a competing firm within a 25-mile radius for one year post-resignation. Ironically, she then chose to work with Movement, which is located a mere five miles from Southern Trust—clearly a breach of that agreement.

But the alleged wrongdoing doesn’t stop there. White is also accused of taking thousands of proprietary documents, including internal training materials and customer leads, effectively compromising Southern Trust’s competitive edge.

“White’s unscrupulous actions have inflicted serious harm on Southern Trust,” the company stated in its legal filing. “As a result of the defendants’ actions, we have already suffered business losses and are now seeking just compensation for the damages incurred.”

Movement Mortgage finds itself in hot water too, as they are accused of participating in the disruption of Southern Trust’s customer relationships for their own gain. One email attached to the complaint shows White encouraging clients to explore options with Reggie Register, a branch manager at Movement, before she officially departed.

Southern Trust is seeking compensatory damages, with the exact amount to be determined at trial, following their lawsuit filed in a Virginia federal court on November 4.

This mortgage lender operates in 11 states and Washington, D.C., boasting nearly 100 sponsored loan officers, according to the Nationwide Multistate Licensing System.

Non-compete agreements might not be the norm, but they serve as a crucial shield for mortgage lenders, particularly when an employee has received training or bonuses. As industry experts have pointed out, they can be wielded as a tool to restrict employee mobility.

Earlier this year, the Federal Trade Commission attempted to outlaw non-compete agreements, impacting an estimated 30 million workers nationwide. However, a federal judge in Texas stepped in, freezing the FTC’s ban and allowing companies, including those in the mortgage industry, to continue using these agreements for now.

Legal experts warn that while the future of the FTC’s non-compete rule hangs in the balance, employers should remain vigilant. “With ongoing litigation and the potential for this issue to escalate to the Supreme Court, the fight is far from over,” noted a seasoned attorney, Troy Garris, in a recent blog.