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John and Maria Payan, Individually and As H/W v. Greenpoint Mortgage Funding

December 17, 2010

JOHN AND MARIA PAYAN, INDIVIDUALLY AND AS H/W, PLAINTIFFS,
v.
GREENPOINT MORTGAGE FUNDING, INC., AMERICAN MORTGAGE, INC.,
KAREN MCHALE INDIVIDUALLY AND/OR D/B/A AMERICAN MORTGAGE,: INC., HOMEQ SERVICING CORPORATION,
AND JOHN DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

Plaintiffs, John and Maria Payan, sought to finance the purchase of their new residence by obtaining a loan subject to a mortgage on their property. With the assistance of their mortgage brokers, American Mortgage, Inc. and Karen McHale, plaintiffs obtained a loan from Litton Loan Servicing, LP. However, because the loan did not feature the favorable terms that plaintiffs had sought and could not be refinanced in a timely manner, plaintiffs, relying on the suggestion of their broker, refinanced into another loan with GreenPoint Mortgage Funding, Inc. ("GreenPoint"). After they had entered into the mortgage loan with GreenPoint, plaintiffs learned that the loan's terms also were unfavorable to them and detrimental to their interests.

On December 31, 2008, plaintiffs filed a complaint in this Court against GreenPoint, American Mortgage, McHale, Litton Loan Servicing LP and its general partner, Litton GP, LLC (collectively, "Litton"), and Homeq Servicing Corporation ("Homeq"), who handled the administration of the loan. Among their allegations, plaintiffs averred that defendants misrepresented and failed to disclose material information in relation to the mortgage loans, thereby violating several statutes including the Truth in Lending Act ("TILA"), 15 U.S.C. 1601 et seq., and the New Jersey Consumer Fraud Act ("CFA"), N.J.S.A. § 56:8-1 et seq. In response to plaintiffs' claims, GreenPoint moved for judgment on the pleadings. In an Opinion and Order dated January 6, 2010, the Court granted GreenPoint's motion and dismissed plaintiffs' claims against GreenPoint, without prejudice. Further, the Court granted plaintiffs leave to amend their complaint.

Since that time, plaintiffs have amended their complaint twice. On or around April 6, 2010, GreenPoint again moved for judgment on the pleadings.

For the reasons expressed below, GreenPoint's Motion for Judgment on the Pleadings will be granted.

I. JURISDICTION

The Court exercises subject matter jurisdiction over plaintiffs' federal claim pursuant to 28 U.S.C. § 1331 and may exercise supplemental jurisdiction over any related state law claims pursuant to 28 U.S.C. § 1367.

II. BACKGROUND*fn1

Plaintiffs sought to finance the purchase of their new residence by obtaining a loan subject to a mortgage on their property. To facilitate the loan, plaintiffs relied on American Mortgage and McHale, an employee of American Mortgage, to act as its mortgage broker. By April 2006, plaintiffs were scheduled to finalize a loan that American Mortgage and McHale (collectively, "broker") had obtained for them.

According to plaintiffs, however, problems arose surrounding the loan. Originally scheduled for April 24, 2006, the closing was rescheduled for April 17, 2006. Despite repeated requests and the closing's imminency, the broker failed to provide plaintiffs in advance with pertinent details regarding the loan, such as the monthly payment, interest rate, and closing costs. In addition, McHale did not appear at the closing to assist plaintiffs as she had promised to do. Because certain documents were not forwarded to the title company, the closing was delayed further on April 17th. Moreover, the loan did not include all of the terms that were promised to plaintiffs. Via telephone, plaintiffs spoke with McHale who assured plaintiffs that they should sign the papers and that the loan would be refinanced within thirty days to comport with their expectations. As a result of that conversation, plaintiffs signed the documents at closing and purchased the property. At some point after the closing, Homeq assumed the administration of the loan, including collecting, monitoring, reporting, and remitting loan payments.

Assurances notwithstanding, the broker could not refinance the loan as plaintiffs had expected and desired. Nevertheless, the broker informed plaintiffs of another loan which might be more favorable to them but with slightly higher monthly payments. Plaintiffs accepted the broker's suggestion and, in November 2006, the broker, according to plaintiffs' second amended complaint, "refinanced Plaintiffs into a complex, negative amortization, Payment-Option, Adjustable Rate Mortgage through [GreenPoint], without disclosure of the details and terms of the loan, just advising Plaintiffs that the program was similar to the COSI loan" they wanted from the outset. The loan was in the amount of approximately $256,500 and was secured by a mortgage on plaintiffs' property.

Plaintiffs were unaware of the agreement's terms until they received monthly mortgage statements. Upon learning of the terms, plaintiffs contacted GreenPoint, who informed them that their loan was nothing like the COSI loan they had sought to obtain. Contrary to the broker's representations, the second monthly statement from GreenPoint indicated that plaintiffs' interest rate increased from 2.5% to 9.25% and that monthly payments rose from $1,365 to $2,400.

Plaintiffs refinanced out of the loan in 2007. Thereafter, on December 31, 2008, plaintiffs filed a complaint in this Court against GreenPoint, American Mortgage, McHale, Homeq, and Litton.*fn2 On January 6, 2010, the Court granted GreenPoint's motion for judgment on the pleadings and dismissed plaintiffs' claims, without prejudice. The Court also granted plaintiffs leave to amend their complaint. About two weeks later, plaintiffs filed an amended complaint.*fn3 The Magistrate Judge later granted plaintiffs' leave to file their second amended complaint, which was entered onto the docket on March 9, 2010.

Among the allegations set forth in their second amended complaint and relevant to the present matter, plaintiffs allege that GreenPoint violated the TILA by failing to make material disclosures concerning the proper monthly payments for the loan and the annual percentage rate. Plaintiffs also appear to allege that an agency relationship existed between defendants, including GreenPoint and the ...


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