The opinion of the court was delivered by: Kugler, United States District Judge:
NOT FOR PUBLICATION (Doc. No. 76)
This matter comes before the Court upon the motion to dismiss filed by all named Defendants.*fn1 Defendants move to dismiss claims of common law fraud, breach of the implied covenant of good faith and fair dealing, and violation of the New Jersey Consumer Fraud Act ("NJCFA"), N.J. Stat. Ann. § 56:8-2. Plaintiffs argue, inter alia, that Defendants fraudulently approved a home mortgage loan by inflating the value of the collateral and failing to account for all of Plaintiffs' debt when determining Plaintiffs' eligibility. Defendants argue that Plaintiffs failed to allege any form of fraud in connection with their home mortgage loan. For the following reasons, Defendants' motion is GRANTED.
Because this matter is before the Court on a motion to dismiss, the following facts are taken from the Second Amended Complaint and assumed true.
Plaintiffs James and Kathy Jatras live in Virginia. In December 2006, they purchased a home in Cape May, New Jersey for $1,305,000.00, subject to financing obtained through CHL. After Plaintiffs signed the purchase contract, they contacted CHL to secure financing. CHL asked Plaintiffs to provide information concerning their assets, income, and liabilities. Plaintiffs provided CHL with this information along with a copy of the Purchase Contract. CHL told Plaintiffs that they would review Plaintiffs' financial information and offer financing based upon the rates and programs available. After reviewing Plaintiffs' financial information, CHL informed Plaintiffs that it was prepared to offer them eighty percent of the purchase price of the property, with a fixed interest rate of 6.5 percent for thirty years. Thereafter, Plaintiffs accepted CHL's offer, pending verification of all final qualification data.
According to Plaintiffs, during the period between CHL's offer and closing, CHL employees contacted Plaintiffs for additional information. In particular, CHL requested information concerning Plaintiffs' income and assets. Included in this information was a specific reference to the rent Plaintiffs paid monthly for an apartment they rented in Northern Virginia. Plaintiffs made clear to Defendants that they intended to remain in the apartment following their purchase of the property in Cape May.*fn2
At closing, Defendants presented Plaintiffs with the Uniform Residential Loan Application, also known as the "Form 1003." According to Plaintiffs, the Form 1003 is "prepared by the lender . . . in part from information provided by the borrower and in part from CHL's own internal information, and then presented at closing to the borrower. . . ." (Second Am. Compl. ¶ 25). Plaintiffs allege that prior to signing the Form 1003, they conducted a "reasonable on-the-spot inspection" and confirmed that "the information [contained in the form] appeared accurate to the best of [their] ability to verify. . . ." (Id.). During the inspection, Plaintiffs failed to identify any incorrect information concerning their debt-to-income ratio or the appraisal value of the property.
Later, after signing the Form 1003, securing the loan, and purchasing their $1.3 million dollar home, Plaintiffs conducted a more thorough inspection of the Form 1003. During this inspection, Plaintiffs learned that Defendants did not include their monthly rental payment of $2,000.00 in the debt-to-income ratio. (Id. ¶ 47). Plaintiffs allege that if Defendants properly included their $2,000 rent into the calculation of Plaintiff's debt-to-income ratio "the loan would have been denied (or the loan approved only at a lower amount) due to CHL's investor-approved guidelines pertaining to ratios designed to determine the borrower's ability to repay the debt." (Id.).
Plaintiffs allege that Defendants fraudulently advertised their products and services. Plaintiffs allege that through their advertisements, Defendants' expressly or impliedly guaranteed suitable and affordable loans for each prospective borrower based on an accurate assessment of mortgage loan. Therefore, the Court will focus solely on the facts alleged in the Second Amended Complaint that specifically relate to Defendants' alleged scheme to defraud Plaintiffs.
each prospective borrower's credit rating and ability to pay. In particular, Plaintiffs allege that CHL published a variety of television, radio, and print advertisements touting themselves as "the company you can trust," and encouraging potential customers to "join the millions of homeowners who have trusted Countrywide." (Id. ¶ 38). CHL also proclaimed to prospective borrowers that "Countrywide is on your side!", that "[CHL] had years to perfect [its] craft," and that CHL offered customers "industry leading expertise." (Id.). Finally, CHL pledged to offer products that "match a family's income level or credit profile," and promised that each loan was "built to suit specific needs of [CHL] customers." (Id.).
3.The Collateral Appraisal Process
Defendants determined that based upon the information Plaintiffs provided to them during the loan application process, the value of the house was $1,315,000.00. After Plaintiffs conducted an examination of the documents presented to them at closing, including the Form 1003 and CHL's appraisal of the property, they determined that CHL falsified the value of the property. (Id. ¶ 30). Plaintiffs' alleged these specific objections to Defendants' collateral appraisal process:
(1) Defendants improperly valued the property nine months after the date of sale. At the time Defendants approved the loan, Plaintiffs allege that "it was considered inappropriate to use comparables over 90 days old . . . ."
(2) Defendants failed to include a "Date of Time/Sale" value adjustment. According to Plaintiffs, if the date of sale time is extended beyond 90 days, an offsetting "Date of Sale/Time" value adjustment is required.
(3) Defendants improperly compared the property to "harbor view" residences in order to inflate the value of the property. Plaintiffs allege that this comparison was improper because the property is listed as "residential," and not "harbor view." Plaintiffs allege that properties that provide occupants with a view of the water are "significantly more desirable" and therefore command higher prices.
(4) Defendants improperly compared the one-story property to a three-story property.
(Id. ¶ 53). According to Plaintiffs, these "gross violations of underwriting standards" artificially inflated ...