The opinion of the court was delivered by: Thompson, U.S.D.J.,
This matter has come before the Court on the Motion for Summary Judgment [docket # 52] filed by Defendants FGC Commercial Mortgage Finance d/b/a Fremont Mortgage and Fremont Investment & Loan, Inc. (collectively, "Fremont" or "Fremont Defendants") and upon the Motion for Summary Judgment  filed by Defendants Litton Loan Servicing LP, Wells Fargo Bank, N.A., and HSBC Bank, USA, National Association (collectively, "Litton Defendants"). Plaintiffs Anthony and Patricia Pezza have opposed the Defendants' motions and have filed a Cross-Motion for Partial Summary Judgment , which both the Fremont and Litton Defendants have opposed [69, 71]. The Court has decided the motions after considering the parties' written submissions, without holding oral argument, pursuant to Fed. R. Civ. P. 78(b). For the reasons given below, the Defendants' motions are granted in part and denied in part, and Plaintiffs' motion is denied.
Plaintiffs Anthony and Patricia Pezza filed this lawsuit seeking rescission of their home mortgage and damages under the Federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., and damages under the New Jersey Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 et seq. (Second Am. Compl. 4--10) .*fn1 Plaintiffs claim that their final Federal Truth in Lending Disclosure Statement ("TILA disclosure") was "misleading" because the final disclosure, as well as statements made by the closing agent, indicated a fixed-rate mortgage even though the mortgage actually had an adjustable interest rate. (Id. at 4.) Plaintiffs also allege consumer fraud on the grounds that the lenders engaged in unconscionable acts, predatory lending, and breach of an implied warranty of good faith. (Id. at 7--9.) They bring their claims against the Fremont Defendants as the lenders in the mortgage transaction and against the Litton Defendants as assignees and servicers of the mortgage.
In 2006, Plaintiffs were in substantial debt: they owed approximately $80,000 in delinquent taxes, the IRS and the State of New Jersey had filed tax liens against their property, and the State of New Jersey had garnished their bank accounts and Patricia Pezza's wages. (Fremont Defs.' Mem. in Supp. Ex. A, Anthony Pezza Dep., 15:18--16:5, 16:23--17:24) ("Anthony Pezza Dep.") [50-1]. To pay off this existing debt, Plaintiffs contacted a number of mortgage brokers to help them find a new loan, and ultimately hired Residential Loan Funding Corp. ("Residential") in March 2006. (Id. at 16:11--15); (id. Ex. B, at Wells. 0029, Mortgage Loan Origination Agreement) [50-2].
Residential provided Plaintiffs with a loan estimate form and a preliminary TILA disclosure. (Id. Ex. C.) [50-3]. The disclosure statement reveals that the proposed loan would contain an adjustable interest rate of 12.75% and a principal amount of $270,000. (Id.)
Residential then submitted a loan application and supporting documents to the lender, Fremont. (Id. Ex. D, at Wells. 0189--197, Uniform Residential Loan Application) [50-4].
Based on the application, Fremont qualified Plaintiffs for a loan with a par rate of 11.2%. Fremont then offered Plaintiffs a loan for $286,500 with an adjustable interest rate of 12.45%, and Plaintiffs accepted the offer. (See, e.g., id. Ex. E) [50-5]. At the closing on May 5, 2006, Plaintiffs signed a number of loan documents, including the following: (1) an "Adjustable Rate Note," (id. Ex. E, at Wells. 0099--0102) [50-5], (2) an "Adjustable Rate Rider," (id. Ex. F, at Wells. 0121--0125) [50-6], (3) an "Adjustable Rate Mortgage Loan Program Disclosure," (id. Ex. G, at Wells. 0007--0008) [50-7], and (4) a final "Federal Truth in Lending Disclosure Statement," (id. Ex. H, at Wells. 0378) [50-8].
Plaintiffs admit that they did not read some of these documents at the closing and still had not read them by the time of their depositions.*fn2 They also concede that their "main concern at the time" they signed the papers was paying off their existing debt. (Anthony Pezza Dep. 45:5--
8.) Nevertheless, Plaintiffs claim that the last document listed-the final TILA disclosure statement-was misleading because it was inconsistent with the other loan documents and with information provided orally at the closing by the closing agent. Specifically, Plaintiffs claim that, even though the final TILA disclosure states that "Your loan contains a Variable Rate Feature," they were misled into believing the loan was for a fixed interest rate because the payment schedule lists 360 payments at $2,855.18 and because the closing agent pointed to the $2,855.18 figure and said, "This is your mortgage payment." (Pls.' Br. 24) . Plaintiffs state that the closing agent also "point[ed] out that there's 360 payments at [$]2,855.18." (Anthony Pezza Dep. 47:16--19.)
After the closing, Fremont disbursed the loan proceeds and Plaintiffs provided Fremont with a mortgage on their property. (See Fremont Defs.' Mem. in Supp. Ex. I, at Wells. 0105-- 0120, Mortgage) [50-9]. The broker received various fees on the transaction: $1,500 as a "broker discount point," a $350 "application fee," and $5,400 as a "yield spread premium." (Id. Ex. J, at Wells. 0336, Settlement Statement) [50-10].
For the next three years, Plaintiffs made monthly payments on their mortgage. (See Pls.' Br. Ex. E, Loan History) [63-7]. Some of these payments were late, but Plaintiffs state that they eventually made all payments owed. (Anthony Pezza Dep. 53:21--54:3.) Fremont served as the servicer of the loan from May 2006 until it assigned the loan to HSBC Bank USA, as Trustee, in September 2006. HSBC serviced the loan from then on.
On April 30, 2009, nearly three years into the loan, Plaintiffs sent a letter to the Defendants, demanding that the mortgage loan be rescinded due to TILA violations. (Fremont Defs.' Mem. in Supp. Ex. L, T.I.L.A. Rescission Notice 1--4) [50-12]. When Defendants took no steps to rescind the mortgage, Plaintiffs filed this lawsuit on May 4, 2009. They subsequently amended their Complaint to add CFA claims to the TILA claims. (Second Am. Compl. 8--10)
. The basis for the CFA claims is that Fremont engaged in the following unconscionable acts: (1) offering Plaintiffs a 12.45% interest rate even though they qualified for a rate of 11.2%, (2) increasing the rate from 11.2% to 12.45% even though Plaintiffs paid "broker discount points," and (3) providing Plaintiffs with a loan Fremont knew they could not afford. (Pl.'s Br. 1--2.)
In August 2009, Plaintiffs sold their property and relocated to Florida. (Anthony Pezza Dep. 56:8--19.) They sold the property "under protest" to preserve their rights in this lawsuit. (Pls. Br. 9.) With the proceeds from the sale, Plaintiffs paid off the mortgage in full. (Id.) Still, they maintain this action seeking a refund of the interest and closing costs on the mortgage as well as statutory damages under TILA, 15 U.S.C. § 1640, and damages under the CFA, N.J.S.A. 56:8-1 et seq.
Both the Fremont and Litton Defendants have now moved for summary judgment on all claims. Plaintiffs have cross-moved for ...