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DOCKET NO. A-0407-13T1










October 31, 2014


Argued September 10, 2014 Decided

Before Judges Fuentes, Kennedy and O'Connor.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-3781-11.

Nicholas A. Stratton argued the cause for appellants (Denbeaux & Denbeaux, attorneys; Joshua Denbeaux and Adam Deutsch, on the brief).

Mark S. Winter argued the cause for respondents (Stern, Lavinthal & Frankenberg, L.L.C., attorneys; Mr. Winter, of counsel and on the brief).


Plaintiffs Robert C. Wallerius and Kathleen Wallerius appeal from an order granting defendant 50 BY 50 REO, L.L.C. (REO) summary judgment and dismissing the complaint with prejudice. We affirm.


Plaintiffs purchased a residence in 1980.1 In January 2006, a mortgage Emigrant Mortgage Company (Emigrant) held against the property went into default. At that time, the principal amount of the mortgage was $226,500, with an interest rate of 10.25%. On June 13, 2006, Emigrant filed a complaint in foreclosure.

In an effort to stave off the foreclosure of Emigrant s mortgage, in March 2006, plaintiff sought to refinance the mortgage debt with defendant Castle Point Mortgage (Castle). Plaintiff, who at that time was unemployed, specifically told Castle he wanted a mortgage based upon the equity in his home and not his income. Plaintiff qualified for and agreed to take out a mortgage from Castle in the amount of $308,500, at an interest rate of 12.125%. Plaintiff claims Castle induced him to enter into the loan agreement by promising the mortgage would be refinanced within three months of closing, free of charge, as long as the foreclosure action was dismissed and plaintiff s credit score above 500.

In July 2006, the Castle mortgage closed. The loan proceeds paid off the Emigrant mortgage as well as other liens and, in addition, provided plaintiff with a cash pay-out of $27,867.63. While the foreclosure action was resolved when the Emigrant mortgage was paid off, there is no evidence plaintiff managed to get his credit score above 500.

Within three months of closing on the Castle mortgage, plaintiff defaulted. He never made another payment toward this debt. In December 2007, REO acquired the loan from Castle2 by asset sale agreement. In January 2009, REO filed a complaint in foreclosure; plaintiff did not answer and a final judgment by default was entered in March 2010. The property was sold at a Sheriff s sale in August 2010, and plaintiff was eventually evicted in May 2011, four and one-half years after making his last payment on the mortgage.

Plaintiff alleges that Castle sold him a "high-cost" loan in violation of the Home Ownership Security Act (HOSA), N.J.S.A. 46:10B-22 to -35, entitling him to the damages permitted in N.J.S.A. 46:10B-29. This claim is premised upon Castle charging mortgage application fees prohibited by HOSA. Specifically, plaintiff claims Castle charged him recording fees of $280 that he never incurred, as well as a fee of $375 that he claims was for the preparation of loan-related documents, a task a borrower cannot be charged under HOSA. Plaintiff also alleged Castle violated the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, for providing him a loan knowing he was mentally incapacitated, but plaintiff abandoned this claim during discovery. Subsequently, plaintiff claimed Castle violated the CFA for failing to adhere to its promise to refinance the mortgage at a lower interest rate within three months of the closing.

Because REO acquired the loan from Castle, plaintiff maintains REO is liable for Castle s wrongful acts, pursuant to N.J.S.A. 46:10B-27. Plaintiff also claims REO violated the CFA, asserting it improperly purchased the loan for the sole purpose of foreclosing upon plaintiff s property.

After the close of discovery, plaintiff and REO filed motions for summary judgment. The court denied plaintiff's and granted REO's motion for summary judgment, and dismissed the complaint with prejudice.


Summary judgment is appropriate only if no genuine issues of material fact exist in light of all pleadings, depositions, answers to interrogatories and admissions on file, in conjunction with any affidavits. R. 4:46-2(c). Courts are to consider the evidence "in the light most favorable to the non-moving party" to determine whether that evidence would be "sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

Only where there exists "a single, unavoidable resolution of the alleged disputed issue of fact [should the issue] be considered insufficient to constitute a 'genuine' issue of material fact for" summary judgment purposes. Ibid.; see also Suarez v. Eastern Intern. College, 428 N.J. Super. 10, 27 (App. Div. 2012), certif. denied, 213 N.J. 57 (2013). Thus, the non-movant party's mere identification of a disputed fact of an insubstantial nature will not defeat a motion for summary judgment. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 75 (1954). Here, there were no genuine issues of material fact in dispute, making the matter ripe for summary judgment.

A loan creditor violates HOSA if the points and fees it charges the borrower exceed 4.5% of the total loan amount. N.J.S.A. 46:10B-24. The total loan amount is defined as the principal of the loan minus those points and fees that are included in N.J.S.A. 46:10B-24. Here, the principal of the loan was $308,500. Plaintiff contends the total points and fees that may be included under the latter statute is $13,589.90, making the total loan amount $294,910.10. Because 4.5% of the total loan amount is $13,270.95 and the points and fees charged were $13,589.90, an amount that exceeds 4.5% of the total loan amount, then, plaintiff argues, the loan was prohibitively "high-cost." We disagree because plaintiff erroneously included in his calculation of points and fees the charge of $280 for recording and filing documents, as well as the fee of $375 that plaintiff claims was for the preparation of loan-related documents. These fees unduly inflated the total loan amount, and should not have been factored into the equation.3

According to the HUD-1 Settlement Statement, plaintiff was charged fees to record and file various documents with the county clerk s office in connection with the acquisition of the Castle mortgage. Plaintiff concedes that N.J.S.A. 46:10B-24 expressly excludes such fees from the definition of "points and fees," but claims Castle charged him recording and filing fees that the county clerk did not charge. Plaintiff, however, did not produce a copy of the clerk s bill. Plaintiff's claim is based on deducting the fees the County Clerk is authorized to charge under N.J.S.A. 22A:4-1.1, from the fees reflected in the HUD-1 Settlement Statement. However, plaintiff did not produce evidence of the number of pages that were recorded and filed a factor that can substantially affect the fee rendering pointless his exercise in deduction. Further, plaintiff himself cited the county s website,4 on which appear the county s fees for recording and filing documents. The county's fees are higher than those set forth in N.J.S.A. 22A:4-4.1, further undermining plaintiff s argument.

As for the $375 fee plaintiff paid, the HUD-1 Settlement Statement expressly states this was a closing fee paid to Quality Title & Abstract. HOSA incorporates provisions of the Home Ownership Equity and Protection Act (HOEPA)5, 15 U.S.C.A. 1601 to -1651, in its definitions of "points and fees." In 15 U.S.C.A. 1605(a), HOEPA provides in relevant part

(a) "Finance charge" defined. Except as otherwise provided in this section, the amount of the finance charge in connection with any consumer credit transaction shall be determined as the sum of all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit. The finance charge does not include charges of a type payable in a comparable cash transaction. The finance charge shall not include fees and amounts imposed by third party closing agents (including settlement agents, attorneys, and escrow and title companies) if the creditor does not require the imposition of the charges or the services provided and does not retain the charges.

The evidence shows that the $375 fee was paid to a title company. There is no evidence Castle either required this fee or the services the title company provided, and there is no evidence Castle retained the charge of $375. Therefore, the $375 fee must be excluded from any calculation of allowable points and fees.

Plaintiff has the burden of proving Castle violated HOSA by providing a high-cost loan. He alleged the points and fees Castle charged exceeded 4.5% of the total loan amount. The records does not support this claim. The points and fees legally permitted to calculate the total loan amount add up to $12,934.90, making the total loan amount $295,565.10. As 4.5% of the total loan amount is $13,300.43 and the points and fees charged were $13,589.90, the loan was not a high-cost one.

Plaintiff also alleged Castle failed to refinance the loan within three months of the closing, as promised. One of the conditions of the promise, however, was that plaintiff's credit score be above 500. Not only is there no evidence plaintiff fulfilled that condition, but also there is no evidence plaintiff ever submitted an application to refinance the loan -- on which he defaulted within three months of closing. Finally, as there was no evidence Castle violated HOSA, the issue whether REO is liable for Castle's actions under N.J.S.A. 46:10B-27 is moot.

After carefully considering the record and the briefs, we conclude plaintiff's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).


1 We use the singular "plaintiff" throughout the balance of our opinion, referring to Robert C. Wallerius.

2 At some undisclosed point in time Castle went out of business.

3 Plaintiff also alleges he was improperly charged loan application and commitment fees, which in the aggregate totaled $1,390, but these claims were not asserted in the complaint or during discovery. These claims were first raised in plaintiff's motion for summary judgment, filed just before trial. Plaintiff never sought to amend his answers to interrogatories to include these claims after the discovery end date. See Rule 4:17-7. For that reason, we decline to consider these claims.

4 Plaintiff cited

5 HOEPA was formerly known as the Truth in Lending Act.