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Poray v. Altimate Discount Mortgage

A-0534-09T3 (N.J. Super. App. Div. 2010) (Unpublished)

LOANS — Where a borrower admits that it lied about its income when applying for a loan, the borrower cannot complain that the loan he or she actually accepted was not on the same terms as had been offered in connection with the loan application.

In connection with a loan he procured to purchase a home, a borrower sued its lender and mortgage broker for violations of the Consumer Fraud Act. The borrower claimed that he requested an adjustable rate loan, with interest-only payments, in an amount equal to seventy-five percent of the home’s purchase price, and was told that loans were available under those terms. The borrower said that he expected to make monthly payments of approximately $3,534 per month. According to the borrower’s deposition testimony, he did not have sufficient income to obtain the loan he sought, but the mortgage broker insisted on inserting the required income amount on the loan application. The borrower secured the mortgage loan, but on different terms than he expected. Faced with a time-of-essence deadline to purchase the property, the borrower accepted mortgage loans that turned out not to be interest-only and with monthly payments of $7,205. The borrower claimed that he accepted the loans in order to avoid forfeiting his deposit.

The borrower then sued the bank and the mortgage broker for violations of the Consumer Fraud Act, claiming they misrepresented the loan terms. The broker moved for summary judgment, arguing that the borrower committed fraud by misstating his income to get the loan and therefore he could not recover on the basis of the broker’s alleged fraud. The broker cited the borrower’s deposition testimony in which the borrower admitted that he lacked sufficient income to procure the loan. The broker argued that had the borrower not misrepresented his income, the borrower would not have received the loan he now claims was fraudulently negotiated by the broker. In his defense, the borrower submitted a certification in which he claimed that, in fact, he did have sufficient income to justify the loan.

The lower court found that the borrower’s certification was a “sham affidavit” because it directly contradicted his deposition testimony. On appeal, the borrower argued that he adequately explained the inconsistencies between his deposition testimony and the certification, but the Appellate Division disagreed. The Court noted that, under the “sham affidavit doctrine,” a court will disregard an affidavit submitted in opposition to a motion for summary judgments when the affidavit contradicts the affiant’s prior testimony. In this case, the broker argued that once the borrower admitted that he lied about his income to get the loan, he could not claim that he suffered damages because he could not get the loan on more favorable terms as he had hoped to get through his fraudulent conduct. The Court rejected the borrower’s claim that he had a sufficient explanation for the discrepancy between his affidavit and his deposition testimony. It found that the record showed that, contrary to the certification he submitted, he did not have the needed income.

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