The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
The plaintiff in this case, Hakki Hayrioglu, asserts that the defendants are liable for their respective roles in issuing him a mortgage that they knew he could not repay. The defendants Metropolitan National Bank Mortgage Company LLC ("Metropolitan National") and US Bank Home Mortgage ("US Bank", and with Metropolitan National, the "Moving Defendants") now each move pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the plaintiff's complaint for failure to state a claim. The third defendant, Granite Capital Funding, LLC ("Granite Capital") has not made an appearance in this case. For the reasons that follow, the Court grants the Moving Defendants' motions to dismiss the complaint.
This case arises out of an alleged "no-doc loan" made to the plaintiff during the summer of July 2007. The "no-doc loan", which was not uncommon in the pre-2008 era of easy consumer credit, is a home loan that is based on the borrower's statement of income and assets without supporting documentation. See, e.g., Alina Tugend, "What You Need to Know to Get a Mortgage", N.Y. Times, June 1, 2008, at RE1 (noting that by the summer of 2008, "[m]ost lenders [were] no longer willing to settle for stated income, without document verification, preferring instead that applicants provide all the necessary paperwork to prove income."). In short, the plaintiff in this case alleges that in issuing him a no-doc loan, the defendants caused him to misstate his income and then wrongfully lent him far more money than he could repay.
Before describing the plaintiff's allegations in detail, the Court will briefly discuss the bases for the ensuing discussion. First, as is required on a motion to dismiss, the Court accepts all of the plaintiff's well-pleaded facts as true. In addition, the Moving Defendants have submitted to the Court a number of documents related to the plaintiff's mortgage loan that the Court finds are incorporated by reference in the plaintiff's complaint. (See Guarino Aff., Exs. A-- F.) The Court will consider these documents in deciding the present motion. See, e.g., Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004).
Also, in opposition to the Moving Defendants' motions, the plaintiff submitted his own affidavit setting forth additional facts not alleged in his complaint. Generally, such evidence is not to be considered at this stage of the case. In addition, the plaintiff states in his affidavit that he "cannot read English" and speaks "very little English", (Hayrioglu Aff., ¶ 4), but then does not explain how he learned the contents of the affidavit before signing it. Nevertheless, rather than permit the plaintiff to cure these errors by amending his complaint, the Court for the purpose of this motion only will treat the plaintiff's affidavit as supplementing his allegations in the complaint. The Court does this in the interest of judicial economy and, because the Court finds that these additional facts do not alter the outcome of the present motions. The Court will now turn to a recitation of the facts in this case.
The plaintiff Hakki Hayrioglu is a forty-nine year old Turkish immigrant. Hayrioglu came to the United States in 2003, and now works as a livery cab driver.
In 2007, when he entered into the loan that is the subject of this case, Hayrioglu's annual income was approximately $24,300, which amounted to approximately $2,025 per month.
On April 30, 2007, Hayrioglu contracted with one Deborah Benzer to purchase from her a home at 65 Dobson Avenue, Merrick, NY 11566 (the "Dobson Avenue Property"). Although the plaintiff's complaint is ambiguous on this point, the Residential Contract of Sale dated April 30, 2007 indicates that Hayrioglu was already represented at that time by New York attorney Margaret Mayora, Esq. (Guarino Aff., Ex. A at 9.) The purchase price for the home was $508,800, and Hayrioglu paid just over $100,000 of that price in cash. The plaintiff then sought a mortgage loan to cover the balance that he owed on the purchase price.
The first lender that the plaintiff approached for a loan rejected the plaintiff's application. However, on or about July 16, 2007, the plaintiff's attorney Margaret Mayora "found the mortgage broker Granite Capital Funding and the lender Metropolitan National Bank for Hayrioglu." (Compl., ¶ 11.) As mortgage broker, Granite Capital arranged for Metropolitan National to loan Hayrioglu the balance of the purchase price for the Dobson Avenue Property, which amounted to $407,040. On July 30, 2007, Metropolitan National and Hayrioglu consummated the mortgage loan, and Hayrioglu and Deborah Benzer closed on the purchase of the property.
According to the loan documents incorporated by reference in the plaintiff's complaint, the mortgage loan that Metropolitan National extended to Hayrioglu had a 30-year repayment period and a fixed interest rate of 6.375%. (Guarino Aff., Ex. B.) After adding payments for taxes and insurance, Hayrioglu's monthly payment obligation to service the loan was $3,212.96 for the first year. (Id., Ex. G.) This exceeded his actual gross monthly income by approximately $1,200.
Among the documents executed by Hayrioglu on July 30, 2007 was a "Uniform Residential Loan Application." This four-page document is completed in type, and the third page of the application relates that it was filled out by a Judah Langer of Metropolitan National, based on a telephone interview with the plaintiff-although the plaintiff "does not recall" this interview. (Id., Ex. D at 3; Compl., ¶ 5.) The application states the basic terms of the mortgage, including the principal to be loaned, the interest rate, and the repayment period. It also states on its second page that the plaintiff has a monthly income of $8,950.00. (Guarino Aff., Ex. D at 2.) The plaintiff's initials appear at the bottom of this second page, as well as on the application's first page. His full signature then appears on both the third and fourth pages of the application. The plaintiff did not submit any other documents to any of the defendants to corroborate that this was an accurate statement of his income.
Fourteen months after the closing date, in September 2009, the plaintiff defaulted on his mortgage for the Dobson Avenue Property. Ten months after that, on July 8, 2010, the plaintiff commenced the present action in this Court against Granite Capital, Metropolitan National, and US Bank. Unlike Granite Capital and Metropolitan National, US Bank is not alleged to have been involved in issuing the plaintiff's mortgage. However, the plaintiff alleges that US Bank purchased his loan from Metropolitan National sometime before he commenced this action, and that it is derivatively liable based on that fact.
The plaintiff's basic contention in this lawsuit is that the defendants took advantage of him; a recent immigrant with a working-class job who speaks "very little English", to foist upon him a debt that the defendants knew he could never afford. To be sure, the plaintiff does not deny that he signed the loan application and related documents. However, he alleges that he never knew the contents of the documents, and that the misstatement of his monthly income was generated solely by the defendants. He also alleges that he understood Metropolitan National's decision to issue a loan to him to be an affirmative indication that he could afford to repay the debt he was assuming.
Based on these allegations, the plaintiff alleges three causes of action, in the following order: (1) violation of New York's Deceptive Practices Act, NYGBL § 349; (2) common law fraud; and (3) violation of the Credit Repair Organizations Act, 15 U.S.C. §§ 1679--79j. On December 7, 2010, Metropolitan National moved to dismiss all of the plaintiff's claims against it for failure to state a valid claim. Approximately two weeks later, on December 22, 2010, US Bank also moved to dismiss the plaintiff's claims. The plaintiff opposes both motions to dismiss. The defendant Granite Capital has entered no appearance in this case, and has neither answered the complaint nor moved to dismiss.
A. Legal Standard on a Motion to Dismiss
Under the now well-established Twombly standard, a complaint should be dismissed only if it does not contain enough allegations of fact to state a claim for relief that is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007). The Second Circuit has explained that, after Twombly, the Court's inquiry under Rule 12(b)(6) is guided by two principles. Harris v. Mills, 572 F.3d 66 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009)).
"First, although ‗a court must accept as true all of the allegations contained in a complaint,' that ‗tenet' ‗is inapplicable to legal conclusions' and ‗threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.'" Id. (quoting Iqbal, 129 S. Ct. at 1949). "‗Second, only a complaint that states a plausible claim for relief survives a motion to dismiss' and ‗[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Id. (quoting Iqbal, 129 S. Ct. at 1950). Thus, "[w]hen there are ...