The United States District Court for the District of Utah partially granted summary judgment for borrowers alleging that their mortgage lender violated the Truth in Lending Act, and its implementing regulation, Regulation Z. TILA requires lenders to give borrowers a notice of rescission that clearly and conspicuously states that the borrower may rescind the loan within three business days of the transaction. Under Regulation Z, Saturday is considered a business day. Plaintiffs closed their loan on a Wednesday, and not realizing that Saturday was a business day, exercised their right to rescind the following Monday. The mortgage lender refused to let plaintiffs rescind the loan because the deadline to rescind expired on Saturday, noting that the notice of rescission informed borrowers they had three business days to rescind. The notice, however, did not expressly state that Saturday was considered a business day, or provide an exact date by which plaintiffs were required to rescind the loan. Plaintiffs subsequently filed suit alleging that the notice of rescission was not clear and conspicuous in violation of TILA and Regulation Z.
In granting plaintiffs’ motion for partial summary judgment, the Court held that the rescission notice was not clear, because Regulation Z requires that the rescission notice disclose “[t]he date the rescission period ends.” The Court ruled that the language in the notice, though taken from a standard form, was subject to “more than one sensible reading” by the average consumer, who would likely be “surprised” to learn that TILA defines Saturday as a business day. Because plaintiff had to make an additional inquiry to determine the date of the rescission notice, the Court ruled the notice of rescission at issue was not “clear” as a matter of law.
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