MEMORANDUM AND ORDER

KATHRYN H. VRATIL, United States District Judge

Ricky and Debra Davison filed suit against Bank One Home Loan Services and Mortgage Plus, Inc., alleging violations of the Truth In Lending Act, 15 U.S.C. § 1601 et seq., and the Kansas Consumer Credit Code, K.S.A. § 16a-1-101 et seq., relating to the refinancing of their home mortgage in 1999. This matter is before the Court on Defendant Mortgage Plus, Inc.'s Motion For Partial Summary Judgment (Doc. #53) filed September 30, 2002. For reasons stated below, defendant's motion is overruled.

Summary Judgment Standards

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir. 1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248. A "genuine" factual dispute requires more than a mere scintilla of evidence. Id. at 252.

The moving party bears the initial burden of showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hicks v. City of Watonga, 942 F.2d 737, 743 (10th Cir. 1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990); see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991). The nonmoving party may not rest on its pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.

"[W]e must view the record in a light most favorable to the parties opposing the motion for summary judgment." Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir. 1991). Summary judgment may be granted if the non-moving party's evidence is merely colorable or is not significantly probative. Anderson, 477 U.S. at 250-51. "In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 794 (10th Cir. 1988). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52.

Factual Background

For purposes of defendant's motion for summary judgment, the following facts are uncontroverted, deemed admitted or, where disputed, viewed in the light most favorable to plaintiffs.

On August 27, 1999, Mortgage Plus, Inc. issued a home mortgage loan to Ricky and Debra Davison. At the loan closing, the Davisons each signed the Truth In Lending Act ("TILA") disclosure form, acknowledging that they each received one copy of the document. In addition, they each signed a "notice of right to cancel" form, acknowledging that they each had received two copies of the document. When they left the loan closing, plaintiffs did not know how many copies of the right to cancel or TILA disclosure forms they had received. Plaintiffs retained their copies of the loan documents in a notebook which they placed in a file cabinet in their home.

On July 30, 2001, after reviewing documents on file at the Register of Deeds in McPherson County, Kansas, attorney Brad Dillon sent plaintiffs a solicitation letter. Dillon expressed a willingness to review plaintiffs' loan documents at no cost and stated that "significant remedies may be available" and that "[i]f you wish to assert Truth in Lending claims against Mortgage Plus, Inc., all of our attorney fees will be paid in the event of a recovery, by the present holder of your note." Letter Dated July 30, 2001 at 6, attached as Exhibit H to Defendant's Memorandum (Doc. #54). Until they received Dillon's letter, plaintiffs did not intend to rescind their loan. Absent the letter, they would not have brought the instant suit.

Later in 2001, plaintiffs gave Dillon all of the closing documents from the notebook in their file cabinet. After plaintiffs reviewed the documents with Dillon, they determined that they had received only two copies of the right to cancel form and one copy of the TILA disclosure form.

Mortgage Plus typically does not close its own loans, but instead retains a closing agent. Mortgage Plus only hires closing agents with significant experience and good reputations in the industry. Its practice and procedure includes instructing all closing agents to comply with all federal and state guidelines and to provide borrowers the correct number of copies of closing documents.

Mortgage Plus hired the law firm of Karstetter Klenda to close plaintiffs' loan. Mortgage Plus sent Karstetter Klenda the originals of the Davison loan documents, but did not provide copies of any loan documents. Mortgage Plus provided Karstetter Klenda instructions which stated that the closing agent was required to "provide each Borrower and each person having any ownership interest in the security property with two (2) copies of the completed Notice of Right to Cancel." Closing Instructions at 4 (emphasis in original), attached as Exhibit F to Defendant's Memorandum (Doc. #54). The instructions also stated that the closing agent was required to "deliver one (1) copy of the Federal Truth-In Lending Disclosure Statement to each Borrower." Id. at 1 (emphasis in original).

Michelle Kleinschmidt, who worked for Karstetter Klenda from May 1999 through December 2000, closed plaintiffs' loan. Kleinschmidt testified that she does not recall how many copies of the loan documents she gave to plaintiffs, but that her practice was to follow the closing instructions and to give each borrower the proper number of copies. Kleinschmidt signed the closing instructions, acknowledging that she agreed to them. In some instances, Karstetter Klenda received loan documents for a closing agent to review only one hour before the scheduled closing.

Both plaintiffs concede that (1) they suffered no harm from Kleinschmidt's alleged failure to provide the required number of copies of the right to cancel and TILA disclosure forms; (2) they understood that they had three days from the date of closing to cancel the loan without penalty; (3) they understood the terms and conditions of their loan, including the rates; and (4) they had no complaints about the loan or the loan originator, Mortgage Plus.

Plaintiffs allege that they are entitled to rescission under the TILA because they did not receive four copies of the right to cancel form and two copies of the TILA disclosure form (Count 1). Plaintiffs also allege that Mortgage Plus charged excessive prepaid finance charges in violation of the Kansas Consumer Credit Code (Count 2). Mortgage Plus argues that it is entitled to summary judgment on Count I because (1) plaintiffs cannot rebut the presumption created by their signed acknowledgments that they received the required number of copies of the right to cancel and TILA disclosure forms, (2) Mortgage Plus did not fail to make any material disclosure, (3) rescission of the mortgage loan would be inconsistent with the purpose of TILA, (4) equity does not entitle plaintiff to rescind the loan, and (5) rescission is not permitted because any alleged errors by Mortgage Plus were unintentional and the result of a bona fide error.

Analysis

Mortgage Plus seeks summary judgment on plaintiffs' claim for rescission of the loan agreement under the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601, et seq. (Count I). The purpose of the TILA is to give consumers meaningful disclosures of credit terms and conditions, and encourage the informed use of credit. See 15 U.S.C. § 1601(a). To satisfy this purpose, the TILA allows borrowers to rescind certain consumer credit transactions in which a security interest is or will be acquired in property which is used as the borrower's principal dwelling. See 15 U.S.C. § 1635(a). Borrowers generally must exercise their right to rescind within three business days of the consummation of the transaction. See id. The TILA provides:

The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Board, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.

Under TILA regulations, a creditor must "deliver two copies of the notice of the right to rescind to each consumer entitled to rescind." 12 C.F.R. § 226.23(b)(1). Borrowers may seek rescission until the later of (1) the third business day after the consummation of the transaction or (2) the date when the lender delivers the information and rescission forms required under the TILA, together with a statement containing the material disclosures required under the statute. See 15 U.S.C. § 1635(a). "If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation [of the transaction]." 12 C.F.R. § 226.23(a)(3); see 15 U.S.C. § 1635(f). In addition to the right to rescind form, lenders must deliver to each borrower one copy of the TILA disclosure form. See 12 C.F.R. § 226.17(d) (if transaction is rescindable under 12 C.F.R. § 226.23, disclosures must be made to each borrower).

Courts have liberally construed the TILA in favor of borrowers. See Begala v. PNC Bank, Ohio, N.A., 163 F.3d 948, 950 (6th Cir. 1998), cert. denied, 528 U.S. 868 (1999); Smith v. Fid. Consumer Disc. Co., 898 F.2d 896, 898 (3d Cir. 1990); Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989); Bizier v. Globe Fin. Servs., 654 F.2d 1, 3 (1st Cir. 1981); Mirabal v. Gen. Motors Acceptance Corp., 537 F.2d 871, 878 (7th Cir 1976), cert. denied, 439 U.S. 1039 (1978), overruled on other grounds by Brown v. Marquette Sav. Loan Ass'n, 686 F.2d 608 (7th Cir. 1982). The TILA and its regulations mandate the disclosure of certain information in financing agreements and enforces that mandate by "a system of strict liability in favor of consumers who have secured financing when the standards are not met." Thomka v. A.Z. Chevrolet, 619 F.2d 246, 248 (3d Cir. 1980); see Mars v. Spartanburg Chrysler Plymouth, Inc., 713 F.2d 65, 67 (4th Cir. 1983); In re Rodrigues, 278 B.R. 683, 687 (Bankr.D.R.I. 2002). Even where the borrower cannot establish actual damages, lenders may be liable for technical or minor violations of the TILA. See Jackson, 890 F.2d at 120; Mars, 713 F.2d at 67; see also Herrera v. First N. Sav. Loan Ass'n, 805 F.2d 896, 901 (10th Cir. 1986) (no showing of actual damages required to recover statutory penalty under TILA; proven violation of disclosure requirements is presumed to injure borrower by frustrating purpose of permitting consumers to compare various available credit terms).

I. Receipt Of Copies Of Right To Cancel And TILA Disclosure Forms

Mortgage Plus argues that the Davisons cannot rebut the presumption that they received the required number of copies of the right to cancel and TILA disclosure forms. Under the TILA, for transactions subject to rescission, a borrower's written acknowledgment of receipt of disclosures or documents required by the statute "does no more than create a rebuttable presumption of delivery." 15 U.S.C. § 1635(c). To rebut this presumption, borrowers must present evidence to the contrary. See Williams v. First Gov't Mortg. Investors Corp., 225 F.3d 738, 751 (D.C. Cir. 2000) (presumption of delivery requires borrower to come forward with evidence to meet presumption, but does not shift burden of proof to borrower).

Plaintiffs concede that because they signed acknowledgments that they each received two copies of the right to cancel form and one copy of the TILA disclosure form, TILA provides a rebuttable presumption of delivery. For purposes of defendant's motion for summary judgment, however, plaintiffs have presented sufficient evidence to rebut that presumption. As explained above, plaintiffs retained their copies of the loan documents in a notebook which they placed in a file cabinet in their home. The documents remained intact from the date of the loan closing on August 27, 1999 until Mrs. Davison removed them from the file cabinet shortly before she met with counsel in late 2001. During plaintiffs' meeting with their attorney, they discovered that they had received a total of two copies of the right to cancel form and a total of one copy of the TILA disclosure form. Viewing the evidence in a light most favorable to plaintiffs, a reasonable jury could find that they did not receive a total of four copies of the right to cancel form or a total of two copies of the TILA disclosure form. See Cooper v. First Gov't Mortgage Investors Corp., 2002 WL 31520158, at *11-13 (D.D.C. Nov. 4, 2002) (presumption rebutted by borrower's testimony that she did not read documents at closing, but placed them in "lockbox" shortly thereafter, and when she later reviewed them, required number of copies were not present); Hanlin v. Ohio Builders Remodelers, Inc., 212 F. Supp.2d 752, 762 (plaintiffs' testimony that they did not receive disclosures sufficient to rebut presumption); Stone, 728 F. Supp. at 1353-54 (same); In re Rodrigues, 278 B.R. at 687 (same); In re Williams, 232 B.R. at 641 (same), aff'd in relevant part, 237 B.R. 590, 594-95 (E.D.Pa. 1999); see also Cooper, 2002 WL 31520158, at *11-13 (TILA plaintiff attempting to overcome presumption faces low burden). But see Gaona v. Town Country Credit, 2001 WL 1640100, *3 (D.Minn. Nov. 20, 2001) (affidavits that required number of copies are not now in closing folder is insufficient to rebut presumption created by signed acknowledgments). The Court therefore overrules Mortgage Plus' motion for summary judgment on this issue.

II. Mortgage Plus' Defenses

A. Materiality Of Non-Disclosure

Mortgage Plus argues that even if plaintiffs did not receive the correct number of copies of the right to cancel and TILA disclosure forms, it did not fail to make any material disclosure. Under the statute, the lender must deliver both the required right to cancel and TILA disclosure forms. See 15 U.S.C. § 1635(a) (borrower may rescind transaction until later of "the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter") (emphasis added). The requirement as to the number of copies is a substantive requirement of the TILA regulations which cannot be altered based on a court's determination of the "materiality" of the number of copies in a particular transaction. See 12 C.F.R. § 226.17(d) (one copy of TILA disclosure form to each borrower); 12 C.F.R. § 226.23(b)(1) (two copies of right to cancel form to each borrower). The regulations promulgated by the Federal Reserve Board ("FRB") are dispositive unless "demonstrably irrational." Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 567-69 (1980); see Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219 (1981) (absent some obvious repugnance to TILA, FRB's regulation should be accepted). The Supreme Court has explained:

The enactment and expansion of § 1640(f) has significance beyond the express creation of a good-faith immunity. That statutory provision signals an unmistakable congressional decision to treat administrative rulemaking and interpretation under TILA as authoritative. Moreover, language in the legislative history evinces a decided preference for resolving interpretive issues by uniform administrative decision, rather than piecemeal through litigation. See S. Rep. No. 93-278, supra, at 13-14; 122 Cong. Rec. 2852 (1976) (remarks of Rep. Annunzio); 121 Cong. Rec. 36927 (1975) (remarks of Rep. Annunzio). Courts should honor that congressional choice. Thus, while not abdicating their ultimate judicial responsibility to determine the law, cf. generally SEC v. Chenery Corp., 318 U.S. 80, 92-94, 63 S.Ct. 454, 461-462, 87 L.Ed. 626 (1943), judges ought to refrain from substituting their own interstitial lawmaking for that of the Federal Reserve, so long as the latter's lawmaking is not irrational.

Finally, wholly apart from jurisprudential considerations or congressional intent, deference to the Federal Reserve is compelled by necessity; a court that tries to chart a true course to the Act's purpose embarks upon a voyage without a compass when it disregards the agency's views. The concept of "meaningful disclosure" that animates TILA, see St. Germain [v. Bank of Haw.], 573 F.2d [572,] 577 [(9th Cir. 1977)], cannot be applied in the abstract. Meaningful disclosure does not mean more disclosure. Rather, it describes a balance between "competing considerations of complete disclosure . . . and the need to avoid . . . [informational overload.]" S.Rep. 96-73, p. 3 (1979) (accompanying S. 108, Truth in Lending Simplification and Reform Act); see S. Rep. No. 95-720, pp. 2-3 (1978); 63 Federal Reserve Board, Ann.Rep. 326, 349-350 (1976); Comment, Acceleration Clause Disclosure Under the Truth in Lending Act, 77 Colum. L. Rev. 649, 662-663 (1977). And striking the appropriate balance is an empirical process that entails investigation into consumer psychology and that presupposes broad experience with credit practices. Administrative agencies are simply better suited than courts to engage in such a process.

Ford Motor Credit, 444 U.S. at 567-69 (footnotes omitted).

The regulations as to the required number of copies of the right to cancel and TILA disclosure forms are not demonstrably irrational. In 1980, the FRB considered and rejected a proposal to modify the right to cancel provision to require only one copy. The FRB explained:

The present proposal returns to the current regulatory requirement that the creditor give two copies of the rescission notice. Some commenters [sic] requested this change, so that the consumer would be able to use one copy to notify the creditor and retain the other for information. The proposal also clarifies that two copies of the notice must be given to each consumer entitled to rescind.

Credit; Truth in Lending; Revision of Regulation Z, 45 Fed. Reg. 80648, 80675 (Dec. 5, 1980). As to the requirement that joint borrowers each receive copies of the required forms, the FRB specifically noted that if more than one consumer has the right to rescind a transaction, any one of them may exercise the right and cancel the transaction on behalf of all. See Truth in Lending; Official Staff Commentary, 46 Fed. Reg. 50288, 50319-20 (Oct. 9, 1981); Truth in Lending; Proposed Official Staff Commentary, 46 Fed. Reg. 28560, 28587 (May 27, 1981). For example, if a husband and wife have the right to rescind a transaction, either spouse acting alone may exercise the right and both spouses are bound by the rescission. See id. Accordingly, each borrower should receive two copies of the right to cancel notice and one copy of the TILA disclosure form. See id. The FRB's purpose in requiring multiple copies of the right to cancel and TILA disclosure forms to be given to each borrower is not demonstrably irrational.

Mortgage Plus also maintains that rescission of plaintiffs' mortgage loan would be inconsistent with the intent and purpose of the TILA. As explained above, the TILA is a strict liability statute and a technical violation is sufficient to impose liability. See Weeden v. Auto Workers Credit Union, Inc., 173 F.3d 857, 1999 WL 191430, at *4 (6th Cir. Mar. 19, 1999) (if court created exception for borrowers who have actual knowledge of their rights, purpose of TILA likely would be undermined), cert. denied, 528 U.S. 1076 (2000); Williamson v. Lafferty, 698 F.2d 767, 768-69 (5th Cir. 1983) (failure to fill in expiration date on rescission form violates TILA and entitles borrower to rescind transaction); Cooper, 2002 WL 31520158, at *11-13 (rejecting argument that substantial compliance with TILA is sufficient). The Court need not consider congressional intent where TILA regulations expressly require a lender to provide to each borrower two copies of the right to cancel form and one copy of the TILA disclosure form. Cf. Ford Motor Credit, 444 U.S. at 560 (interpretation of TILA and its regulations "demands an examination of their express language; absent a clear expression, it becomes necessary to consider the implicit character of the statutory scheme") (emphasis added). The Court therefore overrules defendant's motion for summary judgment on this issue.

B. Equitable Considerations

Mortgage Plus argues that as a matter of law, equity does not entitle plaintiffs to rescind their loan. Rescission is a statutory remedy under TILA. Except for the specific defenses identified in the TILA, the Court cannot excuse technical violations based on equitable defenses or considerations. See Semar v. Platte Valley Fed. Sav. Loan Ass'n, 791 F.2d 699, 704-05 (9th Cir. 1986); see also Purtle, 91 F.3d at 801 (once court finds TILA violation, no matter how technical, it has no discretion with respect to liability); Grant v. Imperial Motors, 539 F.2d 506, 510 (5th Cir. 1976) (same); Weeden, 1999 WL 191430, at *4-5 (notice required is statutory; equitable defenses not recognized).

C. Unintentional Bona Fide Error Defense

Finally, Mortgage Plus argues that plaintiffs cannot rescind the loan because any alleged errors were unintentional and the result of a bona fide error. TILA provides:

A creditor or assignee may not be held liable in any action brought under this section or section 1635 of this title for a violation of this subchapter if the creditor or assignee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

Congress required more than just the maintenance of procedures which were designed to provide proper disclosure[s]. . . . Rather, it required procedures designed to avoid and prevent the errors which might slip through procedures aimed at good faith compliance. This means that the procedures which Congress had in mind were to contain an extra preventative step, a safety catch or a rechecking mechanism. Congress left the exact nature of the preventative mechanism undefined. It is clear, however, that Congress required more than just a showing that a well-trained and careful clerk made a mistake. On the other hand, a showing that the first well-trained clerk's [action] was checked by a second well-trained clerk or that one clerk [employed a procedure to double check his or her own action] would satisfy Congress' requirements.

Mirabal, 537 F.2d at 878-79; Gallegos, 593 F.2d at 376 (statute requires procedures designed to avoid and prevent errors which might slip through procedures aimed at good faith compliance such as safety catch or rechecking mechanism).

Plaintiffs argue that defendant has not shown that it maintained procedures designed to avoid TILA disclosure errors. Mortgage Plus maintains that it specifically instructs its closing agents to give each borrower two copies of the right to cancel form and one copy of the TILA disclosure form. In this case, however, the problem was not that the closing agent did not know the correct number of copies to give each borrower. Rather, through a clerical and/or copying mistake, the closing agent did not do what she knew she was required to do. Mortgage Plus has not shown that it maintained any procedures which were reasonably adapted to avoid such errors, such as a safety catch or rechecking mechanism. See Gallegos, 593 F.2d at 376; Mirabal, 537 F.2d at 878-79. The Court therefore overrules defendant's motion for summary judgment on its bona fide error defense. IT IS THEREFORE ORDERED that Defendant Mortgage Plus, Inc.'s Motion For Partial Summary Judgment (Doc. #53) filed September 30, 2002 be and hereby is OVERRULED.