The opinion of the court was delivered by: NEWCOMER
I have before me cross-motions for summary judgment in an action by a consumer against a creditor for alleged violations of the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq. and of Regulation Z of the Federal Reserve Board, 112 C.F.R. §§ 226.1 et seq. as amended. Pursuant to the jurisdiction granted this Court by 15 U.S.C. § 1640(e) and 28 U.S.C. § 1337, summary judgment will be entered in favor of the plaintiff.
The following facts are unrefuted. In July of 1984, plaintiff's grandson asked her to co-sign a loan for the purchase of a car. She agreed. Plaintiff accompanied her grandson to a car dealership, DeSimone Service Center, A-1 used cars, on July 18, 1984. Upon their arrival, a DeSimone employee drove plaintiff and her grandson to the place of business of the defendant, Fidelity Consumer Discount Company. The DeSimone employee waited while the plaintiff and her grandson, having been placed in separate areas, signed various loan documents. Among the documents the plaintiff signed on July 18 was a mortgage note on her home.
The plaintiff sent a Truth-in-Lending Notice of Rescission regarding the car loan described above to the defendant by letter dated June 17, 1986. The defendant responded by letter dated July 23, 1986 with a refusal to rescind. As of June 17, 1986, payments on the loan totaled $3,604.77. The principal amount of the loan was $4,412.62 with various charges bringing the total amount financed to $4,999.97. The loan terms called for an annual percentage rate of approximately 27% over four years, so that total payments would amount to $ 8,225.76.
The plaintiff alleges three violations of the Truth-in-Lending Act. First, the plaintiff alleges that the defendant improperly disbursed funds prior to the expiration of the statutory rescission period. Second, the plaintiff maintains that the defendant circumvented the rescission period by having her sign a post-dated "Certificate of Confirmation" on July 18, 1984 which certified that she did not exercise her right to rescission. Finally, the plaintiff asserts that a charge for personal property insurance should have been disclosed as a finance charge.
Congress delineated its purposes in exacting TILA in § 1601 of the Act. The Act is designed to permit comparison by consumers of available credit terms and assure full disclosure of credit terms so that the consumer's final decision will be an informed one. 15 U.S.C. § 1601(a). The purposes of the Act are further demonstrated through a standard of strict liability against creditors who fail to make mandated disclosures. 15 U.S.C. § 1640(a).
Among the disclosures required of creditors is notification to the consumer of the consumer's unequivocal right to rescind the transaction within three business days of its consummation. 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(b). During this three-day rescission period, the creditor may not disburse funds, deliver materials, or perform any services connected with the credit agreement. 12 C.F.R. § 226.23(c).
As this court noted in Laubach v. Fidelity Consumer Discount Company, No. 85-1902, (April 9, 1986), two purposes underly the statutory rescission period:
First, it allows the consumer an opportunity to reflect, in the quiet of her home and without any pressure, whether to undertake a loan transaction which would create an encumbrance on the home. Second, it insures that if the consumer decides to cancel, she will not be without the ability to do so (i.e., she cannot spend the ...