## Facts

- Capitol Roofing’s representatives visited Norman and Judy Cole at their home on November 9, 1982, to solicit the sale and installation of vinyl siding for about $4,900.
- During the in-home sales call, the Coles signed a stack of documents presented for signature, including a retail installment contract, a notice of right to cancel, and a deed of trust on their residence.
- The Coles testified they were shown only the work order on top and were told the other papers were routine (e.g., credit application and insurance); the documents were handled so that only signature lines were visible.
- The Coles received only a carbon copy of the work order and a copy of the disclosure statement after the signing.
- The next morning, Judy Cole called to cancel, but Capitol Roofing refused, stating the contract had already been processed.
- Capitol Roofing installed the siding; the Coles signed a completion certificate; Capitol Roofing assigned the installment contract to United Companies Mortgage of Mississippi, Inc. (UCM), which collected monthly payments.
- After problems with the siding, the Coles stopped paying, leading to default; in 1984, after consulting counsel, they notified UCM that they were rescinding based on their right of rescission for dwelling-secured credit.
- The Coles sued for TILA/Regulation Z violations, Mississippi Home Sales Solicitation Act (MHSSA) violations, and warranty breaches; UCM counterclaimed for amounts due under the note/contract.

## Issues

1. Whether the creditor failed to make clear and conspicuous TILA/Regulation Z disclosures that the obligation was secured by the Coles’ residence and failed to provide effective notice of the right to rescind.
2. Whether any TILA disclosure failures were “material,” extending the rescission period beyond three business days and making the Coles’ 1984 rescission timely.
3. Whether the transaction was a MHSSA home-solicitation sale and, if so, whether the seller failed to provide the required written cancellation notice.
4. Whether rescission and cancellation remedies applied against UCM as assignee and required cancellation of the deed of trust held through the trustee.
5. What relief followed from rescission, and whether UCM could recover on its counterclaim despite the asserted rescission.

## Decision

- The court found material TILA/Regulation Z violations based on inadequate disclosure of the security interest in the Coles’ home and ineffective notice of the right to rescind.
- The court held the Coles’ rescission right was extended and that their 1984 rescission notice was effective.
- The court found the transaction was a MHSSA home-solicitation sale and that Capitol Roofing failed to provide a valid statutory notice of the right to cancel, preserving the Coles’ cancellation right.
- The court ordered rescission relief that cancelled the deed of trust and unwound the credit obligation as against Capitol Roofing and UCM as assignee.
- The court rejected UCM’s counterclaim for amounts due under the contract following rescission and awarded the Coles return/credit of payments made, with no further payment obligation for the installed siding.

## Legal Principles

- TILA/Regulation Z requires clear and conspicuous disclosure of any security interest taken in a consumer’s principal dwelling and delivery of effective notice of the right to rescind.
- Material disclosure violations extend the rescission period beyond the ordinary three-business-day period (up to the statutory extended period), and rescission may be exercised within that extended window.
- In a home-solicitation sale, state law may require written notice of a buyer’s right to cancel; failure to provide compliant notice preserves the buyer’s cancellation right.
- TILA rescission cancels the security interest and unwinds the obligation; the remedy may be asserted against an assignee of the consumer credit contract.
- When rescission is effective, an assignee’s effort to enforce the note or foreclose under the related deed of trust fails to the extent it depends on the rescinded obligation.

## Conclusion

The court held that misleading in-home contracting practices and deficient disclosures produced material TILA violations and MHSSA notice failures, allowing the homeowners to rescind years later, cancel the deed of trust securing the transaction, recover amounts paid, and defeat the assignee’s counterclaim for enforcement of the rescinded debt.


Cole v. Lovett, 672 F. Supp. 947 (S.D. Miss. 1987)