MEMORANDUM OF DECISION

WILLIAM C. HILLMAN, Bankruptcy Judge.

I. INTRODUCTION

The matters before the Court are the Second Amended Complaint (the "Complaint") filed by Douglas Cromwell, Jr., and Mary Cromwell (collectively, the "Debtors") against Countrywide Home Loans, Inc. ("Countrywide") and Mortgage Electronic Registration Systems, Inc. ("MERS") (jointly, the "Defendants") alleging violations of the Massachusetts Consumer Credit Cost Disclosure Act1 (the "CCCDA"), as well as the Debtors' Objection to Proof of Claim filed by Countrywide Home Loans, Inc. (the "Objection to Claim") and the Objection to Confirmation of Second Amended Chapter 13 Plan (the "Objection to Confirmation") filed by Countrywide. Through their Complaint, the Debtors seek, inter alia, rescission of a refinancing transaction and a declaration that the mortgage granted by them to MERS, as nominee for Countrywide, is void and that they have no tender obligation as a condition to effectuate the rescission.2 In the Objection to Claim, they, in turn, contend that Countrywide's claim is now unsecured in light of the Debtors' purported rescission. The Defendants dispute the Debtors' allegations in the Complaint and object to the Debtors' Chapter 13 plan on the basis that they propose to treat Countrywide's claim as unsecured. For the reasons set forth below, I will enter judgment in favor of the Debtors and order them to file a fee application within thirty days, sustain the Objection to Claim, and overrule the Objection to Confirmation.3

II. BACKGROUND

In 1985, the Debtors inherited certain real property located at 27 Irving Street in Winchester, Massachusetts (the "Property") from Douglas Cromwell, Sr., free and clear of any encumbrances.4 The Property contains a single family home which has been the Debtors' principal residence since they inherited it.5 They reside there with their two children and, until his death in June, 2010, Douglas' mentally impaired uncle, Durant Cromwell.6

Between September 19, 1991, and January 17, 2006, the Debtors executed thirteen mortgages with respect to the Property.7 Although the parties did not indicate whether each of these transactions refinanced and discharged prior existing mortgages or resulted in multiple mortgages, as of the petition date, the Debtors disclosed the existence of only two mortgages on the Property: a first mortgage held by MERS, as nominee for Countrywide, and a second mortgage held by "American General Finance."8 The Debtors executed the note (the "Note") to in favor of Countrywide in the original principal amount of $300,000 and granted a first mortgage (the "Mortgage") to MERS, as nominee of Countrywide, to secure the obligation on December 23, 2005.9 The purpose of this transaction was to refinance and discharge an existing obligation secured by a mortgage granted to New Century Mortgage Corporation ("New Century") in October, 2003.10 From the total proceeds of the Countrywide refinancing transaction, $264,960.08 was used to pay off the existing balance owed to New Century, while the Debtors used the balance to pay various other debts "incurred primarily for personal, household, or family purposes, and to make repairs to the Property."11

Unable to keep up with the payments due under the Note, the Debtors entered into two loan modification agreements with Countrywide.12 The first, dated March 16, 2007, increased the unpaid principal balance to $317,721.93.13 The second, dated December 5, 2007, again increased the unpaid principal balance to $334,295.15.14 The parties stipulated that the Debtors made only nine regular monthly payments and last made a payment on September 16, 2008.15

On August 8, 2008, the Debtors filed a joint Chapter 13 petition.16 On Schedule A—Real Property ("Schedule A"), the Debtors listed the Property as having a current value of $388,600, subject to secured claims in the amount of $350,117.45.17 The Debtors disclosed secured claims in the amount of $334,200.15 and $13,866.69 owed to Countrywide and American General Finance, respectively, on Schedule D.18 Schedule D also reflected secured claims held by the Town of Winchester for unpaid property taxes in the amount of $1,052.25 and water and sewer charges in the amount of $998.36.19 On their original Schedule C—Property Claimed as Exempt ("Schedule C"), the Debtors claimed an exemption in the Property pursuant to Mass. Gen. Laws ch. 188, § 1 in the amount of $39,534.80 (the "Homestead Exemption"), which appears to be the approximate amount of equity that remained in the Property as of the petition date.20 The Debtors also listed a priority federal tax claim in the amount of $318.80 on Schedule E—Creditors Holding Unsecured Priority Claims ("Schedule E"), and general unsecured claims totaling $68,887.71 on Schedule F—Creditors Holding Unsecured Nonpriority Claims ("Schedule F").21 The Debtors did not list any claims against Countrywide or MERS on their Schedule B—Personal Property ("Schedule B").

The meeting of creditors held was held pursuant to 11 U.S.C. § 341(a) on September 23, 2008, as scheduled and concluded the same day. On October 3, 2008, Countrywide filed a proof of claim indicating that, as of the petition date, the total amount of the secured claim was $359,110.65 with a prepetition arrearage of $25,431.01.22 Initially, the Debtors proposed to cure the prepetition arrearage on Countrywide's claim through their Chapter 13 plan while maintaining their regular post-petition payments. Shortly after Countrywide filed a motion seeking relief from the automatic stay, however, the Debtors' position with respect to the claim abruptly changed.

On January 21, 2009, the Debtors, through counsel, sent written notification to the Defendants' counsel of their election to rescind the Countrywide refinancing transaction.23 On the same date, the Debtors filed the Objection to Claim, contending that, in light of their purported rescission, Countrywide held only an unsecured claim.24 The Defendants disputed the validity of the Debtors' rescission, and to date, have neither taken any action to terminate the security interest nor return any money or property to the Debtors.25 As a result, the Debtors commenced the present adversary proceeding on February 20, 2009, asserting that they can rescind the Countrywide refinancing transaction because they were not provided with the correct number of copies of the Notice of Right to Cancel (the "NORC") under the CCCDA ("Count I"), and that the NORC provided to them at the closing did not adequately disclose their rescission rights because it used the wrong statutory form ("Count II"). Ultimately, the Objection to Claim was consolidated with this adversary proceeding.

Three days after the commencement of the adversary proceeding, the Debtors filed a "Notice of Amendment to Schedule B; Schedule C; Schedule D; Schedule F; Schedule I; and Schedule J," (the "Notice of Amendment") and a further amended Chapter 13 plan.26 In summary, the Debtors amended these schedules to reflect their new position with respect to their purported rescission by disclosing their CCCDA claim on Schedule B, reclassifying the debt owed to Countrywide as a secured claim on Schedule D to an unsecured claim on Schedule F, and treating it as a general unsecured creditor in their amended Chapter 13 plan.27 Additionally, the Debtors sought to amend Schedule C to increase their Homestead Exemption to the full $500,000 provided under Massachusetts law.28 Notably, the certificate of service for the notice of amendment indicated that it was "served via ECF upon the following: Carolyn Bankowski, Chapter 13 Trustee, Office of the United States Trustee, and all other parties and entities that receive notice in this matter by ECF," without specifically listing the names or addresses of all those served.29 Nonetheless, the ECF system reflects that Countrywide received electronic service of the Notice of Amendment through its counsel.

Between May 17, 2010, and September 10, 2010, the parties each sought judgment in the adversary proceeding by filing various motions for partial summary judgment. At the same time, the Debtors filed a motion to certify the following questions of law to the Supreme Judicial Court of Massachusetts (the "Motion to Certify Question"):

After numerous continuances at the request of the parties, I finally heard the cross-motions for summary judgment and Motion to Certify Question on December 8, 2010. At the conclusion of oral arguments, I granted Countrywide summary judgment on Count III of the Complaint with the consent of the Debtors, but denied both parties summary judgment with respect to all other counts, finding that genuine issues of material fact remained.31 Additionally, I declined to certify the Debtors' question because it was ultimately an issue of bankruptcy law over which the Supreme Judicial Court has no jurisdiction.

In the meantime, the Debtors filed their Third Amended Chapter 13 Plan (the "Plan") on September 27, 2010. Through the Plan, the Debtors proposed to pay $322 for the 11 remaining months of their 36 month plan, having already made payments totaling $18,959.32 The only secured claim treated through the Plan was the Town of Winchester's claim for water and sewer charges in the amount of $998.36,33 but the Debtors also proposed to pay a priority claim in the amount of $241.75 on account of a federal income tax debt and an administrative expense of $7,000 to their bankruptcy counsel.34 With respect to the general unsecured claims, the Plan provides that after the payment of all priority and administrative claims, including the Chapter 13 trustee's fee, the general unsecured creditors with claims totaling $459,153.30, consisting of the outstanding balances on both mortgagee's claims, general unsecured proofs of claim totaling $10,998.77, and student loans in the amount of $74,877.19, shall receive a dividend from the remaining funds paid into the Plan.35 According to the Debtors' calculation, the funds remaining for the general unsecured creditors would be $12,021.31, yielding a dividend of approximately 2.6%.36 The Debtors' liquidation analysis concluded that, in light of the property claimed as exempt on Schedule C, there would be no distribution to unsecured creditors in a Chapter 7 case.37

On October 27, 2010, Countrywide Home Loans Servicing, L.P.,38 filed the Objection to Confirmation on the basis that the Plan proposes to treat Countrywide's claim as unsecured despite the fact that there has been no determination that the refinancing transaction was properly rescinded.39 When the Debtors failed to timely respond, I sustained the Objection to Confirmation and ordered them to file a further amended plan. On November 16, 2010, however, the Debtors filed a motion to reconsider, arguing that they were unaware that they were required to respond to the Objection to Confirmation and requesting that it be consolidated with the adversary proceeding. I granted the motion to reconsider the following day.

On May 17, 2011, I conducted a trial at which five witnesses testified and thirty-eight exhibits were introduced into evidence. The testimony elicited largely concerned the number of copies of the NORC the Debtors received at the closing and may be summarized as follows.

The Debtors testified that the closing of the Countrywide refinancing transaction took place at an office park in Burlington, Massachusetts.40 The Debtors sat at a conference table with Countrywide's closing attorney, later identified as Dustina M. Bennett ("Attorney Bennett"), who presented them with a packet of closing documents.41 Bennett then "went over" each document in the packet and gave it to the Debtors to sign.42

Among the documents presented to the Debtors was the NORC. Although Countrywide was not the lender under the existing note and mortgage,43 it is undisputed that the form of NORC used by Countrywide was model form H-944 provided in Regulation Z,45 the enabling regulations for the federal Truth in Lending Act,46 and titled "RESCISSION—SAME LENDER REFINANCE."47 The NORC provided in relevant part:

The bottom of the NORC contained the following acknowledgment (the "Acknowledgment") and an area for the borrowers' signatures:

Even though the Debtors now contend to have only received one copy of the NORC, they freely admit that they signed the Acknowledgment, explaining that they did so simply because they were asked to do so by Attorney Bennett.50

While Attorney Bennett had no recollection of this particular closing, she testified that she has performed thousands of closings and each time adheres to the same procedure based upon Countrywide's closing instructions.51 Upon receipt of the closing documents from the lender, she reviews the packet to ensure that no documents are missing and prepares a copy for the borrowers.52 If any documents are missing, or if the packet does not include the appropriate number of copies of the NORC, Attorney Bennett obtains the missing documents or makes additional copies of the NORC for the borrowers prior to the closing.53 At a closing, after confirming the identity of the borrowers and that they are signing the documents under their own free will, Attorney Bennett presents the lender's documents to the borrowers and explains each one before asking them to sign.54 With respect to the NORC, she explains to the borrowers that they have a right to cancel the mortgage transaction within three business days and may do so by signing the cancellation portion of the NORC and sending it to the listed address.55 Attorney Bennett does not, however, explain the consequences of rescission.56 Indeed, she also testified that she was unaware that different rescission forms were used in same lender refinancing transactions and did not notice the title on the one used here.57 Although she does not hand the borrowers their copies of the NORC at the time they sign the Acknowledgment, she represents to them that they will receive the appropriate number of copies in their packet at the end of the closing.58

The closing lasted approximately forty-five minutes to one hour.59 At the end, Bennett gave the Debtors a folder with unsigned copies of the closing documents approximately one inch thick.60 After the closing, the Debtors drove directly home and Douglas placed the folder in the bottom drawer of a file cabinet in their dining room.61 The folder remained in the file cabinet until January, 2009, when Douglas removed it to bring it to the office of attorney Richard Blumenthal ("Attorney Blumenthal"), the Debtors' bankruptcy counsel, to discuss Countrywide's commencement of foreclosure proceedings.62 The Debtors testified that, to the best of their knowledge, neither they, nor anyone else, ever looked at the documents contained within the folder prior to their meeting at Attorney Blumenthal's office.63 Nonetheless, Mary testified that she understood her right to cancel the transaction and considered doing so within the three business days of the refinancing transaction.64

Upon arrival at Attorney Blumenthal's office, he reviewed the closing documents and observed that only one copy of the NORC was present in the folder.65 Attorney Blumenthal then asked a real estate attorney at his firm, Lisa Darman ("Attorney Darman"), to review the documents to see if she saw anything unusual.66 She too found only a single copy of the NORC.67 In light of this discovery, Attorney Blumenthal referred the Debtors to Attorney Kenneth Quat ("Attorney Quat"), who specializes in Truth in Lending cases. After the meeting, the Debtors returned the folder to the file cabinet.68

At the conclusion of the trial, I took the matter under advisement and ordered the parties to file post-trial briefs, which they both did on June 24, 2011. As noted above, the Debtors included a request that I reconsider my decision on the Motion to Certify Question in a footnote in their Post-Trial Memorandum. The parties have also stipulated to the following figures with respect to Countrywide's loan:

III. POSITIONS OF THE PARTIES

The Debtors

First, the Debtors assert that they did not each receive two copies of the NORC. While the Debtors concede that they signed the Acknowledgment indicating that they had, they contend that no presumption of adequate delivery arises in this case because it is undisputed that Attorney Bennett had not actually given them any copies of the NORC at the time they signed. Moreover, they argue that language of the Acknowledgment can only reasonably be read to mean that the Debtors acknowledged receipt of "two copies" total.

If there is a presumption of delivery in this case, the Debtors assert that it was rebutted because all that is required is evidence to the contrary. Here, they testified that after the closing, they placed the folder of closing documents in their filing cabinet for safekeeping, and that no one removed it or even looked at it until they met with Attorney Blumenthal, at which time only one copy of the NORC was found in the folder. Accordingly, they contend the burden then shifted to Countrywide to prove they each received two copies of the NORC.

Once the burden shifted, the Debtors stress that Countrywide did not present evidence establishing that they each received two copies of the NORC. They note that their testimony at trial was specific, consistent, and uncontroverted, while Countrywide's only witness, Attorney Bennett, could not recall anything about the closing in question. The Debtors further argue that Attorney Bennett's testimony regarding her usual practice cannot trump such specific, credible testimony. They also suggest that her testimony should be discounted because it is incredible that Attorney Bennett would be unaware of the different requirements for same lender refinancing transactions.70

Because Countrywide failed to provide two copies of the NORC to each Debtor, they argue that Countrywide violated the requirements of 209 C.M.R. § 32.23(2)(a), giving rise to an extended right to rescind. To the extent that the Defendants rely on King v. Long Beach Mortg. Co.71 and its progeny72 for the proposition that providing only a single NORC does not give rise to a right to rescind, the Debtors assert that King was wrongly decided because the use of the singular form of "notice" in 12 C.F.R. § 226.23(a)(3), the federal analogue to 209 C.M.R. § 32.23(1)(c), was not meant to override the two copy requirement otherwise contained in the regulations and Official Staff Commentary. Alternatively, the Debtors contend that King is inapposite because that case only involved one plaintiff, where here they received only one NORC total, allowing at least one of them to rescind the loan.

Second, the Debtors argue that, regardless of how many copies of the NORC they received, Countrywide failed to clearly and conspicuously disclose the effects of rescission by using the incorrect model form, thereby extending the right to rescind. Because the form used in this case is intended for a same lender refinancing transaction, they contend it grossly misrepresents the effects of rescission by stating that rescission would not affect any amount that they presently owe and that Countrywide would have to take steps to reflect that their home does not secure the increase of credit, when, in fact, the entire amount of the loan would be rescinded and the entire security interest would be void. The Debtors state that all reported decisions have come to this conclusion.73

In light of either of these violations, the Debtors contend that their right to rescind the Countrywide refinance transaction was extended and that they validly exercised that right. As a result of this rescission, they assert that the current loan balance is $266,928.27. The Debtors arrive at this number by starting with the loan balance of $333,954.47 at the time of the parties' second loan modification and deducting the following amounts: $19,515.10 paid by the Debtors and applied to loan interest; $136.82 paid by the Debtors and applied to late charges; $4,529.59 paid by the Debtors and applied to the loan escrow account; $12,805 paid by the Debtors to third parties in connection with obtaining the Countrywide loan; and $30,039.69 of accrued interest which had been added to the principal for modification purposes. In particular, the Debtors reason that the $30,039.69 of accrued interest that was added to the principal must be deducted because loan interest is a finance charge under Mass. Gen. Laws ch. 140D, § 4(a)(1) and the rescission of the underlying transaction nullifies the subsequent modification agreements.

Having determined the post-rescission loan balance, the Debtors assert that it must be treated as a general unsecured claim in their Chapter 13 plan because both Mass. Gen. Laws ch. 140D, § 10(b) and 209 C.M.R. § 32.23(4)(a) provide that when an obligor rescinds a transaction, the security interest giving rise to the right of rescission becomes void. They contend that upon rescission the security interest is terminated as a matter of law and only the subsequent procedures described in the statute and regulations, namely, the return of any money paid by the consumer and the tender back to the creditor of the property received in the transaction, may be modified by the Court. The Debtors argue that this is consistent with the rulings of the bankruptcy court in this district, including my prior decision in Jaaskelainen v. Wells Fargo Bank, N.A.74 and Judge Boroff's decision in Giza v. Amcap Mortgage, Inc.75 They concede, however, that Judge Zobel of the United States District Court for the District of Massachusetts later held in Wells Fargo Bank, N.A. v. Jaaskelainen that a rescission is not complete unless and until the trial court determines whether tender is an appropriate condition of rescission.76 Alternatively, in light of these conflicting federal decisions and the lack of any guidance from any Massachusetts court, the Debtors ask that I certify this question to the Supreme Judicial Court.

If, however, I find that tender is a condition of rescission, the Debtors assert that I should restructure the loan in a manner that would enable them to retain their home and provide Countrywide with a reasonable return on the post-rescission loan balance. They suggest that such a restructured loan would have a fixed rate not to exceed the current market rate of 4.5% with the balance due on the original maturity date of the note, January 1, 2036, but amortized over 40 years to provide them with an affordable monthly payment. While these terms could result in a substantial balance remaining at the end of the term, the Debtors explain that it could be satisfied by either a sale or refinance of the property.

Finally, the Debtors request that I award them each $2,000 as statutory damages against the Defendants, jointly and severally, in light of their refusal to honor the Debtors' rescission, in addition to their actual costs and reasonable attorney's fees.

The Defendants

The Defendants assert that a presumption of delivery of four copies of the NORC arose simply because the Debtors signed the Acknowledgment. With this presumption in place, the Defendants argue that they are entitled to judgment because the Debtors have not rebutted it. Relying on Gaona v. Town & Country Credit,77 the Defendants assert that a bare allegation that the notices are now not contained in the closing folder, without more, is insufficient to rebut the presumption of delivery. Moreover, the Debtors' testimony, which the Defendants contend was self-serving and incredible, could only establish that they were unsure of how many copies of the NORC they received. Indeed, because the folder was not bound or secured in any way, the Debtors could not rule out that the missing copies had fallen out or been misplaced, or that one of their children or Durant Cromwell, who all had access to the file cabinet, had moved or misplaced the additional copies. Furthermore, the Defendants assert that the testimony of Attorneys Blumenthal and Darman provide no support for the Debtors' case as they both lacked credibility. They cite Attorney Blumenthal's inconsistent testimony regarding whether the closing folder was bound in any way, Attorney Blumenthal's and Attorney Darman's conflicting accounts of whether he specifically instructed her to review the closing documents with a focus on the number of copies of the NORC, and their failure to photocopy the closing folder as examples.

The Defendants assert that, in contrast to the Debtors' self-serving and incredible testimony, Attorney Bennett's testimony provides compelling evidence that the Debtors did, in fact, receive four copies of the NORC. At trial, she testified that she always provides two copies of the NORC to each borrower and reviews the borrowers' packet of closing documents in advance to ensure that it contains the correct number. Moreover, the Defendants note that Countrywide's closing instructions, which Attorney Bennett testified that she followed, not only obligated her to do so, but imposed liability against her for losses resulting from her noncompliance.

Even if the Debtors only received a single copy of the NORC, the Defendants argue that it is only a technical error that does not give rise to an extended right to rescind. Relying on King v. Long Beach Mortg. Co.,78 Ferreira v. Mortg. Elec. Registration Sys., Inc.,79 McKenna v. Wells Fargo Bank, N.A.,80 and McDermott v. Mortg. Elec. Registration Sys., Inc.,81 the Defendants assert that there is no reason to provide an extended opportunity to rescind a transaction to a person who actually knows of the right and does not timely exercise it. They contend that this is consistent with the United States Court of Appeals for the First Circuit's view that Congress did not intend lenders to face overwhelming liability for a relatively minor violation.

The Defendants also assert they are entitled to judgment because the Debtors' right to rescind was clearly and conspicuously disclosed.82 Although the form of the NORC used in this case was for a same lender refinancing transaction, the Defendants, citing Santos-Rodriguez v. Doral Mortg. Corp.,83 state that this is not a per se violation of the CCCDA. They argue that the effect of rescission is nonetheless accurately described because the form conspicuously informed the Debtors of: "(1) the retention or acquisition of a security interest on [the Debtors'] principal dwelling, (2) [the Debtors'] right to rescind, (3) an explanation of how to exercise the right to rescind, with a form for that purpose, designating the address of the creditor's place of business, (4) the effects of rescission, and (5) the date the rescission period expires."84 With respect to the effects of rescission, the Defendants assert that the language of the NORC that states "if you cancel this new transaction, it will not affect any amount that you presently owe. . . . after we receive your notice of cancellation of this new transaction, we must take the steps necessary to reflect the fact that your home does not secure the increase of credit,"85 is accurate in this transaction because "[t]he Countrywide Loan did increase the amount of credit [the Debtors] previously owed on their prior mortgage loan, and, if Plaintiffs had canceled the Countrywide Loan, the mortgage on their home securing the prior mortgage loan would remain in place."86

Alternatively, the Defendants assert they are entitled to judgment on both counts of the Complaint because the borrowers were aware of and understood their right to rescind. They rely on Mechs. Nat'l Bank of Worcester v. Killeen,87 for the proposition that a rescission notice that does not comply with the CCCDA does not give rise to a claim for damages or rescission where the borrowers were not confused by it. Accordingly, the Defendants contend that a lender's liability for providing a technically improper rescission notice depends on the borrower's subjective awareness. Here, Mary Cromwell testified that she was not only aware of her right to rescind, but actually considered exercising it.

Finally, if I do find that the Debtors are entitled to rescind the Countrywide refinancing transaction, the Defendants argue that I not only may, but should condition rescission on the Debtors tendering back the loan proceeds to Countrywide, citing Wells Fargo Bank, N.A. v. Jaaskelainen.88 First, they assert that any alleged violation was a minor, technical violation and should not expose them to a disproportionate punishment. Next, they note that the Debtors have enjoyed the benefits of the loan for years, having paid off several personal debts in addition to retaining their home. Indeed, the Defendants argue that it would be wholly unfair for the Debtors to obtain a free house when the Debtors were not actually confused by the NORC. This is particularly the case, they contend, where Countrywide entered into two loan modification agreements with the Debtors in order to help them retain their home. In sum, the Defendants assert that not modifying the Debtors' rescission would result in them obtaining the entire benefit of the credit transaction while Countrywide would receive nothing in return.

IV. DISCUSSION

A. Introduction to TILA and the CCCDA

"Both TILA and CCCDA were enacted `to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.'"89 Additionally, "[b]oth acts provide that a borrower whose loan is secured by his principal dwelling and who has been denied the requisite disclosures may rescind the loan transaction."90 For this reason, the CCCDA is sometimes referred to as the Massachusetts Truth in Lending Act.91 In Massachusetts, however, credit transactions subject to the CCCDA are exempt from many of the provisions of TILA.92 Nevertheless, because the provisions of the two statutes are substantially the same in most respects, TILA remains relevant to this inquiry and federal court decisions with respect to TILA are instructive in construing the parallel provisions of the CCCDA.93

B. The Statutory and Regulatory Scheme

From the outset I note that because the refinancing transaction in question took place on December 23, 2005, my inquiry must focus on the text of the statute and its enabling regulations as they existed at that time. Section 10(a) of the CCCDA provides in relevant part:

This subsection further requires the creditor to "clearly and conspicuously disclose. . . to any obligor in a transaction subject to this section the rights of the obligor under this section" and "provide . . . appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section," "in accordance with the regulations of the commissioner."95 To that end, the corresponding regulation titled "Notice of Right to Rescind" provides that:

The reference to the effects of rescission described in 209 C.M.R. § 32.23(4) largely repeats the rescission process set forth in Mass. Gen. Laws ch. 140D, § 10(b).97 It provides:

The primary difference between this regulation and the statute is that 209 C.M.R. § 32.23(4) suggests by exclusion that the voiding of the security interest in subsection 209 C.M.R. § 32.23(4)(a) is not one of "[t]he procedures prescribed by this subsection" that may be modified by the Court.99

To satisfy these disclosure requirements, the regulations mandate that "the creditor shall provide a notice that conforms with the model forms in Appendix H of Regulation Z, as appropriate, or a substantially similar notice."100 Appendix H contains two model forms: H-8—Rescission Model Form (General) ("Form H-8"), and H-9—Rescission Model Form (Refinancing With Original Creditor) ("Form H-9").101 Because the right to rescind does not apply to a same creditor refinancing to the extent of the existing debt,102 Form H-9 discloses that in such a transaction, the right to rescind only applies to the new amount financed that exceeds the principal balance plus any earned unpaid finance charges.103 In other words, when a consumer refinances an existing mortgage with its current lender, it may only rescind that new transaction, i.e., the amount advanced in the new transaction. Specifically, the form provides, in relevant part, that:

In contrast, Form H-8, which generally applies to all transactions subject to the right to rescind, provides in relevant part:

If the creditor provides "the obligor the appropriate form of written notice published and adopted by the commissioner, or a comparable written notice of the rights of the obligor," the right to rescind cannot arise solely from the form of written notice used to disclose those rights.106 Indeed, if the creditor uses the appropriate model form, the creditor will be deemed in compliance with the disclosure requirements of the CCCDA so long as the creditor does not change the form in a way that affects the clarity, substance, or meaningful sequence of the disclosure.107 Additionally, the creditor may require the borrower to sign an acknowledgment of receipt of the required number of copies of the NORC, which may be included in the NORC itself, but such an acknowledgment "does no more than create a rebuttable presumption of delivery thereof."108

As quoted above, the CCCDA generally provides that the obligor has three business days to exercise the right to rescind starting from either the consummation of the transaction or the delivery of the material disclosures and rescission forms, whichever is later.109 Notwithstanding the non-delivery of these disclosures and forms, the right to rescind expires, subject to certain exceptions not relevant here, four years from the date of consummation.110 Notably, the effects of rescission as described in 209 C.M.R. § 32.23(4) do not fall within the definition of "material disclosures" under the CCCDA, but are included the definition of "material disclosures" in the applicable regulation.111 This, however, is likely a distinction without a difference because Mass. Gen. Laws ch. 140D, § 10(a) still requires "the delivery of the . . . rescission forms," whose content is expressly set forth by the regulations, in order to trigger the three business days period in which the right to rescind may be exercised.112

In addition to rescission, if a court determines that a creditor has violated Mass. Gen. Laws ch. 140D, § 10, it may award relief under Mass. Gen. Laws ch. 140D, § 32. That section provides in relevant part:

The statutory "damages under clause (2) of subsection (a)" are limited to a single recovery even when there are multiple obligors in a single consumer credit transaction.114

C. The Standard of Clear and Conspicuous Disclosure

The Supreme Court of the United States has observed that "[m]eaningful disclosure does not mean more disclosure. Rather, it describes a balance between competing considerations of complete disclosure . . . and the need to avoid . . . [informational overload]."115 With this in mind, "[m]ost courts have concluded that the TILA's clear and conspicuous standard is less demanding than a requirement of perfect notice."116 Accordingly, the First Circuit has rejected a rule of hyper-technicality with respect to TILA violations in favor of an objective standard of clear and conspicuous disclosure:117

"The average consumer test . . . provides a higher tolerance level for non-confusing mistakes in disclosures to consumers. . . ."119 In adopting this standard, the First Circuit reasoned that by amending TILA in 1995 to provide higher tolerance levels for "honest mistakes in carrying out disclosure obligations . . . Congress made manifest that although it had designed the TILA to protect consumers, it had not intended that lenders would be made to face overwhelming liability for relatively minor violations."120 While the objective standard is forgiving of less than perfect compliance with every single disclosure requirement set forth in the regulations, "a misleading disclosure is as much a violation of TILA as a failure to disclose at all."121

Despite this well-established precedent, the Defendants, relying on Mechs. Nat'l Bank of Worcester v. Killeen, assert that the standard under Massachusetts law is ultimately a subjective one. Killeen involved an alleged violation of Mass. Gen. Laws ch. 140C, § 8(b), the predecessor of Mass. Gen. Laws ch. 140D, § 10(a).122 That section provided that the lender must notify the borrower of his right to cancel the transaction by furnishing two copies of a statutory form that required, inter alia, the lender to disclose its name by filling in the appropriate blank.123 In that case, the lender provided the borrower with two copies of the notice, but its name only appeared on one of the two copies.124 The Supreme Judicial Court found no violation of Mass. Gen. Laws ch. 140C, § 8(b), concluding that the name of the lender was disclosed pursuant to the statute because it appeared on the other copy of the notice.125

The Defendants erroneously conclude that Killeen was decided under a subjective standard because the Supreme Judicial Court found that "[t]he Killeens knew who the lender was, and they did not undertake seasonably to rescind the transaction, as the bank's notice advised them they could."126 This is because they failed to read the sentences that immediately follow that passage:

Although this case substantially predates the First Circuit's adoption of the objective standard, I note that it is completely consistent with such an analysis because the Supreme Judicial Court concluded that the right to rescind was adequately disclosed even though one of the copies of the notice suffered from a minor defect.128 Accordingly, I find that a subjective standard is inapplicable to the question of whether the right to rescind was adequately disclosed.

D. Count I—Adequacy of Delivery of the NORC

As it is undisputed that the Debtors received at least one copy of the NORC, I must consider the threshold issue of whether receipt of a single copy of the NORC triggers an extended right to rescind under the CCCDA. In Jaaskelainen, I previously answered this question in the affirmative and was affirmed by Judge Zobel on this issue.129 Subsequently, Judge Young of the United States District Court for the District of Massachusetts has answered this question in the negative and several other United States District Court judges for this district have adopted his reasoning.

In King v. Long Beach Mortg. Co., Judge Young examined the analogous provisions of Regulation Z and reasoned that:

Judge Young concluded that Congress only intended that a derogation of the lender's duty to deliver two copies of the NORC constitute a violation of TILA for which other remedies, such as damages, may be awarded.131

Thereafter, Judge O'Toole adopted Judge Young's reasoning, explaining:

Judges Gorton and Tauro have since followed King without further discussion.133

Having reviewed King thoroughly, I must respectfully disagree with Judge Young's conclusion. Notwithstanding the fact that the regulations provide that "[t]he consumer may exercise the right to rescind until midnight of the third business day following . . . delivery of the notice required by 209 CMR 32.23(1)(b),"134 the statute uses the plural: "the obligor shall have the right to rescind the transaction until midnight of the third business day following . . . the delivery of the information and rescission forms required under this section. . . ."135 As that section does not require any other "information" form136 and must be delivered "together with a statement containing the material disclosures," that passage can only mean that failure to deliver the requisite number of "rescission forms" must give rise to an extended right to cancel.137

Having determined that the number of copies of the NORC the Debtors received is relevant to their claim for rescission, I must next consider the effect of the Acknowledgment in this case. As explained above, any signed acknowledgment of receipt of the requisite number of copies of the NORC "does no more than create a rebuttable presumption of delivery thereof."138 Here, it is undisputed that the Debtors signed the following Acknowledgment: "[t]he undersigned each acknowledge receipt of two copies of NOTICE of RIGHT TO CANCEL and one copy of the Federal Truth in Lending Disclosure Statement."139 Nonetheless, they argue that defects in the delivery procedure and Acknowledgment language prevent a presumption of adequate delivery from arising in this case.

First, the Debtors argue that no presumption can arise because Attorney Bennett testified that she had not given the Debtors their folder of closing documents at the time they signed the Acknowledgment. This argument is premised on the faulty assumption that delivery triggers the presumption. To the contrary, the act of signing the Acknowledgment itself creates the presumption. This act is wholly independent of the issue of when or whether the Debtors received the copies of the NORC. Ultimately, the circumstances surrounding the delivery of the copies of the NORC and signing of an acknowledgment are only relevant to rebutting the presumption once it arises.

Because the Debtor's signature on the Acknowledgment created a presumption, the next question is what the nature of that presumption was. The Debtors contend that "the acknowledgement . . . contains the printed names of both borrowers and signature lines for both borrowers, so the `two copies' referenced can only reasonably mean the same two copies with respect to each borrower, for a total of two."140 In contrast, the Defendants argue that "the language makes clear . . . [that the] Plaintiffs acknowledged that they each received two copies. . . ."141 Ultimately, I disagree with both parties as I find that the phrase "[t]he undersigned each acknowledge receipt of two copies of NOTICE of RIGHT TO CANCEL," is ambiguous.142 The placement of the word "each" before "acknowledge" renders the phrase susceptible to two meanings. First, that the Debtors acknowledged each received two copies as the Defendants' assert, or second, that they each acknowledged receipt of a total of two copies as the Debtors suggest.143 While I understand that Countrywide intended the former as that is what the law required, the average consumer would not have necessarily known that.144 Accordingly, I find that the ambiguity must be resolved against the drafter of the Acknowledgment such that it did not create a presumption of adequate delivery of a total of four copies of the NORC in this case.145

Without a presumption of adequate delivery in place, it was the Defendants' burden to prove that the Debtors each received two copies of the NORC. To meet that burden, the Defendants offered the testimony of Attorney Bennett, who testified that she had no recollection of this closing, but that her usual practice was to always make sure the closing packets had the correct number of copies of the NORC before giving it to the borrowers. While I generally found Attorney Bennett to be credible, the problem with "usual practice" evidence is that it does not apply to unusual circumstances.146 Here, the evidence presented by the Debtors refutes the idea that this case followed the usual practice.

In particular, I find it significant that the folder of closing documents had only a single copy of the NORC at the time Attorneys Blumenthal and Darman reviewed it in January, 2009. The Defendants' suggest that I should not credit either of those witnesses because they gave inconsistent accounts of some details of their meeting with the Debtors.147 Given that Attorney Bennett does not specifically recall this closing, one would think the Defendants would be more understanding. In any event, there is only one piece of information that either of them testified to that is of any relevance here; namely, that they each found only a single copy of the NORC in the folder. As this fact dictated all subsequent actions, including immediately referring the Debtors to Attorney Quat who specializes in CCCDA cases, I find that Attorney Blumenthal and Attorney Darman testified credibly in this regard. Indeed, finding that their testimony was incredible would require me to find that they were lying at trial and removed copies of the NORC themselves. The record simply contains no facts to support such a bold accusation of misconduct on the part of two attorneys in good standing.148

Up to the point of that meeting, I find that the Debtors testified credibly that they never looked in the folder and placed it in a file cabinet drawer immediately after the closing, where it remained undisturbed. Although other people had access to the file cabinet, the Debtors credibly testified that neither Douglas's mentally impaired uncle, nor their children, did, in fact, access the folder. The Defendants, who bore the burden to prove adequate delivery, have not refuted that testimony simply by suggesting that it is self-serving or that someone else could have removed the copies of the NORC.149 Therefore, I find that the Defendants' did not prove that the Debtors received a total of four copies of the NORC.

E. Count II—Adequacy of Disclosure of the NORC

As explained above, the NORC must clearly and conspicuously disclose, inter alia, the effects of rescission, as described in 209 C.M.R. § 32.23(4),150 which are:

To satisfy these disclosure requirements, a "creditor shall provide a notice that conforms with the model forms in Appendix H of Regulation Z, as appropriate, or a substantially similar notice,"152 indicating that a creditor's failure to use the appropriate model form is not a per se violation of the CCCDA so long as the form used is "substantially similar."153 Indeed, extended rescission rights do not arise from "a comparable written notice of the rights of the obligor . . . [that] otherwise complied with all other requirements of this section regarding notice."154 Consequently, the adequacy of the form of NORC used ultimately hinges on whether, under an objective standard, it clearly and conspicuously informed the borrowers of their right to rescind and the effects thereof. This means that the NORC form used must accurately, though not necessarily perfectly, describe the effects of rescission in compliance with the regulation such that an average consumer "who is neither particularly sophisticated nor particularly dense"155 would not be confused.156

In the present case, it is undisputed that the form of NORC used was Form H-9, which is designed for same lender refinancing transactions. As quoted above, the NORC described the effects of rescission as follows:

Obviously, this was not the "appropriate model form"158 for this transaction as Countrywide was not the original lender, so the fact that it is one of the model forms in Appendix H is not conclusive as to the adequacy of its disclosures.

The Debtors argue that the effects of rescission described in the NORC are grossly inaccurate because no amount would be owed to Countrywide upon rescission and the entire security interest would become void. In contrast, the Defendants assert that the information contained in the NORC are all literally true because Countrywide did increase the amount of credit previously owed to their prior lender and, had the Debtors rescinded the loan, the prior mortgage would have remained in place. Without question, the Debtors have the better side of this argument as accuracy, by itself, is insufficient.

The Defendants contend that Form H-9 adequately discloses the effects of rescission in every refinancing transaction, but they rely on a particularly tortured reading of the quoted language to tout the almost inadvertent technical accuracy of the NORC at the time of the closing.159 Such an interpretation is at best plausible and far from clear. Remembering that "a misleading disclosure is as much a violation of TILA as a failure to disclose at all,"160 I find that the average consumer, who, again, "is neither particularly sophisticated nor particularly dense,"161 would be misled to believe that the right to cancel applied only to the increase in credit and not the entire amount loaned. There is, of course, an excellent reason for this misunderstanding—the Federal Reserve Board specifically adopted this form to describe the effects of rescission in a transaction where the borrower's right to rescind is limited to the extension of new credit only. Even assuming, arguendo, that the borrower would understand that the "amount that you presently owe" language refers to their prior loan with a different lender, Form H-9 does not reflect that the new lender's security interest is void, as is required by Mass. Gen. Laws ch. 140D, § 10(b) and 209 C.M.R. § 32.23(4)(a). Instead, Form H-9 indicates that the borrower's "home does not secure the increase in credit."162 Keeping in mind this new transaction has an "old money" component, Form H-9 suggests, as it was meant to, that the present lender retains a security interest for the balance owed for that amount.

All other reported decisions, including one from this district, have reached the same conclusion, though admittedly, most hail from circuits where hyper-technicality reigns.163 Nonetheless, this result is consistent with the average consumer standard adopted by the First Circuit. The decision in Santos-Rodriguez v. Doral Mortg. Corp.,164 though distinguishable, is informative on this issue. In that case, the borrowers entered into a refinancing transaction with their original lender to increase the amount of credit provided, but were given Form H-8.165 Even though the NORC failed to affirmatively inform the borrowers that they could not rescind their original transaction, the First Circuit concluded that the form's general statement that the cancellation of the transaction would also cancel the security interest clearly and conspicuously described the effects of rescinding the new transaction.166 While Form H-9 would have provided a more complete disclosure regarding the original transaction, Form H-8 sufficiently explained what would happen to the new loan and the new security.167 The present case is the opposite scenario, where the language in Form H-9 provides too much information and ultimately clouds the description of the effect of rescinding the current non-same lender refinancing transaction.

Accordingly, regardless of the number of copies the Debtors received, I find that the NORC that they were provided did not clearly and conspicuously disclose the effects of rescission in this case.

F. Rescission and the Condition of Tender

As has been repeatedly discussed above, "[w]hen a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void. . . ."168 Instead of "rescinds," the corresponding section of the CCCDA uses the phrase "exercises his right to rescind under subsection (a),"169 indicating that "rescind[ing]" in the context of the regulation is the exercise of one's right to rescind under Mass. Gen. Laws ch. 140D, § 10(a).170 This interpretation is consistent with the following part of both the CCCDA and the regulation, which each provide that "[w]ithin 20 calendar days after receipt of a notice of rescission, the creditor shall . . . take any action necessary to reflect the termination of the security interest."171 The clear import of the word "reflect" is that the security interest has already terminated as a matter of law by the time the creditor must act.172 This, however, does not mean that a mere assertion of a right of rescission, by itself, voids the security interest.173

In Large v. Conseco Fin. Serv. Corp., the First Circuit explained that:

Based upon the first sentence in that passage, I understand the word "conditions" in the second sentence to refer only to the statutory availability of the right to rescind as described in Mass. Gen. Laws ch. 140D, § 10(a) and 209 C.M.R. § 32.23(1)(c).175 Put simply, where the creditor contests the borrower's pre-litigation assertion of the right to rescind, the security interest is automatically voided not upon the assertion, but upon the adjudication that the assertion was, in fact, an exercise of a legally available right without regard to any modification the court may order.176

This interpretation is consistent with the CCCDA and its regulations for several reasons.177 First, the only conditions either place on a consumer's right to rescind are that the transaction must not be statutorily exempt178 and that the right to rescind must be exercised within 3 business days following either consummation, the delivery of the notice of the right to cancel, or the delivery of the material disclosures, whichever occurs last, but not later than the fourth anniversary of consummation.179 Second, the voiding of the security interest is not conditioned on the performance of the parties' reciprocal obligations.180 To the contrary, the creditor's obligation is to reflect that the security interest has already terminated, and the consumer's obligation to tender is not triggered until the creditor has fully performed.181 Third, in view of the maxim expressio unius est exclusio alterius, "which translates roughly as `the expression of one thing is the exclusion of other things'" and is "a venerable canon of statutory construction,"182 I must find that because 209 C.M.R. § 32.23(4)(d) states that "[t]he procedures outlined in 209 CMR 32.23(4)(b) and (c) may be modified by court order,"183 the voiding of the security interest as described in 209 C.M.R. § 32.23(4)(a) is not a "procedure" and cannot be modified by the court.184

When and in what order the security interest becomes void is of particular significance in bankruptcy. The bankruptcy judges of this district have consistently held that when a debtor rescinds a transaction, meaning that the court has determined that such a right was legally available, the security interest becomes void and the underlying claim becomes unsecured.185 In In re Jaaskelainen, I reasoned that once this occurs, the Bankruptcy Code presents a legal impediment to a debtor's tender obligation and that in the context of a Chapter 13 case, 11 U.S.C. § 1322(a)(3) would prohibit a full tender to the now unsecured creditor unless all other unsecured creditors received equal treatment.186 As aptly explained by Judge Boroff of this district in In re Giza:

Therefore, in a Chapter 13 case, the bankruptcy court effectively modifies the procedure set forth in 209 C.M.R. § 32.23(4)(c), as is contemplated by 209 C.M.R. § 32.23(4)(d), by requiring a tender of the debtor's remaining obligation through the debtor's Chapter 13 plan in a manner consistent with other similarly classified unsecured creditors.

Arguably, this view is also harmonious with both the legislative history of TILA and the Official Staff Commentary to Regulation Z. The legislative history of TILA states in relevant part:

Similarly, the Official Staff Commentary189 to the federal analog of 209 C.M.R. § 32.23(4)(d) explains that:

While both recognize that a debtor in bankruptcy is legally prohibited from returning property to the creditor and suggest that a modification of the "procedures" in the regulation "might" be appropriate, neither explain the nature of such a modification. I note, however, that the regulation's procedures require a consumer to tender back property received in the transaction, so a modification of that procedure might logically alter that requirement, particularly where the consumer's obligation, as recognized by both, is impacted by bankruptcy.

Admittedly, this is by far the minority position and my prior decision in In re Jaaskelainen was reversed on this point by Judge Zobel.191 In Wells Fargo Bank, N.A. v. Jaaskelainen, she concluded that I erred in finding that the debtors had been legally freed from their obligation to tender back the amounts that they had borrowed and that conditioning rescission on such a tender would unfairly discriminate among unsecured creditors.192 Relying heavily on the United States Court of Appeals for the Ninth Circuit's decision in Yamamoto v. Bank of New York,193 Judge Zobel found that because the security interest did not automatically become void when the debtors sought rescission, I was entitled to determine whether they met or could have met all the conditions for rescission, including any additional ones that I might equitably impose, as part of my inquiry into whether rescission is available.194 Moreover, as she had already found that the security interest had not terminated, she concluded that there was no legal impediment to a full tender and that I was not barred from imposing such a condition on the debtor's rescission.195 Ultimately, Judge Zobel remanded the matter for consideration of appropriate conditions to impose on the debtor's exercise of rescission, explaining that:

Notwithstanding Judge Zobel's thorough and thoughtful analysis, I must respectfully disagree in light of her reliance on Yamamoto v. Bank of New York.197 At first blush, Yamamoto seems to echo the First Circuit in Large v. Conseco Fin. Serv. Corp.:

Here, both the First and Ninth Circuits focus on the same conceptual problem— namely, that in order to exercise a right to rescind and therefore void the security interest, the borrower must actually have such a right. Yamamoto, however, goes further to place non-statutory and non-regulatory conditions on the legal availability of the right to rescind based upon the court's "equitable discretion to modify rescission procedures."199 Relying on TILA's legislative history, the Ninth Circuit concluded that doing so:

Although this proposition is widely accepted,201 I fail to see why resort to the legislative history is necessary or appropriate. The Supreme Court has explained that "[g]iven [a] straightforward statutory command, there is no reason to resort to legislative history."202 Indeed, "we do not resort to legislative history to cloud a statutory text that is clear"203 and "[w]e do not start from the premise that [the statutory] language is imprecise."204 To the contrary, "we assume that ... Congress said what it meant."205 Additionally, Regulation Z is "binding in the courts unless procedurally defective, arbitrary or capricious in substance or manifestly contrary to the statute."206 Both the CCCDA and the regulations contain clear directives as to the procedures for rescission and how courts might modify those procedures. Notably, the word "condition" is absent from both.207 If this Senate Report is to be given any weight at all, it must be read in a manner consistent with the limitations imposed by 12 C.F.R. § 226.23(d)(4) and 209 C.M.R. § 32.23(4)(d) and not used to circumvent their inherent inabilities.

Even assuming, arguendo, that Congress intended the courts to wield the power to impose "equitable conditions" on rescission, it does not necessarily follow that the bankruptcy court can condition rescission on the borrower's full tender of property received.208 As reiterated by the Supreme Court in Marrama v. Citizens Bank of Massachusetts, "a bankruptcy court's general and equitable powers `must and can only be exercised within the confines of the Bankruptcy Code.'"209 Not only would such a condition not fall within the court's power to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title" as granted by 11 U.S.C. § 105(a), but to the extent that the creditor would otherwise be left unsecured, a condition of full tender would undermine the purposes of the Bankruptcy Code and do violence to its provisions.210 While this may mean that sometimes the debtor will have enjoyed the full benefits of the bargain to the creditor's detriment, that results from the creditor's failure to follow the requirements of the statute. On the other hand, "[i]t would be palpably unfair to deny the relief to which a consumer is entitled under TIL[A] because that consumer has also availed himself of bankruptcy relief. To do so would require that the consumer choose between bankruptcy and TIL[A], something neither form of statutory relief contemplates."211

Recognizing that no Massachusetts appellate court has addressed these issues, the Debtors ask that I seek clarification from the Supreme Judicial Court to resolve the conflict between the federal decisions in this district. Nonetheless, I cannot certify the questions presented by the Debtors because the bankruptcy court is not identified as one of the courts from which the Supreme Judicial Court can accept certified questions.212 Moreover, the questions are too generally phrased to warrant certification as they are clearly answered by the statute itself. The question is not whether the security interest is voided as a matter of law without regard to the consumer's tender obligation, but whether the court has the equitable discretion to condition the availability of the right to rescind on such a tender.

Therefore, for all the reasons explained above, I will not require the Debtors to tender back all property received from the Countrywide as a condition to their rescission of the refinancing transaction.213

G. Determination of the Amount of Countrywide's Claim

Pursuant to Mass. Gen. Laws ch. 140D, § 10(b), "when an obligor exercises his right to rescind ... he is not liable for any finance or other charge" and "the creditor shall return ... any money or property given as earnest money, down payment, or otherwise." Finance charges are defined "as the sum of all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit."214 Moreover, the CCCDA specifically identifies the following types of charges as finances charges:

The Federal Reserve Board has further clarified that the amount to be refunded includes:

In the present case, the parties have stipulated to all the figures involved. Starting with the principal loan balance as of May 2, 2011, of $333,954.47, I must at least deduct the following amounts paid by the Debtors: $19,515.10 in loan interest payments; $136.82 in late charges; $4,529.59 applied to the loan escrow account; and $12,805 paid to Countrywide and other third parties in connection with the refinancing transaction.217 This initially yields an adjusted balance of $296,967.96.

The final issue is whether the $30,039.69 in past accrued and unpaid loan interest that was rolled into the principal balance as a result of the two loan modification agreements is properly classified as interest or principal for the purpose of determining the post-rescission loan balance. The Debtors argue that "[l]oan interest is the most basic finance charge" and the fact that the parties "chose to roll interest into principal for modification purposes does not alter the fact that it was a finance charge which resulted directly from the [refinancing transaction] ... [and] is no longer owed."218 Put another way, "rescission ... automatically voids or nullifies the subsequent modification agreement, so the capitalized amount reverts to interest."219 The Debtors do not cite any authority in support of this proposition.

Ultimately, I find that the Debtors' arguments make too little of the loan modification agreements. Indisputably, the amount in question was interest, but the Debtors executed two binding agreements for the express purpose of modifying their loan to treat that interest as principal and postpone foreclosure. They offer no compelling explanation why those loan modification agreements should not be given effect. To the contrary, rescission in this case must rescind the refinancing transaction as subsequently modified. Therefore, I will not deduct the $30,039.69 in capitalized interest from the adjusted balance, but find that the amount of Countrywide's claim is $297,967.96.

H. Treatment of Countrywide's Claim

Having determined that the Debtors exercised a right to rescind that was legally available to them in light of the Defendants' failure to clearly and conspicuously disclose the right to rescind, the Mortgage is void as a matter of law and Countrywide now holds an unsecured claim in the amount of $297,967.96. Consistent with my prior decision in In re Jaaskelainen and Judge Boroff's decision in In re Giza, the Debtors must appropriately classify and treat Countrywide's claim consistently with those of other unsecured creditors. Therefore, to the extent that Countrywide's claim purports to be secured or seeks any amount above the post-rescission balance, the Objection to Claim is sustained. Similarly, to the extent that the Objection to Confirmation is based upon the fact that the refinancing transaction was not rescinded, it is overruled.

Nonetheless, having reviewed the Debtors' case and the Plan, I find that there may yet be a problem with the treatment of unsecured claims in light of the Debtors' reliance on a Homestead Exemption in the amount of $500,000 in their liquidation analysis. Pursuant to Massachusetts Local Bankruptcy Rule 1009-1, a party filing an amendment to the schedule of exemptions after the deadline for objecting to the exemptions must "file a motion with the Court for approval of the amendment."220 Moreover, motions must be accompanied by a certificate of service that "lists the name and address of each person and attorney served with the pleading...."221 Specifically, the Federal Rules of Bankruptcy Procedure require schedule amendments to be served on "the trustee and to any entity affected thereby."222

Here, the Debtors sought to Amend Schedule C to increase their Homestead Exemption from $39,534.80 to $500,000 by filing the Notice of Amendment. As the meeting of creditors concluded on September 23, 2008, the deadline to file objections to the Debtors' claim of exemptions expired on October 23, 2008. Therefore, because the Debtors' amendment was filed four months after that deadline, they were required to file a properly served motion seeking court approval for the amendment. Further compounding the problem, the accompanying certificate of service neither complied with the local rules nor evidenced service on all affected parties.

This error is not insignificant. With the Mortgage voided, the Debtors' equity in the Property increases by $349,065.20. In a Chapter 7 liquidation and in the absence of a valid claim of exemption, this equity would need to be devoted to the payment of unsecured creditors which would generate a dividend of approximately 85%. Because the Plan contemplates a dividend to unsecured creditors of approximately 2.6%, all creditors were entitled to proper notice and an opportunity to object. Therefore, I will order the Debtors to file a motion to amend Schedule C that is properly served on all creditors.

I. Damages, Costs, and Attorney's Fees

Mass. Gen. Laws ch. 140D, § 32 provides that when a creditor fails to comply with any requirement under the CCCDA or enabling regulations, the borrower may recover actual damages, statutory damages of not less than two hundred dollars or greater than two thousand dollars, and costs and reasonable attorney's fees incurred to enforce successfully the foregoing liability or the right to rescind.223 Statutory damages, however, are limited to a single recovery even where there are multiple obligors.224

In the present case, the Debtors have not alleged any actual damages resulting from the Defendants' failure to comply with the CCCDA and its regulations. While they are entitled to statutory damages, I find that $200 is sufficient given that they have been partially relieved of their obligation to tender back the funds loaned and Countrywide's claim will be treated as an unsecured claim in their bankruptcy. To the extent that the Debtors' are entitled to costs and reasonable attorney's fees, I will order them to file a fee application within thirty days.

V. CONCLUSION

In light of the foregoing, I will enter judgment in favor of the Debtors on Counts I and II of their Complaint and enter an order directing them to file a fee application within thirty days, sustaining the Objection to Claim, and overruling the Objection to Confirmation.