Which law provides borrowers with the right to rescind a consumer loan within three business days?

The Truth-in-Lending Act is the law that grants borrowers the right to rescind certain consumer loans within three business days. This act is designed to protect consumers by ensuring they are fully informed about the terms and costs of borrowing, thus allowing them to reconsider their decision after the loan has been agreed upon.

The three-day right of rescission applies primarily to loans that involve a homeowner’s primary residence, allowing borrowers the opportunity to cancel the loan without penalty if they change their mind. This is essential for consumer protection, as it gives borrowers space to reflect on their financial decisions and the obligations they may be taking on.

In contrast, the other options listed focus on different aspects of lending and consumer rights. The Equal Credit Opportunity Act focuses on preventing discrimination in credit transactions, the Real Estate Settlement Procedures Act addresses transparency in the closing process for real estate transactions, and the Home Mortgage Disclosure Act aims to provide information on how financial institutions serve the housing needs of communities. Each of these laws plays a vital role in consumer protection and fair lending practices, but none provide the specific right to rescind a loan as the Truth-in-Lending Act does.