What regulation provides the owner's right to rescind a home equity loan agreement within three days?

The correct understanding relates to Regulation Z, which implements the Truth in Lending Act (TILA). Regulation Z establishes the requirement that consumers have the right to rescind certain types of home equity loans and other closed-end credit transactions within three business days of signing their loan agreement. This feature is designed to protect consumers by allowing them to reconsider their decision and back out if they change their mind after the fact.

The rescission right applies specifically to home equity loans secured by the borrower's principal residence, ensuring that homeowners have ample opportunity to evaluate the terms, the costs involved, and any potential implications of taking on additional debt. Regulation Z also mandates that lenders inform borrowers of this right and provide the necessary disclosures, emphasizing the importance of transparency in lending agreements.

In contrast, the Truth in Lending Act is the overarching law that outlines the requirements related to credit disclosures, while the Real Estate Settlement Procedures Act primarily focuses on disclosure of settlement costs and practices. The Equal Credit Opportunity Act addresses discriminatory lending practices rather than rescission rights. Thus, Regulation Z is directly responsible for the right of rescission, particularly concerning home equity loans.