Define "right of rescission."

The correct choice highlights the "right of rescission" as the legal provision that allows borrowers to cancel certain types of loans within a specified period after closing. This right is primarily applicable to certain types of loans secured by a borrower's principal dwelling, such as home equity loans and certain refinances, under the Truth in Lending Act (TILA). The borrower generally has three business days to exercise this right, which protects consumers by providing an opportunity to reconsider their decision and back out of the transaction without penalty.

This provision is crucial in promoting consumer protection and ensuring that borrowers fully understand their commitments before being locked into a potentially long-term financial obligation. Understanding this right allows homeowners to make informed decisions and provides recourse should they feel uncertain about their mortgage agreement after the fact.