Which law mandates that MLOs provide borrowers with a right of rescission?

The Truth in Lending Act (TILA) mandates that mortgage loan originators (MLOs) provide borrowers with a right of rescission, specifically in certain types of loans such as home equity loans and refinances. This right allows borrowers to cancel the transaction within three business days after the loan closing. TILA was established to promote informed disclosure of the cost of credit and to protect consumers from unscrupulous lending practices, and the right of rescission is a critical consumer protection feature designed to allow borrowers a cooling-off period during which they can reconsider the terms of the loan and their decision to proceed.

Other laws such as the Home Ownership and Equity Protection Act (HOEPA) and the Real Estate Settlement Procedures Act (RESPA) focus on other aspects of lending, such as high-cost loan disclosures and settlement process transparency, respectively. The Fair Housing Act (FHA) addresses issues of discrimination in housing and does not pertain to the right of rescission directly. Therefore, TILA is the legislation that specifically grants this important consumer right.