What are the terms of the "cooling off" period if a loan falls under the Home Ownership and Equity Protection Act (HOEPA)?

The correct choice highlights an important consumer protection feature under the Home Ownership and Equity Protection Act (HOEPA). The "cooling off" period specifically allows borrowers to reconsider their decision after obtaining a high-cost mortgage, which falls under HOEPA's guidelines. This period lasts for three business days prior to closing and is designed to give borrowers time to fully understand the terms of the loan and its implications, as well as a chance to back out if they choose to do so.

This critical time frame promotes responsible lending practices and ensures that borrowers are not rushed into making significant financial commitments. By having this cooling-off period, the legislation aims to protect consumers from making hasty decisions that they may later regret, especially in transactions involving high-cost loans that can carry elevated risks of foreclosure or financial hardship.