Which act requires lenders to inform borrowers about their rights to rescind?

The Truth-In-Lending Act (TILA) is the legislation that requires lenders to disclose certain information to borrowers about the terms and costs of a mortgage, which includes informing them about their right to rescind. This right to rescind allows borrowers to cancel certain types of loans, specifically those secured by their principal dwelling, within three business days after closing without penalty.

TILA aims to protect consumers by providing them with clear and comprehensible information regarding the financial implications of taking out credit. By mandating disclosure of the right to rescind, TILA ensures borrowers are aware of their ability to reconsider their financial commitments soon after entering into a transaction.

Other acts mentioned have different focuses. For example, the Fair Credit Reporting Act primarily addresses how credit reporting agencies handle consumer information, while the Home Mortgage Disclosure Act requires certain financial institutions to provide information about mortgage lending patterns. The Equal Credit Opportunity Act is focused on preventing discrimination in lending. Each of these acts serves a unique purpose within consumer finance, but it is TILA that specifically enforces the requirement for lenders to inform borrowers about their rescission rights.