What are the terms of the "cooling off" period if a loan falls under HOEPA?

If a loan falls under the Home Ownership and Equity Protection Act (HOEPA), the "cooling off" period is established to provide borrowers with the opportunity to reconsider their loan agreement before finalizing the transaction. The correct answer indicates that this cooling-off period lasts for three business days prior to the closing of the loan. During this time, the borrower has the right to receive important disclosures, which gives them a chance to review the terms and conditions of the loan, ensuring they fully understand their obligations.

This three-business-day period is critical for protecting consumers, as it allows them to make informed decisions and consider the implications of committing to a loan, thereby reducing the likelihood of entering into unfavorable agreements. It acts as a safeguard against high-pressure sales tactics that may rush borrowers into signing before they have adequate time to evaluate the mortgage terms.