Under which circumstance can a borrower potentially revoke a loan transaction and receive a refund of all interest charged?

The correct answer relates to the significant violations outlined under the Truth in Lending Act (TILA). A borrower has the right to rescind a loan transaction and receive a full refund of all interest charged primarily when there are significant violations of the disclosure requirements mandated by regulation.

For example, if the lender fails to provide the required disclosures or misrepresents the terms of the loan, this could qualify as a significant violation. In such cases, the borrower is entitled to cancel the loan and recover all charges, including interest, because the lender did not meet their legal obligations in providing clear and accurate information regarding the loan.

In contrast, minor violations may not provide the same legal ground for revocation. Similarly, being dissatisfied with the loan terms, while potentially justifiable as a personal concern, does not confer the borrower the legal right to rescind the transaction under TILA. Lastly, if the lender cancels the loan, the borrower may not necessarily receive a refund of interest as this situation is not initiated by the borrower’s action or rights under TILA.