Which of the following loans is subject to the 3-day right of rescission under the TILA?

The correct answer, which pertains to a home equity loan used to pay down credit card balances, is subject to the 3-day right of rescission under the Truth in Lending Act (TILA) because it is a type of transaction that is secured by the borrower's primary dwelling. TILA provides consumers a right to rescind certain types of loans, allowing them three business days to reconsider the loan terms and cancel the transaction if they choose to do so. This right is particularly relevant for home equity loans, which often involve the refinancing of primary residences.

The other options relate to types of loans that are not subject to this rescission period. For instance, a 1-year adjustable-rate mortgage (ARM) is generally considered a purchase money loan, and thus does not offer the right of rescission since it is not secured by an existing debt obligation on the borrower's dwelling. An investor loan for a 12-unit apartment building also falls outside the purview of TILA's right of rescission because it is intended for investment purposes rather than personal use. Similarly, a 30-year fixed-rate mortgage for a first-time home buyer is typically a purchase transaction which does not grant the right to rescind in the same manner as a home equity loan