Final answer:
According to the Truth in Lending Act, the first day the loan could fund following a cash-out refinance with a rescission period ending on Friday is 'Monday, the following week'. Business days do not include weekends or federal holidays, hence the loan cannot fund before the next business day after the rescission period ends.
Step-by-step explanation:
The question concerns the right of rescission, which is a borrower's right to cancel a home equity loan or refinancing deal within a certain number of days after the agreement is signed, without penalties. When a borrower goes for a cash-out refinance on their principal residence and the rescission period ends at midnight on Friday, under federal law, specifically the Truth in Lending Act (TILA), they have until the end of the third business day after the transaction to rescind. As weekends and federal holidays are not considered business days, the first possible day the loan could fund would be after that period has passed, which is the following Monday.
Therefore, the correct answer to when the first possible day the loan could fund is Monday, the following week.