A lender offers a mortgage product with a temporary introductory rate that is prominently advertised, but the subsequent rate increase is disclosed only in fine print at the bottom of marketing materials. The lender argues this practice is acceptable because all required disclosures are technically present. Under UDAAP standards, this practice is most likely:
Correct Answer
B) Deceptive because the prominent advertising creates a misleading impression despite technical compliance
Under UDAAP, a practice can be deceptive if it creates a misleading impression, even with technically compliant disclosures. The prominence of the introductory rate advertising combined with inconspicuous disclosure of rate increases likely creates a misleading impression about the true cost of the loan.
Why This Is the Correct Answer
Under UDAAP, a practice can be deceptive if it creates a misleading impression, even with technically compliant disclosures. The prominence of the introductory rate advertising combined with inconspicuous disclosure of rate increases likely creates a misleading impression about the true cost of the loan.
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A borrower offers to pay an MLO an additional $1,000 'bonus' for helping secure a loan approval. What should the MLO do?
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