A lender quotes an APR of 4.25% on a mortgage loan, but the actual APR calculation results in 4.28%. Under TILA's APR accuracy tolerance, is this disclosure compliant?
Correct Answer
A) Yes, because the difference is less than 0.125 percentage points
Under TILA/Regulation Z Section 1026.22, for closed-end credit secured by real property, the APR is considered accurate if it is not more than 0.125 percentage points above or below the actual APR. Since 4.28% - 4.25% = 0.03%, which is less than 0.125%, this disclosure is compliant.
Why This Is the Correct Answer
Under TILA/Regulation Z Section 1026.22, for closed-end credit secured by real property, the APR is considered accurate if it is not more than 0.125 percentage points above or below the actual APR. Since 4.28% - 4.25% = 0.03%, which is less than 0.125%, this disclosure is compliant.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
A lender originates a mortgage that meets all QM requirements. Three years later, the borrower defaults and claims the lender violated the ATR rule. What legal protection does the lender have?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
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