A lender's website advertisement states 'ARM loans with initial rates as low as 2.75% APR, adjusting annually after the first year.' What additional disclosure is required under TILA advertising rules?
Correct Answer
B) A statement that the rate may increase and the maximum rate
Under TILA Regulation Z Section 1026.24(g), advertisements for variable rate transactions must include a statement that the rate may increase and the maximum rate. While the ad mentions the rate adjusts annually, it must specifically state that the rate may increase and disclose the maximum possible rate.
Why This Is the Correct Answer
Under TILA Regulation Z Section 1026.24(g), advertisements for variable rate transactions must include a statement that the rate may increase and the maximum rate. While the ad mentions the rate adjusts annually, it must specifically state that the rate may increase and disclose the maximum possible rate.
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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