A printed advertisement for a closed-end home mortgage prominently offers payments of $899 per month for the first three years but omits the later $1,640 payments and their duration. What payment-disclosure problem does this create under Regulation Z?
Correct Answer
B) It omits the later payment amount and period required alongside the advertised introductory payment
B. The advertisement omits the later payment and its applicable period. The advertised payment is itself a triggering term; no advertised interest rate is needed to trigger additional disclosures. For this printed dwelling-secured advertisement, applicable payment amounts and periods must be presented with the required prominence and proximity, not hidden until closing. Scope and exceptions: This addresses a printed advertisement. Do not automatically transfer every formatting rule to radio, television or specifically excluded formats. Other required advertising disclosures also remain. Source: 1026.24(d)(1)(iii), (d)(2), (f)(3) — https://www.consumerfinance.gov/rules-policy/regulations/1026/24/
Why This Is the Correct Answer
B. The advertisement omits the later payment and its applicable period. The advertised payment is itself a triggering term; no advertised interest rate is needed to trigger additional disclosures. For this printed dwelling-secured advertisement, applicable payment amounts and periods must be presented with the required prominence and proximity, not hidden until closing. Scope and exceptions: This addresses a printed advertisement. Do not automatically transfer every formatting rule to radio, television or specifically excluded formats. Other required advertising disclosures also remain.
Why the Other Options Are Wrong
Option A: There is no problem because the introductory payment is actually available
An available introductory payment does not make the omitted later obligation irrelevant.
Option C: There is no problem if the later payment is disclosed only at closing
Closing disclosure cannot repair an incomplete advertisement.
Option D: Payment disclosures are required only if an interest rate is also advertised
Payment amounts independently trigger requirements.
Exam Tip
An introductory payment must not conceal the later repayment obligation.
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