A lender advertises a 30-year fixed rate at 5.25% with 0 points. Its rate sheet has no such product; the best 30-year fixed on offer that week is 5.99% with 1 point.
Correct Answer
A) Non-compliant: no 5.25% product exists, so the term may not be advertised
An advertisement may state only terms that actually are or will be arranged or offered by the creditor, so a rate that exists on no rate sheet cannot be advertised. Other choices: calling it an invitation does not rescue a term the lender does not have; a subject-to-change disclaimer covers movement in real terms, not terms that never existed; and no consumer has to be turned away first, because the advertisement itself is the violation. Source: 12 CFR 1026.24(c)
Why This Is the Correct Answer
An advertisement may state only terms that actually are or will be arranged or offered by the creditor, so a rate that exists on no rate sheet cannot be advertised. Other choices: calling it an invitation does not rescue a term the lender does not have; a subject-to-change disclaimer covers movement in real terms, not terms that never existed; and no consumer has to be turned away first, because the advertisement itself is the violation. Source: 12 CFR 1026.24(c)
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