A single-page flyer advertising a closed-end consumer credit sale subject to Regulation Z states: "New homes from $340,000. Only 5% down!" Five percent is actually required. It gives a phone number but no other financing information. Does it satisfy the triggered disclosure requirements?
Correct Answer
B) No: 5% down triggers required financing disclosures, and repayment terms and APR are missing
B. The required downpayment percentage triggers additional disclosures. The ad must include the applicable downpayment, full repayment terms and APR, noting a possible APR increase when applicable. The stated downpayment does not supply the missing repayment terms or APR. Scope and exceptions: Full repayment terms include an applicable balloon. The downpayment trigger is limited to credit sales; a no-downpayment statement does not trigger it. Other advertising duties still apply. Source: Section 1026.24(d)(1)–(2); comment 24(d)(1)-1 — https://www.consumerfinance.gov/rules-policy/regulations/1026/24/
Why This Is the Correct Answer
B. The required downpayment percentage triggers additional disclosures. The ad must include the applicable downpayment, full repayment terms and APR, noting a possible APR increase when applicable. The stated downpayment does not supply the missing repayment terms or APR. Scope and exceptions: Full repayment terms include an applicable balloon. The downpayment trigger is limited to credit sales; a no-downpayment statement does not trigger it. Other advertising duties still apply.
Why the Other Options Are Wrong
Option A: Non-compliant: the $340,000 price is itself the triggering term here
The identified trigger is the downpayment percentage, not the house price alone.
Option C: Compliant: a downpayment percentage alone is not a triggering term
The commentary specifically includes a required percentage downpayment.
Option D: Compliant, because the flyer quotes no interest rate or monthly payment
Omitting a rate or payment does not defeat a different trigger.
Exam Tip
One applicable trigger is enough to require the additional terms.
More Federal Laws Questions
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
People Also Study
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
A billboard carries only a lender name, a logo and the words "Home loans made simple" — no rate, no payment, no term. A manager asks whether the additional disclosures are needed.
Next Question
A loan officer telephones a bank posing as the borrower to confirm a $52,000 balance rather than asking for a signed authorization. Does impersonating the borrower to obtain bank information constitute prohibited pretexting?