A compliance review finds that an ad shows an interest rate but omits the APR presentation. What should the MLO do next?
Correct Answer
D) State the rate as an annual percentage rate
Lines 261-265 and 273-277; 12 CFR 1026.24(c). Closed-end credit advertising rules require the finance charge rate to be stated as an annual percentage rate. Therefore, the correct response is "State the rate as an annual percentage rate".
Why This Is the Correct Answer
The correct response is "State the rate as an annual percentage rate" because Lines 261-265 and 273-277; 12 CFR 1026.24(c).
Why the Other Options Are Wrong
Option A: Continue the activity because the borrower appears willing to proceed.
Continue the activity because the borrower appears willing to proceed. is not correct because it does not apply the rule tested by this file scenario.
Option B: Resolve the APR in advertisements issue with the changed-circumstance exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Document the issue later instead of correcting the compliance problem first.
Document the issue later instead of correcting the compliance problem first. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
mortgage advertising compliance: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to mortgage advertising compliance; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Ethics & Fraud Questions
The loan team is resolving Privacy and Confidentiality during a quality-control sample. Which action best fits the rule?
Before the team acts on a branch training session, the loan team must address UDAAP Unfair Deceptive Practices. Which response is most defensible?
Before the loan advances, a sponsorship reviewer must resolve an predatory-lending controls issue in an NMLS filing review. What should happen?
A disclosure specialist compares the file facts with Fraud Detection and Reporting during a new-hire scenario. Which conclusion is accurate?
Before the team acts on a production meeting, the MLO must address professional conduct standard to Borrowers. Which response is most defensible?
A processor compares the file facts with Fraud Detection and Prevention during an underwriting condition review. Which conclusion is accurate?
A risk reviewer is resolving Fair Lending Ethics during a quality-control sample. Which action best fits the rule?
During intake, a title company offers a gift card for each borrower referral. What is the best compliant response?
A compliance review finds that a title company offers a gift card for each borrower referral. What should the MLO do next?
A processor asks how to handle a file where a title company offers a gift card for each borrower referral. Which response is most accurate?
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