During an annual compliance meeting, a state compliance officer identifies an issue involving TILA advertising. Which response is most compliant?
Correct Answer
D) Disclose required terms when a trigger term is used
Why this is correct: TILA's advertising rules (Regulation Z) require that if an advertisement includes a "trigger term" (like the amount of payment, APR, or finance charge), it must also clearly disclose other required terms, such as the APR if a payment is advertised. The correct answer, "Disclose required terms when a trigger term is used," states this conditional disclosure rule. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because TILA's advertising disclosures are mandatory and not subject to internal exceptions. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the disclosure must be present in the advertisement itself when published. "Resolve the TILA Advertising Requirements issue with the consumer complaint exception that does not fit the facts" is wrong because consumer complaint resolution is a separate process; it does not excuse missing mandatory disclosures in an ad. Exam tip: For TILA advertising, think "trigger terms." If a specific rate or payment is advertised, additional disclosures are automatically required.
Why This Is the Correct Answer
The correct response is "Disclose required terms when a trigger term is used" because Mortgage advertisements must be truthful and include required APR or trigger-term disclosures.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option B: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option C: Resolve the TILA Advertising Requirements issue with the consumer complaint 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.
Memory Technique
TILA advertising: 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 TILA advertising; 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 Federal Laws Questions
A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. 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 mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
A mortgage team asks a branch supervisor about TILA APR and finance-charge rules during a renewal checklist. Which answer should guide the file?
A mortgage file is paused during a risk-control review because of TILA QM DTI Calculation. Which answer should choose the most defensible file action?
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?
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