A team member asks about TILA Advertising Requirements in a daily pipeline review while trying to resolve the issue before the file moves forward. Which response should a risk reviewer use?
Correct Answer
A) Disclose required terms when a trigger term is used
Why this is correct: Under TILA's advertising rules, if an advertisement for closed-end credit includes a "trigger term" (such as a specific payment amount, down payment, or finance charge), it must also disclose other required terms, including the Annual Percentage Rate (APR). The correct answer, "Disclose required terms when a trigger term is used," states this core requirement. Why the other choices are wrong: "Assume the TILA Advertising Requirements condition is met because the borrower satisfied the separate advertising disclosure requirement" is wrong because the borrower's actions do not relieve the lender of its independent duty to ensure advertisements comply. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because compliance must be proactive and pre-consummation. "Rely on oral agreement when the rule requires documented compliance" is wrong because required advertising disclosures must be in writing. Exam tip: Key trigger terms that mandate additional disclosures include the amount or percentage of any down payment, the number of payments, the amount of any payment, or the amount of any finance charge.
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 B: Assume the TILA Advertising Requirements condition is met because the borrower satisfied the separate advertising disclosure requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: 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 D: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
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
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