In a mortgage origination file, an ad shows an interest rate but omits the APR presentation. Which action should be taken?
Correct Answer
B) 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". Closed-end credit advertising rules require the finance charge rate to be stated as an annual percentage rate.
Why the Other Options Are Wrong
Option A: Treat the compliance requirement as optional because closing is near.
Treat the compliance requirement as optional because closing is near. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option C: Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue.
Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option D: Ignore the issue if the borrower orally agrees to continue.
Ignore the issue if the borrower orally agrees to continue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Memory Technique
When an ad mentions a rate, look for APR.
Exam Tip
When an ad mentions a rate, look for APR.
Common Mistakes to Avoid
- -The note rate and the APR are not interchangeable advertising disclosures.
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?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
A branch manager asks about a loan file because marketing proposes a rate the company is not prepared to offer. What should happen?
Next Question
A team member asks about Privacy and Data Protection in a compliance desk review while trying to choose the compliant next step. Which response should the file reviewer use?