During an annual compliance meeting, a training manager identifies an issue involving TILA advertising. Which response is most compliant?
Correct Answer
A) Remove misleading mortgage-advertising claims
Why this is correct: TILA's advertising rules (Regulation Z) require that mortgage advertisements be accurate and non-deceptive. If an advertisement contains certain "trigger terms" like a payment amount, it must also disclose other required information, such as the APR. The most compliant response is to correct any violation, making "Remove misleading mortgage-advertising claims" the correct action. Why the other choices are wrong: "Use an internal exception" is wrong because federal disclosure rules are mandatory and cannot be overridden by internal policies. "Use the high-cost loan standard" is wrong because HOEPA/High-Cost loan rules are a separate set of requirements for specific loans, not the general TILA advertising rules. "Rely on oral agreement" is wrong because advertising compliance requires proper written disclosures; oral statements do not cure misleading written claims. Exam tip: For advertising, remember the key principle: If an ad is misleading, the only compliant fix is to remove or correct the misleading claim. Internal justifications or oral clarifications are insufficient.
Why This Is the Correct Answer
The correct response is "Remove misleading mortgage-advertising claims" because Mortgage advertisements must be truthful and include required APR or trigger-term disclosures.
Why the Other Options Are Wrong
Option B: 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 C: Use the high-cost loan standard to decide the TILA Advertising Requirements issue before confirming the trigger facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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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