In a document-cure review, a compliance analyst sees facts tied to TILA Advertising Requirements. What should the file reflect?
Correct Answer
B) State the APR when advertising a rate
Why this is correct: TILA Regulation Z requires that if a specific trigger term (like a simple interest rate or payment amount) is used in a closed-end credit advertisement, the advertisement must also state the Annual Percentage Rate (APR). This ensures consumers see the full cost of credit. Why the other choices are wrong: "Apply the correct general concept to the wrong loan estimate stage rather than the TILA Advertising Requirements rule" is wrong because the Loan Estimate is a separate TRID disclosure, not an advertising rule. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because advertising rules must be followed at the time of advertising. "Rely on oral agreement when the rule requires documented compliance" is wrong because advertising disclosures must be in the advertisement itself. Exam tip: In mortgage ads, mentioning a rate or payment triggers the requirement to disclose the APR.
Why This Is the Correct Answer
The correct response is "State the APR when advertising a rate" because Mortgage advertisements must be truthful and include required APR or trigger-term disclosures.
Why the Other Options Are Wrong
Option A: Apply the correct general concept to the wrong loan estimate stage rather than the TILA Advertising Requirements rule.
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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