During a disclosure desk review, a risk reviewer encounters a TILA Advertisement Requirements issue. Which response should select the answer that fits the governing requirement?
Correct Answer
B) Advertise only terms actually available
Why this is correct: TILA and Regulation Z's advertising rules require that any advertised credit terms that are triggers for additional disclosures (like a simple annual interest rate or payment amount) must actually be available to the consumer. This is a fundamental truth-in-lending principle. Advertisements cannot be misleading or bait-and-switch tactics; they must accurately represent the terms of credit offered. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because TILA advertising rules are federal law and cannot be circumvented by internal policy. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because advertising must be compliant when disseminated, not retroactively. "Treat the TILA Advertisement Requirements review as complete because the file contains a related credit underwriting note" is wrong because advertising compliance is a separate, distinct requirement from underwriting analysis. Exam tip: For TILA advertising, if you mention a specific term (like a rate or payment), you must be prepared to offer it. Truthfulness is non-negotiable.
Why This Is the Correct Answer
The correct response is "Advertise only terms actually available" 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 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: Treat the TILA Advertisement Requirements review as complete because the file contains a related credit underwriting note.
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
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