A mortgage team asks a compliance manager about TILA advertising during a new-license application. Which answer should guide the file?
Correct Answer
D) Remove misleading mortgage-advertising claims
Why this is correct: Truth in Lending Act (TILA) advertising rules require that mortgage advertisements be truthful and non-deceptive. If an advertisement contains misleading claims, it must be corrected. The rule also mandates specific disclosures (like APR) when certain "trigger terms" are used. The fundamental guiding principle is to ensure advertising is accurate. The correct answer is "Remove misleading mortgage-advertising claims." Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal policies cannot override federal TILA disclosure requirements. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because compliance with advertising rules is mandatory from the outset, not contingent on regulatory inquiry. "Use the reverse-mortgage occupancy standard to decide the TILA Advertising Requirements issue before confirming the trigger facts" is wrong because it applies an irrelevant standard (occupancy for reverse mortgages) to an advertising issue, which is a misapplication of rules. Exam tip: For TILA advertising, accuracy is paramount. Misleading claims must be removed immediately.
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 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 B: 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 C: Use the reverse-mortgage occupancy 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.
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
More Federal Laws Questions
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