A mortgage team asks a training manager about mortgage advertising compliance during a file review. Which answer should guide the file?

Correct Answer

A) Use truthful advertising with required APR disclosures

This question tests the core principle that all mortgage advertising must be truthful and non-deceptive, and must include required disclosures when specific "trigger terms" are used. The governing concept is that compliance with advertising rules, such as those under TILA and Regulation Z, is mandatory and not conditional on borrower willingness or other unrelated file details. The correct answer applies this principle directly by stating the fundamental requirement: to use truthful advertising and provide the required APR disclosures. Why this is correct: "Use truthful advertising with required APR disclosures" is correct because it directly states the foundational compliance obligation. Mortgage loan originators must ensure all advertising is truthful and not misleading. Furthermore, if an advertisement states specific credit terms (like the payment amount, down payment, or finance charge), it becomes a "triggered ad" and must also disclose the Annual Percentage Rate (APR), among other items, as required by law. Why the other choices are wrong: "Continue the activity because the borrower appears willing to proceed." is wrong because a borrower's willingness does not excuse a violation of advertising laws; compliance is mandatory regardless of borrower sentiment. "Assume the TILA Advertising Requirements condition is met because the borrower satisfied the separate income calculation requirement." is wrong because satisfying an underwriting requirement like income calculation is completely unrelated to and does not fulfill the separate legal requirements for advertising disclosures. "Document the issue later instead of correcting the compliance problem first." is wrong because when a compliance problem is identified, the priority is to correct it immediately to prevent further violation, not merely to document it for later action. Exam tip: Remember that advertising rules are strict and standalone. Borrower actions or other file conditions never override the requirement for truthful ads and proper APR disclosures.