A social post says "360 payments, no money down". A compliance reviewer counts two triggering terms in seven words. What follows from that?
Correct Answer
B) Disclose required terms when a trigger term is used
Why this is correct: TILA Regulation Z mandates that if an advertisement for closed-end credit uses a 'trigger term' (e.g., a specific periodic payment amount or a down payment amount), it must also disclose certain other terms, such as the APR, loan amount, and repayment terms. This ensures ads are not misleading. 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 TILA's advertising disclosure requirements. "Apply the loan estimate timing rule even though the file is testing TILA Advertising Requirements" is wrong because the Loan Estimate timing is a separate TRID rule, not an advertising rule. "Rely on oral agreement when the rule requires documented compliance" is wrong because advertising disclosures must be included in the ad itself, not communicated orally. Exam tip: In ads, using a trigger term automatically requires additional disclosures; memorize common trigger terms like 'payment amount' or 'down payment.'
Why This Is the Correct Answer
The correct response is "Disclose required terms when a trigger term is used" 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: Apply the loan estimate timing rule even though the file is testing TILA Advertising Requirements.
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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