A billboard carries only a lender name, a logo and the words "Home loans made simple" — no rate, no payment, no term. A manager asks whether the additional disclosures are needed.
Correct Answer
B) Disclose required terms when a trigger term is used
Why this is correct: Truth in Lending Act (TILA) advertising rules require that ads are not misleading. A key provision is that if a specific "trigger term" (like the amount of a payment or the interest rate) is advertised, then certain other disclosures (like the APR) must also be clearly and conspicuously stated. Therefore, the compliant response is to disclose the required terms whenever a trigger term is used. Why the other choices are wrong: Using an internal exception instead of the required federal disclosure or timing rule is wrong because internal policies cannot override TILA's legal mandates. Waiting until a regulator asks for the file before applying the federal requirement is wrong because compliance must be built into the advertising process from the start. Resolving the TILA Advertising Requirements issue with the TRID timing exception that does not fit the facts is wrong because TRID (which governs closing disclosures) timing rules are a separate requirement and not a valid exception for advertising disclosures. Exam tip: Remember the TILA advertising 'trigger terms' concept. If you advertise a payment rate, you must disclose the APR and other key terms.
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: 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: Resolve the TILA Advertising Requirements issue with the TRID timing exception that does not fit the 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
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
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