Before closing, the team discovers that an ad shows an interest rate but omits the APR presentation. What is the safest compliant answer?
Correct Answer
D) State the rate as an annual percentage rate
Lines 261-265 and 273-277; 12 CFR 1026.24(c). Closed-end credit advertising rules require the finance charge rate to be stated as an annual percentage rate. Therefore, the correct response is "State the rate as an annual percentage rate".
Why This Is the Correct Answer
The correct response is "State the rate as an annual percentage rate". Closed-end credit advertising rules require the finance charge rate to be stated as an annual percentage rate.
Why the Other Options Are Wrong
Option A: Wait until after the pre-closing review to decide whether the disclosure, filing, or license issue matters.
Wait until after the pre-closing review to decide whether the disclosure, filing, or license issue matters. is not correct because it bypasses the rule supported by the explanation.
Option B: Treat advertising and consumer protection as satisfied by an oral manager approval.
Treat advertising and consumer protection as satisfied by an oral manager approval. is not correct because it bypasses the rule supported by the explanation.
Option C: Treat prior mortgage experience as a substitute for the required compliance condition.
Treat prior mortgage experience as a substitute for the required compliance condition. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
When an ad mentions a rate, look for APR.
Exam Tip
When an ad mentions a rate, look for APR.
Common Mistakes to Avoid
- -The note rate and the APR are not interchangeable advertising disclosures.
More Ethics & Fraud Questions
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