A mortgage company's newspaper ad reads, 'Buy your dream home today with only $5,000 down!' What does Regulation Z require of that ad?
Correct Answer
C) It must also state the terms of repayment and the annual percentage rate
Regulation Z treats certain specifics in a consumer credit ad as trigger terms: the amount or percentage of a down payment, the number of payments or period of repayment, the amount of any payment, or the amount of any finance charge. Stating one of them, as '$5,000 down' does, requires the ad to also state the amount or percentage of the down payment, the terms of repayment, and the annual percentage rate. A general phrase such as 'low down payment options available' states no trigger term and pulls in no additional disclosures.
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