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Question 1 of 4

1. Question
A lender creates an advertisement for a closed-end mortgage loan that highlights unusually low monthly payments but fails to clearly explain important loan terms and limitations. During a CFPB review, regulators determine the advertisement may be misleading to consumers.

Under the final Truth-in-Lending advertising rules effective January 1, 2009, what is the primary purpose of these requirements?
- A) To prohibit all mortgage advertising involving adjustable-rate loans
- B) To ensure mortgage advertisements provide accurate and balanced information and do not contain misleading or deceptive representations
- C) To require all mortgage advertisements to contain government approval disclosures
- D) To eliminate the use of payment examples in mortgage advertising
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Question 2 of 4

2. Question
A mortgage company advertises both open-end and closed-end mortgage products online. Regulators later review whether the advertisements properly disclosed information relating to rates, monthly payments, and fees.

How must this information generally be presented under the final advertising rules?
- A) Only in the loan application package after the borrower applies
- B) In fine print located at the bottom of the advertisement
- C) In a clear and conspicuous manner with accurate and balanced information
- D) Only if specifically requested by the consumer
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Question 3 of 4

3. Question
A lender advertises a variable-rate mortgage using the phrase “Fixed Payment Loan” without clearly disclosing that the payment amount may later change. During a regulatory examination, auditors determine the advertisement violates Truth-in-Lending advertising standards.

Why could this advertisement be considered misleading?
- A) Variable-rate mortgage advertisements may never reference payment amounts
- B) The term “fixed” may not be used for any mortgage advertisement
- C) Advertisements may not state that rates or payments are “fixed” unless it is adequately disclosed that the fixed period is limited rather than applicable for the full loan term
- D) Adjustable-rate mortgage advertisements are prohibited for consumer loans
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Question 4 of 4

4. Question
A lender advertises an adjustable-rate mortgage and repeatedly uses the word “fixed” to describe the introductory payment period. Regulators review whether the advertisement properly identifies the loan as an adjustable-rate transaction.

Under the Truth-in-Lending advertising rule, what must occur before the first use of the word “fixed” in the advertisement?
- A) The lender must disclose the borrower's maximum possible payment increase
- B) The phrase “Adjustable-Rate Mortgage” or “Variable-Rate Mortgage” must appear before the first use of the word “fixed” and be at least as conspicuous
- C) The advertisement must include a full amortization schedule
- D) The lender must disclose all future index adjustments and margins
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