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Question 1 of 6

1. Question
TRIGGERING TERMS IN ADVERTISING

A mortgage advertisement states:

“Only 5% Down Required!”

Why is this statement considered a triggering term under federal advertising rules?
- A) Because any reference to mortgage financing automatically requires regulatory approval
- B) Because the amount or percentage of a down payment is considered a triggering term
- C) Because only APR disclosures are considered triggering terms
- D) Because down payment information may never appear in mortgage advertisements
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Question 2 of 6

2. Question
TRIGGERING TERMS IN ADVERTISING

A lender publishes the following advertisement:

“30-Year Mortgage
Payments Under $1,400 Per Month”

Which additional disclosure must generally also appear in the advertisement?
- A) The annual percentage rate (APR) and repayment terms
- B) The lender annual earnings statement
- C) The borrower estimated closing date only
- D) The seller property tax information
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Question 3 of 6

3. Question
TRIGGERING TERMS IN ADVERTISING

A mortgage company advertises:

“Low Introductory APR Available!”

However, the advertisement fails to disclose that the APR may increase after consummation of the loan.

What federal advertising issue exists?
- A) Introductory APRs are prohibited in mortgage advertisements
- B) APR disclosures are optional if payments are not shown
- C) If the APR may increase after consummation, that fact must also be disclosed
- D) APR adjustments may remain confidential until closing
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Question 4 of 6

4. Question
TRIGGERING TERMS IN ADVERTISING

A mortgage advertisement does not specifically state the repayment term but provides enough information for a consumer to easily calculate the repayment structure.

Why could additional disclosures still be required?
- A) Additional disclosures are required only when triggering terms are stated exactly as defined by regulation
- B) Triggering terms apply only to printed advertisements
- C) Additional disclosures are required even if a triggering term may be readily determined from the advertisement
- D) Consumers are prohibited from calculating repayment terms independently
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Question 5 of 6

5. Question
PROHIBITED REPRESENTATIONS

A mortgage advertisement states:

“Your monthly payment covers all interest owed each month and your loan balance will never increase.”

In reality, unpaid interest may be added to the loan balance under the loan terms.

Why could this advertisement violate federal law?
- A) Mortgage lenders are prohibited from discussing monthly payments in advertisements
- B) The advertisement may materially misrepresent how interest and loan balances are calculated
- C) Loan balance increases may never occur under adjustable-rate loans
- D) Advertisements are not required to accurately describe interest calculations
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Question 6 of 6

6. Question
PROHIBITED REPRESENTATIONS

A lender advertises:

“Absolutely No Fees Guaranteed!”

However, the borrower is later charged origination and processing fees at closing.

Why could this advertisement violate federal regulations?
- A) Fees may only be disclosed verbally
- B) Mortgage advertisements are prohibited from mentioning fees
- C) The advertisement may materially misrepresent the existence or amount of fees associated with the mortgage product
- D) Closing costs are exempt from federal advertising regulations
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