Sec 1-Page 66 2

1. Question

A mortgage loan originator quotes a borrower a 6.25% interest rate during a telephone inquiry but does not mention the APR.

Under federal Truth-in-Lending rules, what must occur whenever a note rate is quoted to a consumer?

A) The lender must also quote the APR at the same time
B) The lender may delay disclosure of the APR until application
C) The APR is required only for written advertisements
D) The APR is required only if the borrower requests it

2. Question

A lender places a newspaper advertisement promoting mortgage financing. The ad prominently displays the note interest rate in large print while the APR appears in very small print at the bottom corner of the advertisement.

Why could this advertisement violate Truth-in-Lending advertising requirements?

A) Mortgage advertisements may not contain interest rates
B) The APR may not appear in a smaller size than the advertised interest rate
C) The APR may only appear on the Closing Disclosure
D) Newspaper advertising is exempt from Truth-in-Lending requirements

3. Question

A lender distributes a social media advertisement promoting residential mortgage financing.

Under the federal definition, how is advertising defined for Truth-in-Lending purposes?

A) Only printed newspaper mortgage advertisements
B) Only communications made directly to existing borrowers
C) A commercial message in any medium that promotes, directly or indirectly, a credit transaction
D) Only television and radio mortgage commercials

4. Question

A borrower telephones a lender and asks about current mortgage interest rates.

How is a verbal rate inquiry treated under Truth-in-Lending rules?

A) Verbal inquiries are exempt from federal advertising regulations
B) Verbal inquiries are considered solicitations of business and require APR disclosure when a note rate is quoted
C) APR disclosures are required only after application
D) APR disclosures are required only for adjustable-rate mortgages

5. Question

A lender advertises ‘Only 5% down!’ in a mortgage advertisement.

Why does this phrase create triggering language under Truth-in-Lending rules?

A) It references the amount or percentage of a down payment
B) It references only the lender name
C) It contains no financing terms
D) It references only taxes and insurance

6. Question

A mortgage advertisement states ‘Monthly payments as low as $1,250.’

Why could this advertisement trigger additional disclosure requirements?

A) Because advertisements may never reference payment amounts
B) Because payment disclosures are allowed only for FHA loans
C) Because mentioning the amount of any payment is considered triggering language
D) Because Truth-in-Lending prohibits monthly payment advertising

7. Question

A lender uses triggering language in a mortgage advertisement by disclosing repayment terms and monthly payment amounts.

Which disclosure must also appear if triggering terms are used?

A) The borrower's estimated income
B) The lender's underwriting guidelines
C) The property's estimated future value
D) The APR and whether the rate may increase after consummation

8. Question

A lender advertisement promotes a 5.75% interest rate but fails to identify the APR separately.

What is required whenever a simple interest rate appears in an advertisement?

A) Only the note rate may be displayed
B) The APR must also be disclosed and identified as the APR
C) The APR may be omitted if the rate is fixed
D) APR disclosures apply only to adjustable-rate mortgages

9. Question

A lender advertises an adjustable-rate mortgage using a discounted introductory interest rate but does not disclose how long the reduced rate will remain in effect.

Why could this advertisement violate Truth-in-Lending advertising requirements?

A) Adjustable-rate advertisements may never reference introductory rates
B) Introductory rates may be disclosed only after application
C) Ads reflecting an initial reduced or discounted rate must disclose the term for which the rate applies
D) Reduced-rate advertising is prohibited for refinance transactions

10. Question

A lender creates an advertisement illustrating how an introductory reduced rate temporarily lowers monthly payments on an adjustable-rate mortgage.

Which statement is correct under Truth-in-Lending advertising rules?

A) Illustrating reduced-rate payments automatically triggers all disclosures
B) Advertisements may never reference discounted-rate payment examples
C) Payment illustrations are permitted only for fixed-rate mortgages
D) Ads may illustrate the effect of an initial reduced rate on payments without triggering additional disclosures

Quiz Summary

Information

Results