Sec 1-Page 69

1. Question

A lender advertises a home-secured mortgage loan and prominently states “Fixed Closing Costs Guaranteed.”

Under the final advertising rule, why is this use of the word “fixed” generally permitted?

A) The word “fixed” may be used when referring to fees or settlement costs for home-secured loans
B) The word “fixed” may only be used for FHA-insured mortgage loans
C) The word “fixed” is prohibited in all mortgage advertisements involving settlement charges
D) The advertisement is exempt because settlement costs are not regulated under Truth-in-Lending

2. Question

A lender advertises a low introductory “teaser” payment for a mortgage loan but fails to disclose the higher payments that will apply later during the loan term.

Why could this advertisement be considered misleading?

A) Mortgage advertisements may never contain introductory payment examples
B) Advertisements comparing teaser rates or payments must also disclose the payments or rates applicable over the full term of the loan
C) Adjustable-rate mortgages may only be advertised to existing customers
D) The advertisement failed to disclose underwriting standards

3. Question

A mortgage advertisement prominently displays a discounted introductory payment amount for the first year of the loan.

Under the final advertising rule, what disclosure requirement applies?

A) The advertisement must include all applicable payments or rates over the loan term and the period during which each applies
B) Only the introductory payment amount must be disclosed
C) Future payment disclosures are required only for FHA loans
D) The lender must provide payment details only after application

4. Question

A lender advertises a low monthly mortgage payment but fails to disclose that taxes and insurance are not included in the payment amount.

What additional disclosure was required?

A) A disclosure describing the lender’s escrow waiver policy
B) A statement explaining future property tax reassessments
C) A prominent statement that the advertised payment does not include taxes and insurance premiums, if applicable
D) A disclosure identifying the projected future property value

5. Question

A lender advertises a variable-rate mortgage using a low introductory interest rate derived from the index and margin that will later determine future payment adjustments.

What must the advertisement clearly disclose?

A) That the payment or rate is subject to adjustment and when the first adjustment will occur
B) Only the initial note rate and first-year payment
C) The lender’s future servicing transfer policy
D) The borrower’s estimated future property taxes

6. Question

A mortgage company advertises a 5.25% simple interest rate in large bold print but places the APR in much smaller print at the bottom of the advertisement.

What disclosure standard applies to APR presentation?

A) The APR may be omitted if the note rate is fixed
B) The APR must be disclosed as conspicuously as the simple interest rate
C) APR disclosures are required only for adjustable-rate mortgages
D) The APR may appear in smaller print if disclosed elsewhere in the advertisement

7. Question

A private mortgage lender advertises its loan products as “Government-Supported Mortgage Programs” even though the loans are not backed or sponsored by any governmental agency.

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

A) Mortgage advertisements may never reference government entities
B) Only FHA-approved lenders may advertise mortgage loans
C) Advertisements may not characterize loans as government-supported unless the loans are actually sponsored or endorsed by a government entity
D) Government-backed loan advertising is permitted only for refinance transactions

8. Question

A lender advertises a VA mortgage loan and describes the product as a “government-supported loan.”

When is this type of description generally permitted?

A) Only when the advertisement also includes a conventional mortgage option
B) Only for loans actually endorsed or sponsored by a federal, state, or local government entity such as FHA or VA loans
C) Whenever the lender participates in federally insured banking programs
D) Only when the borrower signs a government disclosure acknowledgment

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