Sec2-Page 32

1. Question

A mortgage advertisement promotes a loan with a 3.50% rate when the actual APR is substantially higher and the advertisement fails to explain the difference. What has been misrepresented?

A) The annual percentage rate or other rate associated with the mortgage
B) The existence of a prepayment penalty
C) The amount of available cash
D) The existence of required payments

2. Question

A lender advertises No Fees even though borrowers must pay origination and processing charges at closing. What has been misrepresented?

A) The type of mortgage product
B) The existence, nature, or amount of fees or costs associated with the mortgage
C) The amount of cash available
D) The potential for default

3. Question

A mortgage company advertises free credit disability insurance with every loan even though the insurance requires an additional premium. What has been misrepresented?

A) The variability of interest rates
B) The amount of available credit
C) The existence, cost, or terms of an additional product or feature
D) The type of mortgage product

4. Question

A mortgage advertisement states that property taxes and homeowners insurance are included in the monthly payment, but the borrower must actually pay them separately. What has been misrepresented?

A) The amount of available cash
B) The prepayment penalty
C) The type of mortgage product
D) The terms or payment requirements relating to taxes or insurance

5. Question

A lender advertises that a loan has no prepayment penalty even though a penalty applies during the first three years. What has been misrepresented?

A) The existence or terms of a prepayment penalty
B) The amount of available cash
C) The annual percentage rate
D) The timing of required payments

6. Question

An advertisement repeatedly describes a mortgage as fixed even though the interest rate adjusts after five years. What has been misrepresented?

A) The amount of available credit
B) The variability of interest, payments, or other loan terms
C) The type of mortgage product
D) The amount of required insurance

7. Question

A mortgage advertisement compares a one-year introductory payment to a payment that appears to apply for the entire loan term. What advertising concern exists?

A) A misleading comparison involving a temporary rate or payment
B) A failure to disclose the lender's address
C) A failure to maintain records
D) A failure to disclose licensing information

8. Question

A lender advertises a loan as fully amortizing even though the product contains features that may prevent full amortization. What has been misrepresented?

A) The amount of available cash
B) The prepayment penalty
C) The type of mortgage credit product
D) The existence of required payments

9. Question

A mortgage advertisement guarantees that every borrower will receive $50,000 cash at closing regardless of qualifications. What has been misrepresented?

A) The variability of interest rates
B) The existence, nature, or amount of cash or credit available
C) The timing of required payments
D) The amount of insurance required

10. Question

A reverse mortgage advertisement states that borrowers can never default and will never have any payment-related obligations. What has been misrepresented?

A) The amount of available cash
B) The type of mortgage product
C) The existence, amount, timing of required payments and the potential for default
D) The annual percentage rate

11. Question