Federal Mortgage LawsQuestion 72 of 400
An advertisement states 'Fixed 3.5% payment for life!' when in fact only the minimum payment is fixed and the interest rate adjusts, causing the balance to grow. Under Regulation N this ad is:
a.Compliant because a number is disclosed
b.Compliant because payments are technically fixed
c.A prohibited misrepresentation about the existence or amount of payments
d.Exempt because it is a teaser rate
Explanation
Regulation N specifically bars misrepresentations about the terms, amounts, payments, or existence of fees, including implying a fixed payment or rate that is not truly fixed. Advertising a 'payment for life' that hides negative amortization deceives consumers about the true cost. The presence of a number does not cure a misleading impression.
Law Reference: Mortgage Acts and Practices Advertising Rule (Reg N, 12 CFR 1014)Practice all 400 questions free — no signup required.
Related questions on this topic
- The required amount of flood insurance on a residential building is generally the least of the outstanding principal balance, the insurable value of the building, or:
- A borrower lets required flood insurance lapse. After proper notice, the servicer purchases coverage and charges the borrower. This is known as:
- Under the Mortgage Acts and Practices Advertising Rule (Regulation N), which advertising practice is prohibited?
- A title company pays a mortgage broker $200 for each borrower the broker refers, regardless of any services performed. Under RESPA, this arrangement is:
- For an Affiliated Business Arrangement to fall within RESPA's exception to the anti-kickback rule, the person making the referral must generally do all of the following EXCEPT:
- Which payment is generally permitted under RESPA Section 8?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against NMLS SAFE Mortgage Loan Originator National Test · How we review