Podcast
Questions and Answers
What must advertisements comply with to ensure truthfulness and non-deceptiveness?
What must advertisements comply with to ensure truthfulness and non-deceptiveness?
- They must include testimonials from past consumers.
- They must meet the reasonable consumer test. (correct)
- They must always use legal language.
- They must highlight all claims without supporting evidence.
Which of the following is considered a deceptive practice under UDAAP?
Which of the following is considered a deceptive practice under UDAAP?
- Providing a competitive loan product
- Disclosing all applicable fees upfront
- Offering clear terms in advertisements
- Engaging in bait and switch advertising (correct)
What defines a material fact in advertising?
What defines a material fact in advertising?
- A fact that does not influence consumer decisions.
- A fact that is legally documented.
- A fact that if known, could influence a reasonable consumer's choice. (correct)
- A fact that is common knowledge among consumers.
Which of the following is an example of unintentional misrepresentation?
Which of the following is an example of unintentional misrepresentation?
What is one of the key requirements of the Mortgage Acts and Practices-Advertising (Reg N)?
What is one of the key requirements of the Mortgage Acts and Practices-Advertising (Reg N)?
Which of the following is NOT specifically prohibited by MAP in relation to loan misrepresentations?
Which of the following is NOT specifically prohibited by MAP in relation to loan misrepresentations?
When advertising loan terms, which of the following must be disclosed if triggering terms are used?
When advertising loan terms, which of the following must be disclosed if triggering terms are used?
Which statement correctly describes what is necessary regarding the APR when advertising loan terms?
Which statement correctly describes what is necessary regarding the APR when advertising loan terms?
What is required in advertisements if the APR can increase after the loan is closed?
What is required in advertisements if the APR can increase after the loan is closed?
Which of the following describes permissible advertising practices under MAP?
Which of the following describes permissible advertising practices under MAP?
Which of the following triggers the need for additional disclosures in loan advertisements?
Which of the following triggers the need for additional disclosures in loan advertisements?
What information must accompany a statement about the mortgage credit product's effectiveness?
What information must accompany a statement about the mortgage credit product's effectiveness?
Which of the following options is a misconception about permissible statements in loan advertisements?
Which of the following options is a misconception about permissible statements in loan advertisements?
Flashcards
Material Fact
Material Fact
A fact that could have influenced a reasonable consumer's decision if they had known it.
Misrepresentation
Misrepresentation
When a lender makes a false or misleading statement about their product or service, either intentionally or unintentionally.
Bait and Switch
Bait and Switch
A misleading advertising tactic where a lender offers an attractive deal to lure consumers in, then switches to a less desirable product once they're hooked.
Mortgage Acts and Practices-Advertising (MAP Rule)
Mortgage Acts and Practices-Advertising (MAP Rule)
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Reasonable Consumer Test
Reasonable Consumer Test
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MAP & Loan Costs
MAP & Loan Costs
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MAP & Repayment Terms
MAP & Repayment Terms
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MAP & Prepayment Penalties
MAP & Prepayment Penalties
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MAP & Credit Availability
MAP & Credit Availability
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MAP & Product Effectiveness
MAP & Product Effectiveness
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MAP & Government Association
MAP & Government Association
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MAP & Lender Representation
MAP & Lender Representation
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MAP & Loan Approval
MAP & Loan Approval
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Study Notes
Truth in Advertising and Marketing (UDAAP and MAP Rule)
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UDAAP (Unfair, Deceptive, or Abusive Acts or Practices): Regulators evaluate ads using a "reasonable consumer" standard. Lenders cannot misrepresent products, make false claims, or hide crucial information (material facts).
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Material Fact: A fact that, if known, could change a reasonable consumer's decision.
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Misrepresentation Types:
- Intentional: Deceptive, potentially criminal fraud.
- Bait and Switch: Attractive, but misleading, offer to lure consumers into less desirable products.
- Claiming Association: Falsely claiming affiliation with government agencies (e.g., VA, FHA).
- Unintentional/Negligent: Omitting material facts, errors in disclosures.
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Truthful Advertising: To comply with UDAAP, ads must:
- Be supported by evidence.
- Avoid impossible claims.
- Maintain supporting evidence.
- Avoid taking advantage of less knowledgeable consumers.
- Meet the reasonable consumer test (as defined by CFPB).
Mortgage Acts and Practices-Advertising (MAP Rule)
- MAP Rule (Reg N): Specific FTC rule for mortgage advertising. Prohibits lenders from:
- Misrepresenting interest rates, loan costs.
- Misrepresenting terms, repayment, escrow.
- Misrepresenting prepayment penalties.
- Misrepresenting variable rates, amortization types.
- Misrepresenting payment counts, available cash/credit.
- Misrepresenting the product's effectiveness in solving consumer issues.
- Misrepresenting association with government agencies or falsely claiming government benefit.
- Misrepresenting the creditor as a consumer's current lender or servicer.
- Misrepresenting reverse mortgage occupancy requirements.
- Misrepresenting the likelihood of loan approval.
- Misrepresenting refinance/modification possibilities.
- Misrepresenting counseling services availability.
Permissible Advertising Statements
- Permissible Statements: Truthful, avoid exaggeration, consider average consumer knowledge, and follow disclosure requirements. Specific loan terms (e.g., interest rates) are allowed but must be fully disclosed if triggering terms are used.
Triggering Terms and Required Disclosures
- Triggering terms require extra disclosures including:
- Down payment amount/percentage
- Repayment terms
- APR (annual percentage rate) in full
- APR and interest rate must have equal prominence.
- Payment examples supporting APR calculations (if variables like loan size, credit scores, or LTVs affect it).
- Statements about increased APR after closing (for adjustable-rate mortgages).
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