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#19959 - 06/06/02 11:35 PM Reg Z Trigger Terms
Bear Collector, CRCM Offline
Diamond Poster
Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
I agree (thanks to Richard Insley and David Dickenson showing me the error of my ways!) that loan terms (30 year fixed, 5/1 ARM, etc) on a website or in an advertisement are triggering terms. I had instructed our marketing department to be sure that any such references were either removed from our site, or properly disclosed. My mortgage folks are now insisting that all they need to have on our site is a "representative sample" of APRs, but that current rates and terms are not required. I am concerned that such a practice could be considered "bait and switch" advertising. They said, "SunTrust does it, so why can't we?" Yes, SunTrust does have a representative rate sample on their site, but they also have a current rate sheet (mortgage rates good for applications submitted through tomorrow).
What do I need to do to satisfy the Advertising requirements of Reg Z in this instance? Is just a representative rate sample acceptable? Crazed mortgage people are circling their wagons and loading their weapons outide my door! Help me, please!
Last edited by mbguard; 07/11/02 05:30 PM.
Being kind is more important than being important.

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Lending Compliance
#19960 - 06/07/02 03:00 PM Re: Oh no, Reg Z AGAIN!
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,159
Toano, VA
Reg Z provides no clear answer to this question, but at an absolute minimum you would need a complete illustration of one of every type of loan product advertised. It IS clear that you can't advertise rates and terms that are no longer available.

Reg Z also doesn't point out clearly that the representative payment examples in advertisements must be more than just the first payment. In a discounted/premium ARM, for example, the representative payment example is meaningless without all the steps in the payment schedule. Same thing for a balloon loan or anything else with multiple streams of payments.

Finally, big banks violate the law, just like everyone else. Don't assume that it's right because you've seen it on MegaBank's site. Some of the most entertaining e-vios I've seen were on big bank sites.
...gone fishing.

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#19961 - 06/11/02 12:01 AM Re: Oh no, Reg Z AGAIN!
SJB Offline
Diamond Poster
Joined: Jun 2002
Posts: 1,210
Just because someone else violates a reg doesn't make it OK but it sure makes it hard to convince marketing people of what they should be doing.

I agree with Richard that you cannot advertise that which is no longer available. [226.24(a)]

I think the ambiguity comes in when we look at note 49 to section 226.24 which states: "An example of one or more typical extensions of credit with a statement of all the terms applicable to each may be used."

It can be argued that this at least implies you don't have to do the full set of triggered terms for each and every product (but you do have to disclose all triggered terms for the products you do describe.)

I'd like to hear, actually read, how others are interpreting this.
My opinions are not legal advice and are worth what you paid for them.

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