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#2174135 - 04/18/18 07:21 PM Re: Advertising for Loans complynewbie13
Richard Insley Online
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Toano, VA
Now that you're asking about dwelling secured credit ads, someone else will have to comment about the requirements of Section 1026.24(f) and beyond.

What you provide would be sufficient for fixed rate loans that are not dwelling-secured. Unless you are advertising loans to finance the sales of bank-owned repos and foreclosures, no mention of a downpayment is required. If any of the advertised credits have variable rates, see Section 1026.24(c).
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#2174325 - 04/19/18 06:17 PM Re: Advertising for Loans complynewbie13
David Dickinson Offline
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Yes. But you might be able to shorted up the 3 disclosures. For instance,

20% down payment required. Subject to credit approval and other bank guidelines.
For a $100,000 mortgage loan for a term of:
5 years with an APR of __%, the monthly payment would be $___.
7 years with an APR of __%, the monthly payment would be $___.
10 years with an APR of __%, the monthly payment would be $___.
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#2219778 - 08/15/19 03:59 PM Re: Advertising for Loans complynewbie13
trying_to_comply Offline
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Originally Posted by David Dickinson
Not Adam, but I think I can help. Here's an excerpt from our Advertising training manual on closed-end loan advertisements:

a. “Triggering” Terms [§1026.24(d)(1)]:
The mere mention of certain loan terms in an advertisement will trigger a requirement to disclose certain other terms of the loan. The triggering terms for closed-end credit include:

i. The amount or percentage of down payment (applies to “credit sales” only);
ii. The number of payments or period of repayment;
iii. The amount of any payment; and
iv. The amount of any finance charge.


b. “Triggered” Terms [§1026.24(d)(2)]:
If any one or more of the “triggering” above terms of the loan are stated in an advertisement, the following terms must also be disclosed (to the extent they apply):

i. The amount or percentage of the down payment (applies to “credit sales” only);
ii. The terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment;
iii. The “annual percentage rate”, or “APR”, using one of these terms; and
iv. If the rate may be increased after consummation of the loan, that fact.


In regards to the bolded section above (amount or percentage of the down payment), my understanding is down payment is a triggering term for a credit sale transaction, but for a non-credit sale transaction, when a triggering term other than down payment is used, the requirement is to state the down payment, terms of repayment, APR and if the APR can increase.

Is that incorrect?

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#2219789 - 08/15/19 06:10 PM Re: Advertising for Loans complynewbie13
Richard Insley Online
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You're almost there! The term "downpayment" has no Reg. Z meaning whatsoever unless the transaction being advertised is a credit sale. See the definition in Section 1026.2(a)(18).
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#2242341 - 09/11/20 07:13 PM Re: Advertising for Loans complynewbie13
Vander Offline
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If we are working on an ad and included the verbiage "Terms up to 20 year fixed rates." There isn't an APR disclosed. I see that we will have to include an example with APR and payment. I also understand we would use an example of a common loan.

We update rates weekly. Would we also need to update the example weekly or frequently?

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#2242343 - 09/11/20 07:22 PM Re: Advertising for Loans complynewbie13
rlcarey Online
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Where is the ad appearing.
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#2242344 - 09/11/20 07:25 PM Re: Advertising for Loans complynewbie13
Vander Offline
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It is intended to be distributed to local real estate agents to promote our new fixed rate product.

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#2242345 - 09/11/20 07:28 PM Re: Advertising for Loans complynewbie13
rlcarey Online
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Then I would be inserting an "as of date" and update when you deem it time to update or reproduce them. Not sure the value of such a generic statement to realtors. Can't customers go most anywhere and get a fixed rate loan?
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#2242346 - 09/11/20 07:30 PM Re: Advertising for Loans complynewbie13
Vander Offline
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Vander
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It's not common in our market without selling to secondary market. The as of date will fix my problem! Thank you for your help!

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#2242353 - 09/11/20 08:13 PM Re: Advertising for Loans complynewbie13
Richard Insley Online
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Randy's advice is on the mark, but be careful how often you replace these flyers, and keep a record that could answer a compliance examiner's questions like: "how do you assure that stale ads are being withdrawn or replaced reasonably soon after the advertised rates expire?" In addition to the letter of Reg. Z, there's always the spirit of UDAAP to be considered.
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#2255515 - 06/17/21 07:57 PM Re: Advertising for Loans complynewbie13
mbl4250 Offline
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I am looking over an advertisement that our marketing department wants to send out for our mortgage department that is a flyer and I have a question regarding their wording for the following bullet points that they have:

9 Month Construction period for fixed interest rate
12 Month construction period for adjustable rate

Would this be considered a trigger term?

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#2255530 - 06/17/21 09:28 PM Re: Advertising for Loans complynewbie13
David Dickinson Offline
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Central City, NE
Refer to Commentary to §1026.24(d) and §1026.24(d)(1).

The “number of payments” as a triggering term has not given rise to much interpretation, but the “period of repayment” has. “Thirty-year mortgage”, “48-month loan” and the like plainly qualify. But the FRB has said, “monthly payment terms arranged” will not be deemed a triggering term because the number of those monthly payments is not given. The item that turns these statements into triggering terms is the disclosure of how long the loan will last, not the mere mention of the payment interval.

Specific to your question: I think the 9 and 12 month "periods" does trigger additional disclosures.
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#2255607 - 06/18/21 05:36 PM Re: Advertising for Loans complynewbie13
mbl4250 Offline
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I talked to our marketing department and they are wanting to keep the wording like it is so I am looking at the disclosures that are needed since there is a triggering term. Would I need to give two payment examples, one for the 9 Month Construction Fixed Rate and one for the 12 Month Construction Adjustable Rate?

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#2255830 - 06/23/21 07:05 PM Re: Advertising for Loans complynewbie13
mbl4250 Offline
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bump

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#2255924 - 06/24/21 08:22 PM Re: Advertising for Loans complynewbie13
Dan Persfull Offline
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Bloomington, IN
See 1026.24(d)(2) - (ii) The terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment.

How can one representative payment example disclose the legal terms for both a 9 month fixed rate term loan and a 12 month variable rate term loan?
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#2255951 - 06/25/21 02:11 PM Re: Advertising for Loans complynewbie13
Richard Insley Online
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You haven't specified the products. Are these construction-only loans, or the construction phases of construction-perm loans?
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