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#723676 - 04/27/07 09:07 PM Disclosing Finance Charges in Ad
tjbanker Offline
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Joined: Jun 2002
Posts: 310
Lender is looking at putting together an ad that states an origination fee of 1% and other finance charges. Does the lender need to state a dollar total for the finance charges or is a generic statement of "other finance charges" okay? This loan is for a one time close. Also, does the APR need to be as conspicuous at the interest rate or can the rate be more conspicuous than the yield? Thank you!
Last edited by monicamn; 04/27/07 09:15 PM.
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#725252 - 05/01/07 09:59 PM Re: Disclosing Finance Charges in Ad tjbanker
Rocky P Offline
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Joined: Jun 2003
Posts: 7,420
If closed-end credit, 226.24 provides guidance

(c) Advertisement of terms that require additional disclosures. (1) If any of the following terms is set forth in an advertisement, the advertisement shall meet the requirements of paragraph (c)(2) of this section:
(i) The amount or percentage of any downpayment.
(ii) The number of payments or period of repayment.
(iii) The amount of any payment.
(iv) The amount of any finance charge.
(2) An advertisement stating any of the terms in paragraph (c)(1) of this section shall state the following terms,{49}

{49 An example of one or more typical extensions of credit with a statement of all the terms applicable to each may be used.}

as applicable:
(i) The amount or percentage of the downpayment.
(ii) The terms of repayment.
(iii) The "annual percentage rate," using that term, and, if the rate may be increased after consummation, that fact.

Finance charge (1% origination fee) is mentioned so you would need to give a hypothetical example.

Oh, the rate - "The advertisement shall not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate." You need the APR and the loan rate cannot be more conspicuous.
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#725467 - 05/02/07 03:33 PM Re: Disclosing Finance Charges in Ad Rocky P
goingtoexperts Offline
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Joined: Jul 2006
Posts: 149
What about zero origination fee for a non-real estate closed-end loan?

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#725568 - 05/02/07 04:48 PM Re: Disclosing Finance Charges in Ad goingtoexperts
tjbanker Offline
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Joined: Jun 2002
Posts: 310
Thanks for the reply. Would you please provide an additional example of the hypothetical example for the origination fee? I want to make sure I am clear as to what you are stating.

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#725609 - 05/02/07 05:25 PM Re: Disclosing Finance Charges in Ad tjbanker
ahou Offline
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Joined: Aug 2002
Posts: 3,094
He's referring to the fact you are including the amt of a finance charge in your ad which triggers disclosures such as the repayment period. (APR is also a triggering term) An example for disclosing repayment terms is:

120 monthly payments of $82 per $1,000 borrowed
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#728793 - 05/09/07 02:09 PM Re: Disclosing Finance Charges in Ad ahou
ToTo Offline
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Joined: Apr 2004
Posts: 595
I may be misreading ahou's statement, but just one little point of clarification: the APR is not a "triggering" term, it is a "triggered" term. In other words, you can quote the APR, and no other terms are triggered. On the other hand, if you quote a finance charge in your ad, the APR is triggered.

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