Answer by Randy Carey:Sec. 226.24 Advertising.
(b) Advertisement of rate of finance charge. If an advertisement states a rate of finance charge, it shall state the rate as an "annual percentage rate," using that term. If the annual percentage rate may be increased after consummation, the advertisement shall state that fact. 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.
Answer by Richard Insley:Knowing that mortgage ads are rarely limited to the rate, be sure to include the representative payment example if you mention the number of payments or term.
First published on BankersOnline.com 1/12/09