(a) Actually available terms. If an advertisement for credit states
specific credit terms, it shall state only those terms that actually
are or will be arranged or offered by the creditor.
(b) Clear and conspicuous standard. Disclosures required by this section shall be made clearly and conspicuously.
(c) 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. If an advertisement is for
credit not secured by a dwelling, 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.
If an advertisement is for credit secured by a dwelling, the advertisement
shall not state any other rate, except that a simple annual rate that
is applied to an unpaid balance may be stated in conjunction with,
but not more conspicuously than, the annual percentage rate.
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(d) Advertisement of terms that require
additional disclosures. —
(1) Triggering
terms. If any of the following terms is set forth in an advertisement,
the advertisement shall meet the requirements of paragraph (d)(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)
Additional
terms. An advertisement stating any of the terms in paragraph
(d)(1) of this section shall state the following terms,
49 as applicable (an example of one or more typical extensions
of credit with a statement of all the terms applicable to each may
be used):applicable:
(i) The amount or percentage of the
downpayment.
(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,” using that term, and, if the rate may be increased after consummation,
that fact.
6-913
(e) Catalogs or other multiple-page advertisements;
electronic advertisements. —
(1) If a catalog or other multiple-page
advertisement, or an electronic advertisement (such as an advertisement
appearing on an Internet website), gives information in a table or
schedule in sufficient detail to permit determination of the disclosures
required by paragraph (d)(2) of this section, it shall be considered
a single advertisement if—
(i) The table or schedule is clearly
and conspicuously set forth; and
(ii) Any statement of the credit terms in paragraph (d)(1) of this
section appearing anywhere else in the catalog or advertisement clearly
refers to the page or location where the table or schedule begins.
(2) A catalog
or other multiple-page advertisement or an electronic advertisement
(such as an advertisement appearing on an Internet website) complies
with paragraph (d)(2) of this section if the table or schedule of
terms includes all appropriate disclosures for a representative scale
of amounts up to the level of the more commonly sold higher-priced
property or services offered.
(f) Disclosure of Rates and Payments in Advertisements
for Credit Secured by a Dwelling.
(1) Scope. The requirements of this paragraph apply to any advertisement for
credit secured by a dwelling, other than television or radio advertisements,
including promotional materials accompanying applications.
(2) Disclosure of rates —
(i) In general. If an advertisement for credit secured by a dwelling states a simple
annual rate of interest and more than one simple annual rate of interest
will apply over the term of the advertised loan, the advertisement
shall disclose in a clear and conspicuous manner:
(A) Each simple
annual rate of interest that will apply. In variable-rate transactions,
a rate determined by adding an index and margin shall be disclosed
based on a reasonably current index and margin;
(B) The period of time during which each simple
annual rate of interest will apply; and
(C) The annual percentage rate for the loan.
If such rate is variable, the annual percentage rate shall comply
with the accuracy standards in sections 226.17(c) and 226.22.
(ii) Clear and conspicuous requirement. For
purposes of paragraph (f)(2)(i) of this section, clearly and conspicuously
disclosed means that the required information in paragraphs (f)(2)(i)(A)
through (C) shall be disclosed with equal prominence and in close
proximity to any advertised rate that triggered the required disclosures.
The required information in paragraph (f)(2)(i)(C) may be disclosed
with greater prominence than the other information.
(3) Disclosure of payments —
(i) In general. In addition to the requirements
of paragraph (c) of this section, if an advertisement for credit secured
by a dwelling states the amount of any payment, the advertisement
shall disclose in a clear and conspicuous manner:
(A) The amount
of each payment that will apply over the term of the loan, including
any balloon payment. In variable-rate transactions, payments that
will be determined based on the application of the sum of an index
and margin shall be disclosed based on a reasonably current index
and margin;
(B) The period
of time during which each payment will apply; and
(C) In an advertisement for credit secured
by a first lien on a dwelling, the fact that the payments do not include
amounts for taxes and insurance premiums, if applicable, and that
the actual payment obligation will be greater.
(ii) Clear and conspicuous requirement. For
purposes of paragraph (f)(3)(i) of this section, a clear and conspicuous
disclosure means that the required information in paragraphs (f)(3)(i)(A)
and (B) shall be disclosed with equal prominence and in close proximity
to any advertised payment that triggered the required disclosures,
and that the required information in paragraph (f)(3)(i)(C) shall
be disclosed with prominence and in close proximity to the advertised
payments.
(4) Envelope excluded. The requirements
in paragraphs (f)(2) and (f)(3) of this section do not apply to an
envelope in which an application or solicitation is mailed, or to
a banner advertisement or pop-up advertisement linked to an application
or solicitation provided electronically.
(g) Alternative disclosures—television
or radio advertisements. An advertisement made through
television or radio stating any of the terms requiring additional
disclosures under paragraph (d)(2) of this section may comply with
paragraph (d)(2) of this section either by:
(1) Stating clearly and conspicuously each
of the additional disclosures required under paragraph (d)(2) of this
section; or
(2) Stating
clearly and conspicuously the information required by paragraph (d)(2)(iii)
of this section and listing a toll-free telephone number, or any telephone
number that allows a consumer to reverse the phone charges when calling
for information, along with a reference that such number may be used
by consumers to obtain additional cost information.
(h) Tax implications. If an advertisement distributed in paper form or through the Internet
(rather than by radio or television) is for a loan secured by the
consumer’s principal dwelling, and the advertisement states that the
advertised extension of credit may exceed the fair market value of
the dwelling, the advertisement shall clearly and conspicuously state
that:
(1) The interest on the
portion of the credit extension that is greater than the fair market
value of the dwelling is not tax deductible for federal income tax
purposes; and
(2) The
consumer should consult a tax adviser for further information regarding
the deductibility of interest and charges.
(i) Prohibited acts or practices in advertisements
for credit secured by a dwelling. The following acts or practices
are prohibited in advertisements for credit secured by a dwelling:
(1) Misleading advertising of “fixed” rates and payments. Using
the word “fixed” to refer to rates, payments, or the credit transaction
in an advertisement for variable-rate transactions or other transactions
where the payment will increase, unless:
(i) In the case of an
advertisement solely for one or more variable-rate transactions,
(A) The phrase “Adjustable-Rate Mortgage,” “Variable-Rate Mortgage,”
or “ARM” appears in the advertisement before the first use of the
word “fixed” and is at least as conspicuous as any use of the word
“fixed” in the advertisement; and
(B) Each use of the word “fixed” to refer
to a rate or payment is accompanied by an equally prominent and closely
proximate statement of the time period for which the rate or payment
is fixed, and the fact that the rate may vary or the payment may increase
after that period;
(ii) In the case of an advertisement
solely for non-variable-rate transactions where the payment will increase
(e.g., a stepped-rate mortgage transaction with an initial lower payment),
each use of the word “fixed” to refer to the payment is accompanied
by an equally prominent and closely proximate statement of the time
period for which the payment is fixed, and the fact that the payment
will increase after that period; or
(iii) In the case of an advertisement
for both variable-rate transactions and non-variable-rate transactions,
(A) The phrase “Adjustable-Rate Mortgage,” “Variable-Rate Mortgage,”
or “ARM” appears in the advertisement with equal prominence as any
use of the term “fixed,” “Fixed-Rate Mortgage,” or similar terms;
and
(B) Each use of the
word “fixed” to refer to a rate, payment, or the credit transaction
either refers solely to the transactions for which rates are fixed
and complies with paragraph (i)(1)(ii) of this section, if applicable,
or, if it refers to the variable-rate transactions, is accompanied
by an equally prominent and closely proximate statement of the time
period for which the rate or payment is fixed, and the fact that the
rate may vary or the payment may increase after that period.
(2) Misleading comparisons in advertisements. Making any comparison in an advertisement between actual or hypothetical
credit payments or rates and any payment or simple annual rate that
will be available under the advertised product for a period less than
the full term of the loan, unless:
(i) In general. The advertisement includes
a clear and conspicuous comparison to the information required to
be disclosed under sections 226.24(f)(2) and (3); and
(ii) Application
to variable-rate transactions. If the advertisement is for a
variable-rate transaction, and the advertised payment or simple annual
rate is based on the index and margin that will be used to make subsequent
rate or payment adjustments over the term of the loan, the advertisement
includes an equally prominent statement in close proximity to the
payment or rate that the payment or rate is subject to adjustment
and the time period when the first adjustment will occur.
(3) Misrepresentations about government endorsement. Making any statement in an advertisement that the product offered
is a “government loan program,” “government-supported loan,” or is
otherwise endorsed or sponsored by any federal, state, or local government
entity, unless the advertisement is for an FHA loan, VA loan, or similar
loan program that is, in fact, endorsed or sponsored by a federal,
state, or local government entity.
(4) Misleading
use of the current lender’s name. Using the name of the consumer’s
current lender in an advertisement that is not sent by or on behalf
of the consumer’s current lender, unless the advertisement:
(i) Discloses
with equal prominence the name of the person or creditor making the
advertisement; and
(ii) Includes a clear and conspicuous statement that the person making
the advertisement is not associated with, or acting on behalf of,
the consumer’s current lender.
(5) Misleading
claims of debt elimination. Making any misleading claim in an
advertisement that the mortgage product offered will eliminate debt
or result in a waiver or forgiveness of a consumer’s existing loan
terms with, or obligations to, another creditor.
(6) Misleading
use of the term “counselor.” Using the term “counselor” in an
advertisement to refer to a for-profit mortgage broker or mortgage
creditor, its employees, or persons working for the broker or creditor
that are involved in offering, originating or selling mortgages.
(7) Misleading foreign-language advertisements. Providing information about some trigger terms or required disclosures,
such as an initial rate or payment, only in a foreign language in
an advertisement, but providing information about other trigger terms
or required disclosures, such as information about the fully-indexed
rate or fully amortizing payment, only in English in the same advertisement.
