(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, 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):
(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.
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(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 Web site), 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 Web site) 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 1026.17(c) and
1026.22.
(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 section 1026.24(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.
