Regulation Z Trigger Terms – what are they?
Sometimes mortgage advertisers are not fully aware of the Regulation Z “Triggering Terms” rules that require additional disclosures to be made in your mortgage ad. Here’s a quick review of the Triggering Terms that come straight from Reg Z 1026.24:
(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 down payment.
(ii) The number of payments or period of repayment.
(iii) The amount of any payment.
(iv) The amount of any finance charge.
If any of the above terms are in your ad the following additional disclosures must be made:
(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 down payment.
(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.
Application of the Rules: Stating the amount of down payment and the APR is easy. The more detailed disclosure involves the statement regarding the terms of repayment. If for example you are advertising 3% down payment loans and you do not already have a mortgage payment or interest rate in your ad, the best way to handle this is to disclose a 30 year fixed rate loan example, the payment amount and the rate that was used as of the date of creation of your ad.