11.8 Regulation Z

You are required to adhere to the requirements of Federal Truth-in-Lending laws (also known as “Regulation Z”) for advertising certain credit transactions or financial terms. Under Regulation Z, if an advertisement states a specific finance charge, the charge must be expressed as an annual percentage rate (APR).

If any of the following terms are used in the advertisement:

• The amount or percentage of the down payment.

• The amount of any installment payment.

• The dollar amount of any finance charge.

• The number of installments.

• The period of repayment.

Then the advertisement MUST include all of the following specific terms:

• Down payment.

• Terms of repayment.

• Rate of finance charge expressed as an annual percentage rate.

• If the annual percentage rate may be increased after the transaction is consummated, then that fact must also be disclosed.

Any advertisement of commission rates, discount points, reductions, or incentives must be approved by the Broker prior to your placement or use.

Regulation Z requires that all of the terms of the financing be stated if any "triggering terms" are used. "Triggering terms" are terms such as the amount of down payment ("10% down"), the amount of any payment ("Only $550 per month"), the period of repayment ("40 year loan available") or the number of payments ("Only 48 monthly payments”).

Use of any interest rate in advertising is not allowed. Only the Annual Percentage Rate, stated and calculated as such is allowed. Therefore, a property cannot be advertised as having, for example, a "7% assumable VA loan."

Not all terms trigger Regulation Z disclosure. Some examples of terms which can be used without triggering Regulation Z disclosure are "No down payment", "Financing Available", "Special Financing", or "Assumable Loan."