Truth in Lending, Regulation Z, Rescission and Credit Advertising

For the New York salesperson exam, separate three jobs: disclose credit cost, identify whether rescission applies and test an advertisement for rate or payment claims. Do not turn every three-day rule into the same rule.

What is the fastest way to organize Regulation Z?

Use this map:

The memory line is:

TILA makes credit costs comparable. Regulation Z supplies the rules. Rescission usually concerns a lien on an existing principal dwelling, not the purchase mortgage. Specific ad terms can trigger more disclosures.

Official source map

The New York State Department of State Real Estate Salesperson 77-Hour Curriculum lists the Truth in Lending Act, Regulation Z, annual percentage rate, finance charge, right of rescission and advertising rules in Subject 5, Real Estate Finance. It does not publish an official scored-question count for this topic.

The Consumer Financial Protection Bureau, or CFPB, publishes the current 12 CFR Part 1026, Regulation Z. The version used here was most recently amended April 8, 2026. Section 1026.1 states the regulation's purpose, section 1026.4 defines finance charge, and section 1026.22 explains the annual percentage rate for closed-end credit.

The current closed-end rescission rule is 12 CFR 1026.23. The closed-end advertising rule is 12 CFR 1026.24. Open-end home-equity plans use separate provisions, including sections 1026.15 and 1026.16.

Mortgage advertising also remains subject to the federal Mortgage Acts and Practices Advertising Rule, or Regulation N. 12 CFR 1014.3 prohibits material misrepresentations about mortgage products, rates, costs, payments, government affiliation, approval, refinancing and other listed subjects.

What should a student be able to do after this lesson?

You should be able to:

• explain the relationship between TILA and Regulation Z;
• state why standardized credit disclosures matter;
• distinguish interest rate, APR and finance charge;
• identify common closed-end credit disclosure concepts;
• decide whether a transaction is likely subject to federal rescission;
• explain why a purchase mortgage generally has no TILA rescission period;
• identify the principal-dwelling and ownership-interest requirements;
• count the ordinary three-business-day rescission period;
• explain the extended period when notice or material disclosures are missing;
• distinguish rescission from the Closing Disclosure review period;
• identify closed-end advertising triggering terms;
• state the extra disclosures a triggering term requires;
• apply the special rules for dwelling-secured rate and payment ads;
• recognize misleading government, fixed-rate and debt-relief claims; and
• use a safe review process before publishing financing language.

What is the Truth in Lending Act?

TILA is title I of the federal Consumer Credit Protection Act. Congress designed it to promote informed use of consumer credit by requiring meaningful disclosure of terms and costs so consumers can compare credit offers more readily.

TILA is not:

• a promise that a consumer will be approved;
• a national maximum mortgage interest rate;
• an instruction that every lender offer identical terms;
• a substitute for fair-lending law;
• a rule limited to home purchases; or
• the same statute as the Real Estate Settlement Procedures Act.

It combines disclosure requirements with substantive protections for specified transactions. Regulation Z is the detailed federal regulation that implements it.

What is Regulation Z?

Regulation Z is 12 CFR Part 1026. It covers many forms of consumer credit, including closed-end mortgages, home-equity lines, reverse mortgages, installment credit, credit cards and certain student loans. Different subparts and sections apply to different products.

For real estate exam purposes, Regulation Z helps answer:

• what cost terms a creditor discloses;
• how the APR is expressed;
• when a principal-dwelling lien can be rescinded;
• what a credit advertisement must reveal;
• how Loan Estimates and Closing Disclosures work; and
• which mortgage practices have special restrictions.

The next article owns the complete Loan Estimate, Closing Disclosure, TRID and RESPA sequence. This article focuses on cost language, rescission and advertising.

Does Regulation Z set the price of credit?

Generally, no. Its principal role is disclosure and consumer protection, not setting one permissible interest rate for every loan. Other federal and state laws can limit particular costs, products or conduct.

Regulation Z can still impose substantive restrictions. Examples include rescission, limits on certain prepayment penalties, ability-to-repay requirements and rules for high-cost mortgages. “It is a disclosure law” is useful, but incomplete if used to erase those protections.

What is a finance charge?

Regulation Z defines the finance charge as the cost of consumer credit expressed as a dollar amount. It generally includes a charge payable by the consumer and imposed by the creditor, directly or indirectly, as an incident to or condition of extending credit. A charge of a type also payable in a comparable cash transaction is generally outside that core definition.

Depending on the facts and exclusions, finance charges can include:

• interest;
• certain points and loan fees;
• required mortgage-insurance charges;
• service or transaction charges connected only to credit; and
• certain third-party fees when the regulation treats the creditor as requiring or retaining the charge.

Not every closing cost is a finance charge. Regulation Z contains detailed inclusions and exclusions for real-estate-related fees, insurance, taxes and third-party charges. Use the creditor's disclosures and current rule for a live file.

What is the annual percentage rate?

The annual percentage rate, or APR, is a measure of the cost of credit expressed as a yearly rate. For closed-end credit, it relates the amount and timing of value received by the consumer to the amount and timing of payments.

APR can reflect more than the simple note interest rate because qualifying prepaid finance charges affect the disclosed cost. This makes APR useful for comparing credit structures, but it is not a complete affordability measure.

Interest rate versus APR

An offer with the lower note rate can have the higher APR if it carries enough covered upfront cost. A lower APR does not by itself establish the best transaction because loan term, cash needs, adjustable features, points and expected holding period also matter.

The discount points and loan charges lesson explains how points affect cash and rate comparisons.

What other disclosure terms should a student recognize?

For closed-end consumer credit, common terms include:

• Amount financed: the amount of credit provided for the consumer's use, determined under the regulation.
• Finance charge: the dollar cost of consumer credit.
• APR: the yearly rate measure of credit cost.
• Total of payments: the total the consumer will have paid after making scheduled payments.
• Payment schedule: the number, amount and timing of scheduled payments under the applicable disclosure rule.

These concepts are connected but not interchangeable. Amount financed is not the property's price. Finance charge is not the same as cash to close. Total of payments is not the principal balance.

What is the TILA right of rescission?

Rescission is a federal cancellation right for specified consumer credit transactions in which a security interest is retained or acquired in a consumer's principal dwelling. For covered closed-end credit, each consumer whose ownership interest is subject to the lien can have the right.

The ordinary period runs until midnight of the third business day following the last of:

1. consummation of the transaction;
2. delivery of the required rescission notice; or
3. delivery of all material disclosures.

The last event starts the count. Signing one acknowledgment does not shorten a period that has not legally begun.

Which mortgage transactions commonly carry rescission?

Common examples can include:

• a home-equity loan secured by the consumer's existing principal dwelling;
• a refinance of the principal dwelling with a different creditor;
• new credit secured by an existing principal dwelling for repairs, debt consolidation or another consumer purpose;
• the new-advance portion of some same-creditor refinances; and
• a bridge loan secured by the consumer's current principal dwelling while another home is being acquired or built.

Coverage depends on the creditor, security interest, purpose, property use, transaction structure and exemptions. “Refinance” is not enough information by itself.

Does a home purchase mortgage have a three-day rescission right?

Generally, no. Regulation Z exempts a residential mortgage transaction used to finance the acquisition or initial construction of the consumer's principal dwelling from the closed-end rescission rule.

This is the central exam distinction:

The buyer can have other cancellation rights under a contract, statute or loan program. Those are not the TILA rescission right merely because they also use a deadline.

What happens in a same-creditor refinance?

Regulation Z generally exempts a refinancing or consolidation by the same creditor of the existing principal balance and accrued and unpaid finance charges when no new money is advanced. If the same creditor advances new money, the new advance and amounts attributable to it can be subject to rescission.

This rule requires identification of the original creditor and the new advance. A servicer acting for an owner is not necessarily the creditor for this analysis. A borrower should not decide coverage from a familiar company logo.

Does rescission apply to a vacation home?

The ordinary rule focuses on the consumer's principal dwelling. Credit secured only by a vacation home or other second home that is not then the principal dwelling does not receive this rescission right merely because it is residential property.

A consumer generally has one principal dwelling at a time. The rule has special treatment when a new home will become the principal dwelling and for a bridge loan secured by the existing principal dwelling. Identify which property secures the credit.

Who receives the right to rescind?

Each consumer with an ownership interest in the principal dwelling that is or will be subject to the security interest can have the right, even if that owner did not sign the credit agreement as a borrower.

Example: Jordan alone signs a home-equity note, but Jordan and Casey own the principal dwelling and both ownership interests are encumbered. Casey can be a consumer entitled to rescission notice even without personal liability on the note.

The creditor generally provides two copies of the rescission notice to each consumer entitled to rescind, subject to the electronic-delivery rule. Exercise by one entitled consumer is effective for all consumers in the transaction.

How do you count the three business days?

For rescission, “business day” means every calendar day except Sunday and the federal legal public holidays listed in 5 USC 6103(a). Saturday ordinarily counts even if the lender's office is closed.

Do not count the day of the last triggering event. Begin with the next business day and stop at midnight on the third.

Example 1: ordinary Friday consummation

All notices and material disclosures are delivered, and the covered transaction is consummated on Friday. No federal holiday intervenes.

• Saturday: day 1
• Sunday: excluded
• Monday: day 2
• Tuesday: day 3

The ordinary period expires at midnight Tuesday.

Example 2: Monday federal holiday

The same transaction is consummated Friday, but Monday is a federal legal public holiday.

• Saturday: day 1
• Sunday: excluded
• Monday: excluded
• Tuesday: day 2
• Wednesday: day 3

The ordinary period expires at midnight Wednesday.

Example 3: notice arrives later

The transaction is consummated Monday, but the required rescission notice is delivered Wednesday. Material disclosures were delivered earlier.

The clock runs from Wednesday because it was the last required event. Thursday is day 1, Friday day 2 and Saturday day 3, assuming no federal holiday.

How does a consumer exercise rescission?

The consumer must notify the creditor of the decision by mail, telegram or another written means of communication. The notice is effective when mailed, filed for telegraphic transmission or delivered to the creditor's designated place of business within the period.

Calling a loan officer may start a conversation, but it is not a substitute for the written notice required by the rule. The consumer should use the supplied form or another clear written notice, send it to the stated address and keep proof of timely delivery or mailing.

What if the creditor fails to deliver the notice or material disclosures?

If the required notice or material disclosures are not delivered, the right can extend beyond three business days. Under the ordinary outer limit, it expires at the earliest of:

• three years after consummation;
• transfer of all the consumer's interest in the property; or
• sale of the property.

Specified administrative proceedings can affect the statutory period. An extended rescission claim is a legal matter. A consumer should involve qualified counsel promptly rather than assuming a missing form cancels the debt automatically.

For this rule, material disclosures include the APR, finance charge, amount financed, total of payments, payment schedule and specified high-cost and prepayment disclosures.

What happens after a valid rescission?

Regulation Z provides a sequence:

1. the security interest giving rise to rescission becomes void and the consumer is not liable for finance or other charges from the transaction;
2. within 20 calendar days after receiving the notice, the creditor returns covered money or property and begins the action needed to reflect termination of the security interest;
3. after the creditor performs, the consumer tenders money or property received from the creditor; and
4. a court can modify the sequence.

Rescission is not a free-house rule. Tender and contested rights can require court supervision. A salesperson should not calculate the parties' obligations or advise a consumer to stop payment.

Can the consumer waive the rescission period?

Only under the rule's strict bona fide personal financial emergency standard. The consumer must give the creditor a dated written statement that:

• describes the emergency;
• specifically modifies or waives the right; and
• is signed by every consumer entitled to rescind.

Printed waiver forms are prohibited. Convenience, impatience or a routine desire for faster funds does not establish the required emergency by itself.

Is rescission the same as the Closing Disclosure waiting period?

No. They are different rules with different purposes.

The next lesson, covering RESPA, TRID, Loan Estimates and Closing Disclosures, will own the complete disclosure sequence. Until then, use the New York closing guide for the current three-event correction rule.

What counts as a credit advertisement?

Regulation Z defines an advertisement broadly as a commercial message in any medium that directly or indirectly promotes a credit transaction. Depending on content and context, that can include:

• a newspaper or magazine ad;
• a property flyer;
• a brokerage website;
• a lender landing page;
• a social-media post or video;
• an email or text campaign;
• a direct-mail piece;
• a radio or television message;
• a sign; and
• promotional material supplied with an application.

A purely educational explanation that does not promote credit can fall outside the definition. Adding a product, payment, rate or application call to action can change the analysis. Substance matters more than the label “educational.”

What are the foundation rules for closed-end credit ads?

Four rules come first:

1. Terms must be available. A specific advertised credit term must actually be or become available from the creditor.
2. Required disclosures must be clear and conspicuous. Fine print cannot cure a headline that a consumer cannot fairly understand.
3. A stated rate must be an APR. If another permissible simple annual rate appears, the APR must also appear and the other rate cannot be more conspicuous.
4. A triggering term requires more information. The ad must state the linked terms required by section 1026.24(d).

Truthful does not mean incomplete. A payment can be numerically correct yet misleading if the ad hides that it applies for only a short introductory period.

What are the four closed-end advertising triggering terms?

Under section 1026.24(d), the triggers are:

The regulation's defined down-payment trigger applies to a credit sale, such as qualifying seller financing. A lender's ordinary loan ad can still trigger through a specific payment, repayment period or finance-charge amount and remains subject to the dwelling-secured mortgage-ad rules.

What must appear after a triggering term?

When a closed-end ad states a trigger, it must also state, as applicable:

• the amount or percentage of the down payment;
• the terms of repayment over the full term, including a balloon payment when applicable;
• the APR, using that term; and
• whether the APR can increase after consummation.

An ad can use one or more typical examples if all applicable terms for each example are supplied. Mixing the lowest payment from one example with the lowest APR from another can create a misleading composite.

Which common phrases are not section 1026.24(d) triggers?

Examples that do not state one of the four specific terms can include:

• “low down payment” without a number;
• “affordable monthly payments” without an amount;
• “no down payment,” because the commentary distinguishes this from stating an amount actually required;
• the APR by itself;
• “no closing costs,” although the claim must be accurate and other rules still apply; and
• a request to “ask about current rates” without stating a credit figure.

Not triggering the linked disclosures does not create permission to mislead. The actually-available, clear-and-conspicuous and anti-misrepresentation rules still apply.

How must an advertised interest rate appear?

If an ad states a rate of finance charge, it must state the rate as an annual percentage rate and use “annual percentage rate” or the abbreviation APR. If the APR can increase after consummation, the ad must state that fact.

For dwelling-secured credit, a permissible simple annual interest rate can appear with the APR, but it cannot be more conspicuous than the APR. A payment rate, qualifying rate or other figure that is not the rate at which interest accrues cannot be dressed up as the interest rate.

Rate-ad example

An ad promotes a 5.75 percent note rate but places the 6.08 percent APR in pale text at the bottom.

Analysis: The ad raises a prominence problem. A dwelling-secured ad cannot make the simple annual rate more conspicuous than the APR. The terms must also be genuinely available under the stated assumptions.

What if more than one rate will apply?

For a dwelling-secured transaction, if the ad states a simple annual rate and more than one simple annual rate will apply over the loan term, section 1026.24(f) requires clear disclosure of:

• each simple annual rate that will apply;
• the period during which each rate applies; and
• the APR for the loan.

For a variable-rate loan, the ad must identify that the rate can increase. An introductory rate cannot be presented as though it lasts for the complete term.

The fixed, adjustable, balloon and graduated mortgage lesson explains product mechanics separately.

What if an ad states a monthly payment?

Dwelling-secured payment advertising has special context rules. When a specific payment appears, the ad may need to state:

• the amount of each payment that applies during the loan term;
• the period during which each payment applies;
• any balloon payment; and
• that the payment does not include taxes and insurance, when that is true, and that the actual payment obligation will be greater.

If the advertised payment changes, a headline showing only the lowest temporary payment is incomplete. The later payments and their periods need the prominence and proximity required by the rule.

Payment-ad example

A social post says “Own this home for $1,650 a month” but the figure covers principal and interest only and excludes estimated taxes, insurance and association charges.

Analysis: The statement can mislead by presenting a partial financing payment as the cost of owning the home. Regulation Z can require the tax-and-insurance qualification for a covered dwelling-secured credit ad. General advertising and consumer-protection rules also require truthful context.

Can an ad use a hyperlink for required disclosures?

Electronic ads can use Regulation Z's special rule for disclosures reached through a clear and conspicuous link, subject to the exact requirements. The link must be obvious, take the consumer directly to the required information and preserve the necessary proximity and prominence.

A generic footer link labeled “legal” does not necessarily cure a bold rate or payment claim. Design and copy must be reviewed together on mobile and desktop.

What special mortgage-ad claims are prohibited or risky?

Regulation Z and Regulation N address misleading mortgage communications. High-risk claims include:

• calling a variable feature “fixed” without the required limits and periods;
• showing a temporary payment as though it lasts for the full term;
• implying government endorsement, sponsorship or affiliation that does not exist;
• making the ad look like it came from the consumer's current lender or servicer;
• misstating the APR, interest rate, fees, taxes, insurance or prepayment term;
• implying that refinancing eliminates debt when it merely moves or restructures it;
• claiming a consumer is approved before the required decision exists;
• hiding a balloon payment or negative-amortization possibility;
• misdescribing counseling or expert advice; and
• using an unavailable teaser term to attract applications.

These rules examine express statements and reasonable implications. A technically correct disclaimer may not repair a dominant false impression.

Can a real estate salesperson advertise a lender's rate?

A salesperson should use current creditor-approved language and brokerage review. Rate advertising is compliance work, not casual listing copy.

Before publishing, confirm:

1. the creditor and loan product are identified correctly;
2. the rate and APR are current and actually available;
3. points, occupancy, credit, loan amount and other assumptions are stated where needed;
4. the expiration or effective period is clear;
5. every payment and repayment-period trigger has its linked disclosures;
6. taxes, insurance, mortgage insurance and association charges are not hidden;
7. a government logo or program name does not imply endorsement;
8. fair-housing and fair-lending review is complete; and
9. the brokerage retains the approved copy and source.

The New York real estate advertising rules lesson covers broker identification, blind ads, team names and New York licensing rules. A financing ad can need both New York brokerage compliance and federal credit-ad compliance.

What should a salesperson do when a seller offers financing?

Seller financing can be a credit sale and can make the down-payment trigger directly relevant. A salesperson should:

• involve the supervising broker and attorneys;
• identify whether the seller is acting as a creditor under the applicable rule;
• avoid drafting loan terms or legal instruments;
• use reviewed advertising language;
• state the actual down payment, repayment terms and APR when triggered; and
• avoid describing approval, tax effects or legal compliance as settled without qualified review.

The salesperson can market authorized terms but should not calculate a live APR from intuition. APR is a regulatory calculation, not merely the note rate with fees guessed into it.

What are the most common misconceptions?

Misconception 1: TILA and Regulation Z are separate competing laws

TILA is the statute. Regulation Z implements it.

Misconception 2: APR and interest rate are identical

The interest rate drives note interest. APR is a standardized yearly measure of credit cost and can reflect covered charges.

Misconception 3: Every closing cost is a finance charge

Regulation Z has detailed inclusions and exclusions. Comparable cash charges and specified real-estate fees can receive different treatment.

Misconception 4: A homebuyer has three days after closing to cancel the purchase mortgage

The acquisition mortgage is generally exempt from TILA rescission. Contract or state cancellation rights are separate.

Misconception 5: Every refinance is rescindable in full

Same-creditor refinancing without new advances is generally exempt. New money and a different creditor can change the result.

Misconception 6: Any residential property creates rescission

The ordinary rule requires a security interest in the consumer's principal dwelling.

Misconception 7: Only a borrower who signed the note receives rescission rights

An owner whose interest in the principal dwelling is encumbered can be entitled even without signing the credit obligation.

Misconception 8: Saturday does not count

Saturday ordinarily counts for the rescission business-day definition. Sunday and listed federal legal holidays do not.

Misconception 9: The clock begins at consummation in every case

It begins after the last of consummation, delivery of notice and delivery of material disclosures.

Misconception 10: Rescission means the consumer keeps all loan proceeds

The rule includes creditor duties and consumer tender. Courts can modify the sequence.

Misconception 11: A consumer can sign a standard waiver to receive funds faster

Waiver requires a bona fide personal financial emergency and a specific dated statement signed by all entitled consumers. Printed forms are prohibited.

Misconception 12: Only a newspaper loan ad is regulated

Commercial messages in digital, audio, video, print and other media can qualify.

Misconception 13: A true payment amount needs no other text

A specific payment can trigger repayment, APR and other required disclosures. Partial payment context can still mislead.

Misconception 14: Fine print can repair any headline

Required information must be clear and conspicuous. The overall impression matters.

Misconception 15: If no trigger appears, the ad can say anything else

Actually available terms and anti-misrepresentation rules apply even without a section 1026.24(d) trigger.

What decision tree works on exam questions?

1. Identify the task. Disclosure, rescission or advertising?
2. Identify the credit. Closed-end loan or open-end plan?
3. Identify the collateral. Principal dwelling, another dwelling or no dwelling?
4. Identify the purpose. Acquisition, initial construction, refinance, home equity or another purpose?
5. Identify the creditor. Same creditor or different creditor?
6. Find the last event. Consummation, notice or material disclosures?
7. Count correctly. Saturday counts; Sunday and federal legal holidays do not.
8. Read the ad literally. Is there a number for down payment, repayment period, payment or finance charge?
9. Add linked disclosures. Down payment, full repayment terms, APR and possible increase?
10. Check the impression. Are rate, payment, government and approval claims accurate and clear?

Can you apply the rules to eight scenarios?

Scenario 1: Purchase mortgage

Elena closes a loan used to acquire the home that becomes her principal dwelling.

Analysis: The loan is generally a residential mortgage transaction exempt from federal rescission. The preclosing disclosure rules can still apply.

Scenario 2: Home-equity loan

Marcus borrows against the equity in his existing principal dwelling to remodel the kitchen.

Analysis: This is a common covered rescission setting. Confirm all transaction facts and exemptions.

Scenario 3: Same-creditor refinance

A creditor refinances its existing principal-dwelling loan with no new advance beyond the existing balance and earned finance charge.

Analysis: The same-creditor refinancing exemption generally applies. A new advance could produce rescission rights for the new portion.

Scenario 4: Co-owner does not sign note

One spouse signs the home-equity note, but both spouses own the principal dwelling and both interests secure the debt.

Analysis: Both can be consumers entitled to notice because both ownership interests are encumbered.

Scenario 5: Friday before a Monday holiday

A covered transaction is consummated and all material is delivered Friday. Monday is a federal legal holiday.

Analysis: Saturday is day 1. Sunday and Monday are excluded. Tuesday is day 2 and Wednesday is day 3.

Scenario 6: Specific payment ad

A mortgage post states “Only $1,900 per month” and supplies no repayment period or APR.

Analysis: The payment amount is a triggering term. The ad needs the applicable additional terms and dwelling-payment context.

Scenario 7: General rate invitation

A post says “Ask about today's mortgage rates” and states no rate, payment, period, down payment or finance-charge amount.

Analysis: It does not state a section 1026.24(d) triggering term. It must still be truthful and must not imply unavailable or approved terms.

Scenario 8: Government appearance

A private mailer uses an eagle seal and calls itself a government mortgage department although no affiliation exists.

Analysis: The communication can materially misrepresent its source and government association under Regulation N and Regulation Z mortgage-ad rules.

How can a student practice this topic?

Question 1

What is the relationship between TILA and Regulation Z?

A. Regulation Z implements TILA

B. TILA implements Regulation Z

C. They govern only property taxes

D. They are New York zoning laws

Answer: A. TILA is the federal statute, and Regulation Z is its implementing regulation.

Question 2

Which term expresses the cost of consumer credit as a dollar amount?

A. Appraised value

B. Finance charge

C. Loan-to-value ratio

D. Assessed value

Answer: B. Regulation Z defines finance charge as the dollar cost of consumer credit.

Question 3

Which statement best distinguishes APR from the note rate?

A. APR is the property-tax rate

B. APR is a standardized yearly credit-cost measure that can reflect covered charges

C. APR is the broker's commission percentage

D. APR is the down payment

Answer: B. APR can differ from the simple interest rate because of covered credit costs and timing.

Question 4

Which transaction is generally exempt from closed-end TILA rescission?

A. Home-equity loan on an existing principal dwelling

B. Refinance with a new creditor secured by the principal dwelling

C. Purchase mortgage used to acquire the principal dwelling

D. New consumer loan secured by the existing principal dwelling

Answer: C. A residential mortgage transaction used for acquisition is generally exempt.

Question 5

When does the ordinary rescission period begin to run?

A. Only when the appraisal is ordered

B. After the last of consummation, rescission notice and material disclosures

C. When the property is listed

D. Thirty days after recording

Answer: B. The last required event controls the starting point.

Question 6

Which day ordinarily counts for the rescission business-day rule?

A. Sunday

B. A listed federal legal holiday

C. Saturday

D. No weekend day

Answer: C. Saturday ordinarily counts; Sunday and the specified federal holidays do not.

Question 7

Which advertising phrase is a closed-end triggering term?

A. Flexible financing available

B. Ask about rates

C. Payments of $2,000 per month

D. Competitive credit options

Answer: C. A specific payment amount triggers additional disclosures.

Question 8

If an ad states a triggering term, which information is generally required as applicable?

A. The listing broker's tax return

B. Down payment, full repayment terms, APR and possible APR increase

C. The seller's original purchase price

D. The appraiser's license history

Answer: B. Section 1026.24 links the triggers to those additional credit terms.

Question 9

How may a simple annual interest rate appear in a dwelling-secured ad?

A. By itself and larger than all other text

B. With the APR and not more conspicuously than the APR

C. Only as a monthly rate

D. As a payment rate that is lower than the accrual rate

Answer: B. The permissible simple rate can accompany the APR but cannot dominate it.

Question 10

What is required for a rescission waiver?

A. A routine printed form

B. A salesperson's oral approval

C. A bona fide personal financial emergency and a dated signed statement

D. A social-media message after funding

Answer: C. Every entitled consumer must sign the specific written emergency statement.

Question 11

Which statement about rescission is accurate?

A. It is a free-loan remedy with no tender

B. It applies to every residential closing

C. It includes creditor return and lien-release duties followed by consumer tender

D. It can be exercised only by telephone

Answer: C. Regulation Z supplies a sequence, and a court can modify it.

Question 12

Which ad presents the clearest federal concern?

A. An accurate educational definition of APR

B. A request to contact a lender for current terms

C. A private lender using a false federal-agency appearance

D. A glossary link with no product offer

Answer: C. False government source or affiliation claims are prohibited mortgage-ad misrepresentations.

What is the one-minute review?

• TILA promotes informed use of consumer credit.
• Regulation Z implements TILA.
• Finance charge is the dollar cost of credit under the rule.
• APR is a standardized yearly credit-cost measure, not merely the note rate.
• Amount financed, finance charge and total of payments are different figures.
• Rescission generally concerns a lien on the consumer's principal dwelling.
• A purchase mortgage used to acquire that dwelling is generally exempt.
• A different-creditor refinance and home-equity loan commonly carry rescission.
• Same-creditor refinancing with no new advance is generally exempt.
• Each owner whose interest is encumbered can have the right.
• The clock runs after the last of consummation, notice and material disclosures.
• Saturday ordinarily counts. Sunday and federal legal holidays do not.
• Missing notice or material disclosures can extend the right, subject to the outer limit.
• Rescission includes creditor duties and consumer tender.
• Emergency waiver requires a specific dated statement signed by all entitled consumers.
• Rescission is not the Closing Disclosure review period.
• Specific payment, period, finance-charge and covered down-payment terms can trigger more ad disclosures.
• A stated rate must appear as an APR, and a simple rate cannot be more prominent.
• Advertised credit terms must actually be available.
• Mortgage ads cannot misrepresent government ties, approval, payments, rates or debt relief.

Frequently asked questions

What does TILA stand for?

TILA stands for the Truth in Lending Act. It promotes meaningful disclosure of consumer-credit terms and costs.

What is Regulation Z?

Regulation Z is 12 CFR Part 1026, the CFPB regulation implementing TILA for covered consumer credit.

Is APR the same as the mortgage interest rate?

No. The interest rate controls interest accrual under the note. APR is a standardized yearly measure that can incorporate covered finance charges and timing.

What is a finance charge?

It is the dollar cost of consumer credit under Regulation Z. It includes covered charges imposed as an incident to or condition of extending credit, subject to detailed exclusions.

Can a buyer cancel a purchase mortgage for three days after closing?

The federal TILA rescission right generally does not apply to a loan used to acquire or initially construct the principal dwelling. Other contractual or statutory rights are separate.

Which mortgage transactions commonly have a three-day rescission period?

Home-equity loans and many refinances secured by an existing principal dwelling are common examples. The exact creditor, lien, purpose and exemption matter.

When does the rescission period expire?

Ordinarily, at midnight on the third business day after the last of consummation, delivery of the rescission notice and delivery of all material disclosures.

Does Saturday count as a rescission business day?

Yes, ordinarily. Sunday and the federal legal public holidays listed by the rule do not count.

Can one co-owner rescind for everyone?

Exercise by one consumer entitled to rescind is effective for all consumers in the transaction.

Can a consumer waive rescission to receive funds quickly?

Only for a bona fide personal financial emergency using the specific dated written statement required by the rule and signed by every entitled consumer.

What are the four credit-advertising triggers?

They are a covered down-payment amount or percentage, the number of payments or repayment period, a payment amount and the amount of a finance charge.

What must a mortgage ad disclose after a trigger?

As applicable, it must state the down payment, repayment terms over the full term, APR and whether the APR can increase after consummation.

Can an ad show an interest rate without an APR?

No. If a rate of finance charge appears, it must be stated as an APR. A permissible simple annual rate can accompany it but cannot be more conspicuous.

Do social-media mortgage posts count as advertisements?

They can. A commercial message in any medium that promotes consumer credit can fall within Regulation Z.

Does fine print fix a misleading mortgage headline?

Not necessarily. Required disclosures must be clear and conspicuous, and federal rules consider the communication's express claims and reasonable implications.

What should you study next?

Use the Real Estate Finance subject guide for the complete finance sequence. Review PITI and mortgage escrow to distinguish a principal-and-interest quote from the fuller housing payment.

Next in the exact queue is RESPA, TRID, Loan Estimates and Closing Disclosures. For immediate application, compare the mortgage clauses lesson and use the free 19-subject sampler. The sampler is not an official exam distribution or pass predictor.

Sources and verification notes

This lesson was checked against the following primary or official sources on August 27, 2026:

1. New York State Department of State, Real Estate Salesperson 77-Hour Curriculum, Subject 5, TILA, Regulation Z, rescission and advertising.
2. Consumer Financial Protection Bureau, 12 CFR Part 1026, current Regulation Z version and subject map.
3. Regulation Z section 1026.1, authority, purpose and coverage.
4. Regulation Z section 1026.2, advertisement, business day and other definitions.
5. Regulation Z section 1026.4, finance-charge definition, inclusions and exclusions.
6. Regulation Z section 1026.17, general closed-end disclosure requirements.
7. Regulation Z section 1026.18, amount financed, finance charge, APR, payment schedule and total of payments.
8. Regulation Z section 1026.22, closed-end APR determination and accuracy.
9. Regulation Z section 1026.23, closed-end rescission coverage, timing, notice, effects, waiver and exemptions.
10. Regulation Z section 1026.24, closed-end advertising, rate, payment and trigger rules.
11. Regulation Z section 1026.15, open-end rescission distinctions.
12. Regulation Z section 1026.16, open-end advertising distinctions.
13. Electronic Code of Federal Regulations, 12 CFR 1014.3, prohibited mortgage-advertising misrepresentations.
14. United States Code, 15 USC 1601, TILA congressional findings and purpose.
15. United States Code, 15 USC 1635, statutory rescission right, effects, exemptions and time limit.

Regulation Z coverage depends on the transaction, creditor, collateral, purpose and current rule. Credit terms and advertisements can change quickly. A consumer or advertiser should use current creditor disclosures and qualified legal or compliance review. This article provides independent exam preparation and general education. It is not legal, lending, tax, compliance or financial advice, is not affiliated with or endorsed by the New York State Department of State and does not reproduce state exam questions.