I currently have in my possession a flyer that a Loan Officer wishes to place in a certain home (picture of home on flyer) that is for sale during an open house. The flyer contains the following information:

· “You’ll love the rates. They’ll love the new home.”

· Picture of Home with the text $89,900 below it.

· “We offer 100% Financing!

· Bank Name, Loan Officer Name, Contact Information.

· Text – Member FDIC, Equal Housing Lender



In reviewing the advertising requirements in Commentary to Reg. Z (12 CFR § 226.24 – Closed End), it alludes that if no down payment is required, I.e., 100% financing, then this is not a triggering term requiring additional disclosures.



My response to the Marketing and Mortgage Department was that there should be some sort of disclaimer added to the “100% Financing” that relates to “credit approval required” “See Loan officer for details”. Can you provide me with any additional guidance, with the information presented, as to if the information triggers additional disclosures? I feel strange about this one and it is a new thing that the Mortgage and Marketing Departments are doing.

The down payment only triggers additional disclosures in credit sale transactions.

I would prefer the following:

We offfer 100% financing to qualified buyers.

We have a newspaper ad where the branch wants to advertise 100% financing available and list our branch office addresses. I didn't think 100% financing was allowed unless they include the additional disclosures required on ads with triggering terms.

Wow! I guess you can learn something new when you the regulations fully, huh? Now I can tell the branch that there newspaper ad should be okay since our transactions are not credit sales.

Thank you!

What exactly is a "credit sale"?

It's a credit transaction where the proceeds are disbursed in merchandise rather than money. The best example is an automobile sales finance contract. Borrower signs a contract payable to an auto dealer. Dealer hands borrower a set of keys.

It also could be when a bank has acquired REO and then sells the REO and does the mortgage financing. The TIL disclosure would have to make the applicable credit sale disclosures.