TRUTH IN LENDING DISCLOSURE REQUIREMENTS IMPACT REAL ESTATE ADVERTISEMENTS

In addition to any contract or warranty a real estate advertisement may create, the federal Truth in Lending Act requires persons who advertise certain information about financing to make additional disclosures. Real estate brokers and agents are subject to the Act and its regulations when they provide credit for sales for

their own accounts or when they arrange for the extension of credit to purchasers. As implemented by the Federal Reserve Board's "Regulation Z", the Act generally requires that the terms of the financing be disclosed to the consumer in a clear, uniform manner. If the advertisement contains any of the following or similar

statements, it also must provide certain disclosures:

1. Amount or percentage of down payment:

2. Amount of required installment;

3. Number of installments;

4. Period of repayment; or

5. The amount of any finance charge.

When an advertisement contains any of those statements, it also must include the following disclosures:

1. In a credit sale, "cash price", or the amount of the loan as applicable;

2. In a credit sale, the amount or percentage of any required down payment (using the term "cash down

payment"), or a statement that no down payment is required, as applicable;

3. The number, amounts and due dates for periods of payments scheduled to repay the debt;

4. The amount of the finance charge expressed as an "annual percentage rate." If the "simple interest rate"

is also stated, the "annual percentage rate" must be shown in print of the same style and size as the

"simple interest rate." The annual percentage may include insurance, discount and points not included

in the contract rate; and

5. If the rate is variable, there must be a statement indicating that the rate is subject to change.

For example, the above disclosures are required if the advertisement makes any of the following or similar statements:

1. "Five percent down";

2. "Pay only $355.00 per month";

3. "Only 360 monthly payments";

4. "Pay less than $350.00 per month";

5. "30-year mortgage available."

In contrast, an advertisement making any of the following or similar statements need not make the Regulation Z disclosures:

1. "Easy monthly payments";

2. "Graduated payment mortgages available";

3. "Terms to fit your budget";

4. "V.A. and F.H.A. financing available."