Question 59

Annual percentage rate must be stated in the Truth-in-Lending disclosure.

The Truth-in-Lending Act (Regulation Z) mandates that lenders disclose the annual percentage rate (APR) to borrowers, ensuring they understand the cost of credit expressed as a yearly interest rate.

A) attorney fees

Attorney fees are not typically required to be disclosed under the Truth-in-Lending Act. This law focuses on the overall cost of credit, and while attorney fees may be part of the closing costs, they are not specifically mandated for disclosure.

B) cost of title policy

The cost of a title policy is also not a required disclosure under the Truth-in-Lending Act. While it may impact the total cost of a loan, the Act primarily emphasizes the annual percentage rate and other key loan terms rather than specific fees like title insurance.

C) broker's commission

The broker's commission is not included in the Truth-in-Lending disclosure requirements. While it is a cost associated with some transactions, the Act does not mandate that it be disclosed to the borrower as part of the loan terms.

D) annual percentage rate

The annual percentage rate (APR) is a crucial element that must be clearly stated in the Truth-in-Lending disclosure. It provides borrowers with an understanding of the total cost of borrowing over a year, including interest and certain fees, thereby allowing better comparison among lending options.

Conclusion

The requirement to disclose the annual percentage rate under the Truth-in-Lending Act is essential for transparency in lending. Options A, B, and C do not meet the criteria set by the Act, as they pertain to specific fees rather than the overarching cost of credit, which is effectively represented by the APR. Thus, D is the only option that aligns with the regulatory requirements.