An online mortgage advertisement displays: 'Rates as low as 5.5%! 20% down required. 30-year term available.' A consumer with a 680 credit score and 20% down inquires and is quoted 6.875%. The advertised 5.5% rate is only available to borrowers with 780+ credit scores. Under Regulation N (MAP Rule) and TILA, which analysis is most accurate?

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The advertisement violates Regulation N because the 5.5% rate is not available to a meaningful portion of consumers who would respond to the ad, making it materially misleading Regulation N (12 CFR Part 1014, the MAP Rule) prohibits material misrepresentations in mortgage advertising. Advertising a rate that is available only to borrowers with exceptional credit (780+) when the ad targets a general audience creates a materially misleading impression about the rates generally available. The CFPB has held that advertising rates available only to an elite subset of applicants without clear disclosure of the restrictive qualifying criteria violates MAP. "," is incorrect — the fact that the rate is theoretically available to someone does not prevent it from being misleading to the general audience. "rates subject to credit approval'" is partially correct (APR must also be stated) but misses the more serious MAP violation. "The advertisement is compliant because the rate is g..." is incorrect — a generic disclaimer about 'credit approval' does not cure a materially deceptive rate advertisement.

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