§1665b Advertising of Open End Consumer Credit Plans Secured by Consumer’s Principal Dwelling

Summary

Ads that promote open‑end credit plans secured by your main home (like a home‑equity line) must show key facts clearly when they give any specific terms or payment amounts. The ad must say any loan fee that is a percent of the credit limit and give an estimate of other opening fees as one amount or a reasonable range. If periodic rates can be used to figure finance charges, the ad must give those rates as an annual percentage rate (APR). The ad must also give the highest APR that can apply and any other information the Bureau requires. If the ad says interest may be tax deductible, it must be truthful. If the loan could be bigger than the home’s fair market value and the ad is on paper or the Internet, it must say that interest on the amount above the home’s value is not tax deductible and advise the consumer to check with a tax adviser. Ads may not call such loans “free money” or use other misleading terms the Bureau bans. If the ad shows a special initial APR that is not set by the index or formula that will control later rates, it must also show, equally prominently, the current APR that would apply under that index, be reasonably up to date for the type of ad, and state how long the initial rate lasts. If the ad quotes a minimum monthly payment, it must also say if the plan has a balloon payment. Balloon payment means the borrower must repay the full outstanding balance at a set date and the required minimum payments would not fully pay off the balance by that date.