What is the violation if a mortgage company advertises "rates as low as 1.2%" without disclosing the APR?

The correct answer focuses on the requirements laid out in the Truth in Lending Act (TILA), which mandates that lenders and creditors provide clear and conspicuous disclosure of the Annual Percentage Rate (APR) when advertising loans or credit terms. If a mortgage company advertises "rates as low as 1.2%" without disclosing the APR, it fails to comply with this regulation, meaning it does not provide consumers with the essential information needed to compare loan offers effectively.

The rationale here is that the APR reflects the true cost of borrowing when expressed as an annualized percentage, including interest and other finance charges. This transparency is crucial for consumers as it allows them to make informed decisions. Failing to disclose the APR can mislead consumers regarding the total cost of the loan, thus violating TILA.

Other potential violations such as consumer fraud or advertising regulation violations could pertain to inaccurate or misleading advertising. However, the specific context of failing to disclose APR distinctly falls under the Truth in Lending violation, which has specific requirements regarding the disclosure of costs associated with credit. RESPA (Real Estate Settlement Procedures Act) violations would relate more to the disclosure of settlement costs and practices related to real estate transactions rather than the advertisement of mortgage rates.