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A lender wants to advertise 'No closing costs' on refinances where it pays third-party fees through a higher rate, but borrowers still pay prepaid interest and escrow deposits. What is the ethical concern?
Representations about fees and costs must not be misleading; the MAP Rule prohibits misrepresenting the existence or amount of fees or costs (12 CFR 1014.3(c)), and deceptive claims violate UDAAP. If borrowers still pay some amounts at closing, or pay through a higher rate, the ad should say so clearly. Showing the higher rate later on the Loan Estimate does not correct a misleading ad. Source: 12 CFR 1014.3(c); 12 U.S.C. 5531, 5536 (UDAAP) (as at 11 Oct 2026).
Advertising 'no costs' when the borrower pays costs another way.
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