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#1873379 - 11/21/13 09:36 PM Contractual obligation created?
Puzzled Offline
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I have been looking in RCW for information on when a borrower would become contractually obligated on a real estate mortgage. Can someone refer me to the section where I would find this?

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#1873684 - 11/22/13 05:40 PM Re: Contractual obligation created? Puzzled
'Lil Freak! Offline
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Just off the top of my head but I'm thinking "when they sign the promissory note." A loan is a contractual arrangement, so....
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#1873946 - 11/24/13 07:59 PM Re: Contractual obligation created? 'Lil Freak!
Puzzled Offline
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Yes, I would agree but I have some folks in our lending area that are arguing that on refinances it is when rescission is up. I can see their point. When looking at whether the consumer/bank have entered into a contract I would say that 2 out of the 3 contract criteria have been met. The bank has made the loan offer, the customer has accepted but when they sign the loan paperwork no consideration has been given by the bank. Once rescission is up we wire funds to the customer so this would complete the contract.

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#1874235 - 11/25/13 09:44 PM Re: Contractual obligation created? Puzzled
'Lil Freak! Offline
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The psych ward
I see the point you raise. Reg. Z leaves "consummation" to be defined by state law. I didn't see anything in the RCWs, WACs, Consumer Loan Act, etc. defining consummation.

There's some information on the DFI's site regarding MDIA where they define consummation as when the loan documents are signed. So I'm going to opine that the borrowers are contractually obligated when they sign, but can unwind the transaction by exercising their right of rescission. Or at least that's how I understand it.....
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#1877273 - 12/10/13 05:41 AM Re: Contractual obligation created? 'Lil Freak!
Puzzled Offline
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Thanks for the information- I found the info on DFI's website.

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#1916487 - 04/22/14 05:42 PM Re: Contractual obligation created? Puzzled
West Coast Comp Offline
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Lost in the rain.
I don't believe there is any specific state law or regulation that specifically defines consummation in WA. All I can find on the DFI website is a general discussion but there doesn't appear to be a specific defenition and I would question DFI's ability to define the term without a specific RCW or WAC to support it. You can make the argument that the loan is not binding until the loan is funded. There is no specific obligation that I am aware of under WA law to fund a loan even after the borrower signes documents.

It is an interesting discussion.
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