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#2013974 - 05/13/15 09:38 PM Consummation - Definition
trying_to_comply Offline
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Posts: 144
In light of TRID and the CD disclosure requirements, does anyone know where I can obtain a NY definition of consummation?

Thanks.

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#2024990 - 07/03/15 01:34 PM Re: Consummation - Definition trying_to_comply
Hilde Offline
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Joined: Dec 2005
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In New York State there is no statutory definition of consummation; however, there is a 1984 court decision Murphy v. Empire of America, FSA, from the federal court (Second Circuit Court of Appeals)746 F2nd 931, which appears to be considered to be “well-established” law on the topic. That case concludes that, consistent with Reg. Z, consummation occurs under New York law when the consumer accepts the lender’s commitment offer. This really throws a monkey wrench into TRID compliance since it puts the timing of "consummation" into the borrower's hands while the obligation to give closing disclosures 3 days prior is the lender's responsibility.

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#2027176 - 07/15/15 01:27 PM Re: Consummation - Definition trying_to_comply
stressedout Offline
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Joined: Mar 2015
Posts: 93
Yes, and it doesn't look like it is changing any time soon. Do take note that all CFPB documents that the borrower can get there hands on say that consummation is when the loans closes and then the borrower(s) is fully committed to the loan.

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#2027184 - 07/15/15 01:51 PM Re: Consummation - Definition stressedout
rlcarey Online
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rlcarey
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Galveston, TX
Originally Posted By lmp725
Do take note that all CFPB documents that the borrower can get there hands on say that consummation is when the loans closes and then the borrower(s) is fully committed to the loan.


I don't think the CFPB has said that at all. They are very explicit that the definition of consummation and settlement are two very different things:

As noted above, the Bureau recognizes that ‘‘consummation’’ and ‘‘settlement’’ may not coincide in some jurisdictions. Indeed, the definition of ‘‘settlement’’ in Regulation X indicates that a settlement is not necessarily a singular event involving the execution of one agreement, but is instead a ‘‘process of executing legally binding documents’’ regarding a lien on property that is subject to a federally related mortgage loan. See 12 CFR 1024.2(b). Thus, in some jurisdictions, a settlement may begin before ‘‘consummation’’ under Regulation Z, and, in some jurisdictions, may conclude later."
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#2027233 - 07/15/15 04:37 PM Re: Consummation - Definition trying_to_comply
rlcarey Online
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rlcarey
Joined: Jul 2001
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Galveston, TX
You also need to read the NY opinion very carefully. It takes more than the lender sending a typical commitment letter to the borrower. The borrower has to actually agree to the terms offered, i.e., also sign the commitment. It has to be a two way street. If you, as the bank, are just sending a commitment letter to the applicant and are not requiring them to enter into a binding agreement, then this ruling would not apply:

The transaction is consummated when the lender and borrower sign a contract obligating them, respectively, to lend and to borrow the funds. The signing of the contract is the event of central significance. Thereafter, unless the borrower exercises his three-day statutory privilege to rescind, the lender is bound to lend him the funds and the borrower is bound to borrow the money. If the lender refuses to provide the loan it can be held liable to the borrower for damages. Conversely, if the borrower decides not to use the credit he may be liable to the lender for the interest on the loan.
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