What is the legal definition of consummation in a mortgage loan process?

In the context of the mortgage loan process, consummation refers to the moment when the borrower becomes legally obligated to the loan. This is a critical point in the lending process because it marks the transition from the negotiation stage to a binding agreement where the borrower is legally responsible for the loan's terms, including repayment.

At consummation, the borrower has accepted the loan and its terms, typically through signing the necessary documents. This is distinct from the loan being funded, which occurs afterward when the lender disburses the loan funds. Therefore, consummation captures the essential moment of commitment from the borrower rather than any subsequent actions like signing or funding. Recognizing this concept is vital for understanding consumer rights and lender obligations throughout the loan process.