A borrower signs the note on Friday 12 June. Under applicable state law, that act makes the borrower contractually obligated on the loan. The deed records on Monday 15 June and funds disburse on Tuesday 16 June. Which date is consummation under Regulation Z?
Correct Answer
D) Friday 12 June, when the borrower becomes contractually obligated
D. Friday, June 12, is consummation under the stated state-law facts. The consumer becomes contractually bound to the credit transaction on Friday. Later recording and funding are separate events and do not replace that trigger. Scope and exceptions: Do not memorize signing as the answer in every jurisdiction. Applicable law determines when the obligation arises. A purchase contract or nonrefundable deposit alone does not necessarily bind the consumer to a particular credit arrangement. Source: Section 1026.2(a)(13); comments 2(a)(13)-1 and -2 — https://www.consumerfinance.gov/rules-policy/regulations/1026/2/
Why This Is the Correct Answer
D. Friday, June 12, is consummation under the stated state-law facts. The consumer becomes contractually bound to the credit transaction on Friday. Later recording and funding are separate events and do not replace that trigger. Scope and exceptions: Do not memorize signing as the answer in every jurisdiction. Applicable law determines when the obligation arises. A purchase contract or nonrefundable deposit alone does not necessarily bind the consumer to a particular credit arrangement.
Why the Other Options Are Wrong
Option A: Tuesday 16 June, because disbursement always determines consummation
Disbursement does not always determine contractual obligation.
Option B: Monday 15 June, because recording always determines consummation
Recording is not a universal consummation test.
Option C: Any date the settlement agent labels closing, regardless of contractual obligation
A closing label cannot override the legal trigger.
Exam Tip
Find the legal credit-obligation event, not merely the event labeled closing.
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