Final answer:
At loan consummation, a borrower must receive the Closing Disclosure, Truth in Lending Act disclosure, and the Promissory Note. These documents provide critical information about the loan terms, payments, and legal obligations. The Loan Estimate is not part of the consummation documents.
Step-by-step explanation:
Loan Documents at Consummation
When a borrower reaches loan consummation, they are required to receive certain documents that provide detailed information about the loan agreement, its terms, and the obligations involved. The documents that must be provided include:
- Closing Disclosure: This document outlines the final transaction details, including loan charges, interest rate and the monthly payments that will be needed. It's a critical document for the borrower to review and confirm before proceeding.
- Truth in Lending Act (TILA) disclosure: Also known as the TILA document, this includes key elements such as the annual percentage rate (APR), finance charges, amount financed, and the total of payments over the life of the loan.
- Promissory Note: This binding legal document commits the borrower to repay the loan. It states the loan amount, interest rate, payment schedule, and must be signed by the borrower.
- The Loan Estimate is not provided at consummation; it is actually given earlier in the loan process.
Banks are also responsible for ensuring compliance with consumer protection laws, avoiding discrimination, and may require additional assurances from the borrower, such as a cosigner or collateral. These measures help mitigate the risk of loan default.